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Antitrust Brochure

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Antitrust Brochure Powered By Docstoc
					antitrust

Expert economic analysis has come to play an increasingly critical role in antitrust litigation. Looking ahead, there are several
indications that this trend is likely to continue: the Supreme Court’s apparent movement away from per se analysis to the more complex rule of reason, requiring the economic study of industries; changing Court standards for analysis in areas involving allegations of monopolization and predatory pricing, broadening the role of economists; and the globalization of antitrust, as countries in the European Union, Latin America, and Asia begin to adopt and enforce antitrust laws, some aligning with U.S. antitrust laws, others being used competitively against U.S.-based companies. Antitrust has been a core focus of Analysis Group’s work since our inception in 1981. We integrate industry-specific knowledge and research with the latest thinking in microeconomics and industrial organization to develop a thorough understanding of the conduct at issue in both large- and smaller-scale litigation.

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Our Capabilities and analyses We have demonstrated our expertise in complex assignments related to class certification, liability, and damages. We have also evaluated the competitive impact of proposed mergers. We regularly analyze a broad range of antitrust issues, including:
Horizontal Trade Restraints ƒ Price fixing and market allocation ƒ Tacit collusion ƒ Boycotts ƒ Joint ventures Monopolization ƒ Price discrimination ƒ Predatory pricing ƒ Standards and networks ƒ Barriers to entry and expansion ƒ Bundled discounts Vertical Trade Restraints ƒ Tying ƒ Exclusive dealing ƒ Territorial restrictions ƒ Resale price maintenance ƒ Patent misuse Mergers and Acquisitions ƒ Market definition ƒ Unilateral and coordinated price effects ƒ Pass-through of efficiency gains

unparalleled network of academic Experts
Over the past two decades our practice area has continued to grow and develop as we help clients respond to and prepare for continued change. We work with many of the world’s leading experts in industrial organization, competition, and regulation—authorities who help us apply the latest thinking in such areas as microeconomics, market dynamics, bidding and auction behaviors, and organizational design to the conduct at issue.

“I have always been impressed with the quality and scope of Analysis Group’s network of experts. I value their ability to draw on that network to find the right expert for the task at hand.”
JaMEs C. EGan, Jr., Partner, Weil, Gotshal & Manges LLP

rigorous Economic and industry analysis
Our work in antitrust matters includes pretrial discovery support and expert testimony in large, complex antitrust cases in which we coordinate multiple experts. We can also draw on internal experts to provide tailored analyses in smaller matters. Our professional staff and affiliates apply their expertise to class certification, liability, damages, and merger analysis, and rely on state of the art statistical and econometric methods to develop evidence to stand up to cross-examination.

industry Knowledge integrated with Economic Expertise
Analysis Group professionals have demonstrated expertise in a range of industries and markets. Of particular note is the depth of our casework in the technology industry, where we have led the team providing economic support in more than 150 private, state and federal overcharge litigations on behalf of Microsoft. In these cases, and in a number of matters in the payment card industry, we have addressed complex economic issues related to two-sided platforms and network effects. Antitrust considerations may also factor into intellectual property disputes, especially in matters involving generic entry in the pharmaceuticals industry. Allegations of patent misuse or infringement often involve an antitrust counterclaim, in which the defendant alleges that the patent holder has attempted to inappropriately extend monopoly power conveyed by its patent. Our expertise in both areas enables us to fully assess the antitrust and intellectual property aspects of these matters.

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Additionally, in some antitrust disputes, unfair rival behavior may be alleged to explain a plaintiff’s underperformance. We have supported academic affiliates specializing in the application of sophisticated business strategy analysis to determine if poor business decisions or other factors are actually responsible.

Client-centered, Flexible staffing
We are adept at managing both small litigations and large-scale cases involving multiple plaintiffs, defendants, and experts in multi-district matters. Our strong relationships in academia enable us to act quickly to identify multiple highly specialized experts with experience directly relevant to our clients’ challenges. Working together, we establish and maintain the highest standards of client service.

Our firm is organized to maximize collaboration and knowledge sharing among offices and practice groups, and to work efficiently with our academic affiliates and experts. This flexible structure allows clients to gain access to the full range of our resources wherever they work with us, and whatever their particular case needs may be.

Established track record
We have helped obtain favorable outcomes for clients competing in many industries, such as consumer goods, financial services, health care, retail and wholesale distribution, semiconductors, telecommunications, and transportation. Our long track record includes extensive work with electric utilities, in which we have conducted competitive analyses for several recent mergers and acquisitions. In the agricultural products market, we helped obtain a denial of class certification on behalf of our client in Sample v. Monsanto, while in the airline industry, we analyzed the competitive aspects of route-based incentive programs in Virgin Atlantic v. British Airways. Analysis Group has also worked on high profile mergers and acquisitions such as that between P&O Princess Cruises and Carnival Corporation, and the New York Stock Exchange and Archipelago. We have testified at deposition and trial and in front of many government agencies within and beyond U.S. borders, including Canadian and European authorities; we also have considerable experience in matters in front of the International Trade Commission.

