CRA’s international Antitrust and Competition Economics practice has provided expert testimony and economic analysis in a large number of landmark competition and regulatory cases in Canada. Our experts in Canada include former senior officials with the Competition Bureau and academics noted for their contributions to the law and economics literature. With a proven track record spanning more than 40 years and extensive experience in proceedings before major regulatory agencies across the globe, CRA is the clear standard for critical cases.
Abuse of dominance
Aggressively competitive or abusively dominant?
When does competing aggressively cross over into abuse of dominance? The distinction can be very fine. Identical pricing and contractual practices may be permitted when a firms market share is low but prohibited when its share is high.
Clear thinking and cogent analysis
CRA brings clear thinking and cogent analysis to understanding the complexities of dominance cases. We offer the economic and technical expertise to determine when business practices subject to review under Canadas abuse of dominance provisions exclusive contracts, loyalty rebates, low pricing practices are pro- or anti-competitive. We have the tools to distinguish whether practices harmful to competitors are also necessarily harmful to consumers.
By formulating rigorous economic arguments and marshalling evidence effectively, CRA has helped ensure successful client outcomes in some of the most important abuse of dominance cases heard before Canadas Competition Bureau and Competition Tribunal. In respect of practices that a dominant firm is allegedly engaged in, CRA has:
- Examined pricing and defined the opportunity cost for recoupment in matters where allegations of predation have been made
- Undertaken econometric testing of exclusionary patterns of dealing
- Developed pro-competitive investment rationales for regular dealings between firms
- Addressed whether firms were using control over an essential input to raise rivals costs and hinder a more competitive market
- Quantified whether pricing is below avoidable costs
- Empirically estimated the effects from use of loyalty discounts
Class actions are a growing issue for Canadian businesses as more provinces introduce facilitating legislation. CRA has advised on many important class certification motions. We have particular expertise in providing economic analysis central to determining the extent to which any overcharge from the alleged conspiracy affected direct and indirect purchasers. This analysis is integral to deciding the fundamental questions of whether the class members raise common issues and whether a class proceeding is the preferable legal procedure.
CRA applies cutting-edge econometric techniques, simulations, and economic theory to complex economic questions, and presents results in expert reports, oral presentations, depositions, and trial testimony that are readily understood by both economists and noneconomists. In addition, CRA economists may assess whether other economic issues, such as market definition, market power, and anticompetitive effects can be analyzed at a classwide level.
Mergers and acquisitions
Navigating the intricacies
Navigating the regulatory intricacies of a merger or acquisition requires a firm grasp of the competitive issues. CRA conducts rigorous M&A analysis for clients in major industries across Canada. We develop expert reports for submission to the Competition Bureau and Competition Tribunal, where we appear regularly for merging parties, parties opposing acquisitions, or the Competition Bureau itself.
Our merger analyses deal with a wide range of specific issues including market definition, barriers to entry, competitive effects (either downstream to customers or upstream to suppliers), oligopolistic interdependence, and efficiencies. We have also conducted empirical analyses to determine the extent of competition between the merging parties products and those of their rivals, and the likely effects of the merger on prices in the market overall.?
CRA uses the most advanced merger analysis tools available and has been in the forefront of developing new analytical methods. In Canada this work has included:
- Developing sophisticated bidding models to model current market dynamics between merging firms and their rivals in respect to large customers
- Econometric analysis to determine the extent of relevant product and geographic markets, and to estimate own- and cross-price elasticities of demand
- Developing sophisticated, customized simulation models for merger cases
- Building critical-loss models to determine market definition and competitive effects
- Assessing claims of monopsony power
- Modeling efficiency-competitive effects trade-offs
Monopsony is an active area of examination in Canada, and CRA brings clarity to the issues involved by providing economic advice and testimony related to monopsony allegations in a variety of industries. We have particular expertise in the Canadian forestry industry, where we have addressed monopsony concerns expressed by the Competition Bureau with respect to merger cases.
