Calculating Cartel Follow-on Damages: General considerations and application to South African construction sector

This paper considers alternative methods for the quantification of follow-on damages in competition cases, with application to the construction sector. Construction is one of the high-impact sectors prioritised by the Competition Commission. As a result, and in response to the Construction Fast Track Settlement offer, various construction companies recently disclosed their part in bid-rigging activities. The settlements concluded the legal process for the competition authorities. Affected parties now have the right to claim civil damages in terms of the Competition Act, as communicated by the Commission’s Construction Fast Track Process. The quantification of such follow-on damages is a relatively new undertaking in the South African context, as no case for damages in the South African construction sector has been brought to court. Furthermore, quantification of damages in the construction sector are particularly challenging: construction projects are often unique, once-off projects for which long price and other comparator series are not available. Building on the literature and EU policy experience, this paper evaluates a range of economic methods applied in the quantification of follow-on damages, with specific reference to their value within the construction sector. The evaluation also includes a consideration of recent international examples of follow-on damages in the construction sector from other jurisdictions.