Antitrust & Competition Economics: US Antitrust
Our roots lie in US antitrust law. Since our work on behalf of IBM in the 1970s, we have worked on many of the most important government and private antitrust suits on record, including IBM, Kodak, Microsoft, Visa-Mastercard, and Weyerhaeuser, to name a few. Published research by our senior consultants has led to fundamental changes in how economists consider monopolization claims, vertical restraints, and mergers.
CRA provides economic advice and testimony in large, high stakes antitrust class action cases. Our experience includes analysis of class certification issues, liability, aggregate and individual class damages, injunctive relief, and settlement distribution issues.
The class certification process raises a lot of economic questions. Is there a common impact suffered by all members of the class? Can damages suffered by class members be calculated using a common damages method or formula?
CRA uses our economic expertise and broad class action experience to help clients address these issues. In addition, we can use our background in economic theory, econometrics, game theory modeling, and damages to analyze other economic issues, such as market definition, market power, and anticompetitive effects at a class-wide level.
Complex commercial damages
Our economists leverage their strong analytical skills and deep experience in multiple industries to provide expert damages analysis. CRA has assessed damages in thousands of disputes, including civil litigations, arbitrations, administrative proceedings, and international arbitrations.
Complex damages claims require a reconstruction of the market as it would have evolved absent the alleged wrong in order to establish an accurate context in which to project the likely “but for” results of the subject business. Mechanically applied formulas and guidelines are insufficient. Rigorous economic analysis of the relevant market is essential, and demonstration of causation is required.
Our track record of economic analysis and testimony in complex damages matters reflects our expertise and experience in several areas:
- Insight through analysis: In complicated damages disputes, proof of causation and quantification of the impact of the alleged wrong on the plaintiff’s business requires isolation of this impact from other contemporaneous factors.
- Effective communication
- Effective project management
Mergers and acquisitions
Clear cut analysis of the issues arising in horizontal and vertical mergers and acquisitions is a CRA specialty. We have conducted reviews of mergers in most major industries and assisted clients in M&A transactions throughout the world.
CRA employs highly advanced econometric tools—many developed by our own professionals—to speak the language government regulatory agencies themselves use and understand. Our experts define relevant product and geographic markets, measure market concentration, evaluate conditions of entry and efficiencies, and assess the competitive impact of proposed transactions.
CRA has broad experience producing simulation analyses of horizontal and vertical mergers, partial-ownership structures and joint ventures. Our merger simulations include:
- Customized models tailored to fit the facts of the case at hand
- Competitive effects analysis, including unilateral effects, coordinated effects, market foreclosure strategies, and raising rivals’ costs strategies
- Divestiture and remedy analysis
Merger Effects CalculatorSM
The Merger Effects Calculator (MEC) is an online tool that delivers fast, preliminary results for unilateral price effects in oligopoly markets with differentiated products. The system allows the user to manage multiple data sets, manipulate model parameters, rerun simulations, produce comparison reports, and perform sensitivity analyses.
Our experts use economic and technical expertise to help clients determine when competing aggressively crosses over into monopolization.
When do exclusive contracts, loyalty rebates, and low pricing become anti-competitive? The distinction between pro- and anti-competitive behavior is very fine. Identical pricing and contractual practices may be acceptable when a firm’s market share is low but prohibited when its share is high. CRA brings clear thinking and cogent analysis to understanding these complex questions.
- Undertake econometric testing of exclusionary patterns of dealing
- Develop pro-competitive investment rationales for regular dealings between firms
- Address whether firms are using control over an essential input to raise rivals’ costs and hinder a more competitive market
- Quantify whether pricing is below avoidable costs, and determining whether the opportunity for recoupment exists in matters where allegations of predation have been made
- Empirically estimate the effects from use of loyalty discounts
CRA provides new insights into the economics of monopsony through cutting-edge analytics and innovative perspectives. Our experts have brought clarity to monopsony issues across a variety of industries.
CRA has provided economic advice and testimony during many alleged monopsony matters. 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
- Consider the role of differentiated products
- Evaluate the likelihood of entry by competing purchasers
- Identify the alternative purchasers available to input sellers
- Assess the profitability of and potential efficiencies resulting from the alleged conduct
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 buyer’s behavior. These analyses benefit from our creative approach to bargaining game theory.
Monopsony cases frequently involve allegations that defendants shared information to conspire over prices paid for inputs or services. CRA’s strength in information theory enables us to shed light on whether information-sharing is harmful or beneficial.
When price differences result in litigation, CRA economists provide consulting services and expert testimony. We have been involved in price discrimination claims across a variety of industries.
The economic analysis of price discrimination requires careful and thorough analysis of the data to ensure, among other things, that the transactions being evaluated are comparable and that the prices to the buyers have been adjusted, as appropriate, for all discounts, including deferred allowances, rebates, and other payments to the buyers. We have analyzed a number of issues, including:
- Whether a seller has charged higher prices for the same products and during the same period to one purchaser (the “disfavored buyer”) than to a second purchaser (the “favored buyer”), when the buyers competed in reselling the products or employed the products as inputs into the production of competing downstream goods.
- The magnitudes and durations of the price differences.
- Whether the price differences were justified by cost differences or efforts by the seller to meet competitors’ prices.
- The effects of the price differences on the competitive relationship between the favored and disfavored buyers and on the competitive process more generally.
Collusion, actual or alleged, is difficult to prove. CRA uses rigorous, objective economic analysis to assess the plausibility of collusion claims and distinguish between competitive and anti-competitive pricing and payment.
Our economic experts assess the credibility of price-fixing claims and alleged facilitating devices used by firms to reinforce coordinated conduct. We also evaluate the scope of alleged conspiracies, identifying affected product lines, damaged customers, and relevant time periods.
Calculation of damages is a core CRA strength and litigation support service. We estimate damages, critique opposing estimates, and provide pretrial evaluations of damage claims and methodologies in:
- Antitrust cases
- Patent, copyright, and other intellectual property infringement cases
- Contract disputes
- Litigation involving property values and damages to natural resources
Vertical restraints can encourage competition or harm it. CRA helps clients clarify the impact of vertical restraints by rigorously applying modern economic principles of contracting and appropriate statistical and econometric tools.
Many companies submit buyer-seller relationships to contractual restrictions that govern pricing, exclusivity, and territories. In some cases, however, these restrictions are used to disadvantage or exclude efficient rivals or to raise and maintain barriers to entry.
CRA’s economists 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.
We have analyzed many vertical restraints issues, including:
- 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
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.