Insight through analysis
Our strength in evaluating claims that purchasers have exercised market power to reduce the price they pay for inputs or services derives from the analytic skills we apply to merger investigations and cases involving horizontal or vertical restraints. The economic analysis of monopsony cases is unique, however, in how these techniques are applied and the results interpreted and in how the conceptual issues are explained to government agencies, judges, and juries. We have used our expertise to:
- Define product and geographic markets for the inputs or the services at issue and the output markets in which the inputs are used
- Identify the full set of alternative purchasers available to input sellers
- Evaluate the likelihood of entry by competing purchasers
- Assess the profitability of exercising monopsony power against the potential lost efficiencies resulting from such conduct
CRA has often provided new insights into the economics of monopsony through cutting-edge analytics and innovative perspectives.
Evaluating monopsony cases in the context of a bargaining game between buyers and sellers, rather than a more traditional monopsony model, has yielded new information about the likely competitive impact of a buyers behaviour. These analyses benefit from our creative approach to bargaining game theory.
Monopsony cases may involve allegations of joint conduct among purchasers such as the sharing of information to conspire over prices paid for inputs or services. CRAs strength in information theory enables us to shed light on whether information-sharing is harmful or beneficial. We address issues such as whether countervailing market power would level the negotiation playing field in a pro-competitive fashion, and whether coordination among buyers can occur with lower combined shares than required for seller coordination. We have also assessed the relationship between buy-side and sell-side market power, or the lack thereof.
Shining a penetrating light
Collusion, actual or alleged, is inevitably murky. Evidence is hard to come by and almost always contested. Rigorous, objective economic analysis by CRA professionals, however, can shine a penetrating light on the issues. CRA offers the expertise to differentiate price-fixing conspiracies from normal supply, demand, and cost interactions. We contribute key, objective economic facts in cases where convincing legal evidence of other kinds is often unobtainable.
Our clients include both investigators charged with uncovering possible cooperative pricing activities and defendants seeking to dissuade prosecutors. CRA has assisted defendants in dissuading the Competition Bureau from pursuing legal action by quantifying actual price effects from alleged cartel behaviour. When prices dont actually rise as a result of an alleged conspiracy, we have the tools to prove it.
Damages calculation is a core CRA strength and support service. We determine fair and appropriate damages based on sound economic analysis employing original techniques that address the unique circumstances of each case. Our experts have also long been active in the Canadian class action environment. Expert economic reports by CRA staff and senior consultants have been filed in a number of critical class action suits, including Chadha v. Bayer, to deal with class certification issues.
With all of these analyses, CRA experts provide counsel with top-quality support delivered within short timeframes.
Clarifying the impact
Vertical restraints can encourage competition or harm it. They can manifest efficient economic behavior or opportunistic economic exploitation. CRA helps clients clarify the impact of buyer-seller contractual arrangements known as vertical restraints by rigorously applying modern economic principles of contracting and appropriate statistical and econometric tools.
Submitting buyer-seller relationships, typically involving manufactures and distributors, to contractual restrictions governing matters such as pricing, exclusivity and territories is a common and legitimate business practice. Normally, vertical restraints encourage effective inter-brand competition and adequate investments by manufacturers and distributors. In some cases, however, they may be used to disadvantage or exclude efficient rivals or to raise and maintain barriers to entry.
Experience and skills
CRA economists have extensive experience analyzing vertical restraints; in fact, we have pioneered the development of many of the key elements of contractual economics. We are skilled in the use of the requisite empirical tools and procedures used to evaluate the competitive effects from vertical restraints: contract simulation, critical elasticity studies, cost-justification assessments and market surveys, among others.
Our experience has been brought to bear on such issues as the:
- Reasonableness of territorial and customer restrictions
- Competitive effects of termination and renewal provisions
- Appropriateness of discounts, allowances and other promotional practices
- Efficiency of after-market restrictions
- Importance and competitive consequences of an installed base
- Efficiency properties of bundling and other purchase requirements
- Competitive effects of non-compete clauses
CRA has applied complex financial concepts across many different industries over thousands of successful engagements. Our experts possess deep, specific knowledge of data sources, facts, and institutions in almost every major industry, including, but not limited to, airline, automobile, banking, computer hardware and software, consumer products, durable products, credit card and credit card security, energy, health care, heavy manufacturing, pharmaceuticals, retail, real estate, telecommunications, and various utilities.