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sELECtEd CasE ExPEriEnCE We have helped our clients – large and small – achieve favorable outcomes in cases involving allegations of price fixing, monopolization, bundling, and other restraints of trade. We have also evaluated the competitive impact of proposed mergers and acquisitions. Representative examples are described below. » Allegations of Bid Rigging by Major Insurers Analysis Group supported our academic affiliate Edward Snyder, Dean of The University of Chicago Graduate School of Business. Dean Snyder was retained by a group of defendants in this class action against major insurance companies and brokers to assess allegations of “steering” business through use of contingent commissions and bid rigging. He was asked to determine whether a class approach was appropriate to assess impact and potential damages assuming that liability was established. Analysis Group reviewed the documentary evidence and analyzed individual policyholder insurance data over multiple years to determine whether the alleged conduct impacted the efficiency of the market. We also examined patterns of behaviors related to customer retention and insurance premiums to determine whether they indicated consistencies that would allow a class-wide evaluation of impact and damages, or whether the patterns of behaviors across companies, customers, and time suggested individual inquiry would provide a superior approach.

“Analysis Group has consistently delivered bulletproof results. I rely on them for outstanding support in every area of my practice – financial analysis, quantitative market modeling, and econometrics.”
rObErt E. HaLL, Mcneil Joint Professor of Economics and senior Fellow (Hoover), stanford university

» U.S. v. Visa USA et al. In this suit against Visa and our client, MasterCard, the U.S. Government claimed that the card associations’ governance structures reduced competition and innovation. An Analysis Group team supported our academic affiliate Robert S. Pindyck of MIT in analyzing the extent of competition in the payment card industry by studying new card programs, technological innovation, and advertising. Professor Pindyck found that MasterCard and Visa competed vigorously for issuers and there was no evidence that competition was reduced by industry structure. The judge cited Professor Pindyck’s testimony in finding “the Government has failed to prove that the governance structures of the Visa and MasterCard associations have resulted in a significant adverse effect on competition or consumer welfare.”

» Ortho Biotech, LLP v. Amgen, Inc. Analysis Group provided and supported expert testimony and consulting to assess the relative merits of drugs, as well as the costs experienced by payers, in a dispute over product bundling. Ortho Biotech sought a preliminary injunction, alleging that Amgen used its monopoly in the white blood cell growth factor market to force bundled purchases of its anemia drug and deny customers the ability to purchase Ortho Biotech’s red blood cell growth factor independently. An Analysis Group team supported Managing Principal Pierre Cremieux and academic affiliate Lee-Jen Wei of Harvard’s Biostatistics department, both of whom delivered expert court testimony on the relative cost and efficacy of the two anemia drugs.

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a FuLL sPECtruM OF sErViCE Our participation in the Microsoft private litigations and Weyerhaeuser amicus curiae brief (see page 7) demonstrates the range of assistance we can provide in presenting economic arguments at all phases of legal engagement – from involvement in class certification before discovery to assisting with economic analysis in an appeal to the Supreme Court. Microsoft Private Litigations Our work with Microsoft has spanned a variety of case matters beginning before discovery and lasting through trial preparation and settlement negotiations. We have identified experts in a broad range of industries, including information technology and the software industry; disciplines including technology/Internet company stock market dynamics, survey design, and pricing; and areas such as class certification, industrial organization, antitrust liability, and damages. The Role of Academic Experts In our work on behalf of Microsoft, in both class action and competitor antitrust litigations, we have supported experts including Ray Ball (Chicago) on the relationship of R&D investment and profitability; Ernst Berndt (MIT) on hardware and software price trends; Robert Hall (Stanford) on affirmative and rebuttal damages; John Hauser (MIT) on consumer surveys; R. Glenn Hubbard (Columbia) on causation and damages; Christopher Kemerer (Pittsburgh) on the role of innovation in information technology markets; Sharon Oster (Yale) on business strategy and market dynamics; and Catherine Morrison Paul (UC-Davis) on methodologies for analyzing representativeness, pass-through, and damages for class certification. In the Minnesota overcharge matter, which settled after seven weeks of trial in 2004, we worked closely with Microsoft to evaluate liability claims, and to assess the potential but-for prices of Microsoft software if any claims were to be established. Our efforts included evaluating and critiquing a variety of overcharge approaches sponsored by class action plaintiffs. In the Iowa case, which settled in 2007, we worked with both in-house counsel for Microsoft and Heller Ehrman LLP; Sullivan & Cromwell LLP; and Montgomery, McCracken, Walker & Rhoads LLP. This class action lawsuit involved allegations of anticompetitive behavior and overcharging of consumers for software products. Our team provided consulting assistance for the attorneys and academic experts in the preparation of reports, deposition testimony, preparation for plaintiffs’ depositions, and trial. We have also worked closely with Microsoft on competitor lawsuits, including actions brought by AOL/Netscape and Sun Microsystems, and supported multiple experts in the antitrust suits that RealNetworks filed against Microsoft.
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sELECtEd CasE ExPEriEnCE

» Archipelago/NYSE Merger The $9 billion merger between the New York Stock Exchange and Archipelago Holdings, Inc. in 2005 created a new publicly held corporation, NYSE Group Inc. NYSE Group was authorized to trade NYSE- and Nasdaq-listed stocks, as well as other stocks and financial instruments, through Archipelago’s electronic trading system. During the merger approval process, an Analysis Group team supported our academic affiliate Robert S. Pindyck of MIT in his studies showing that anticompetitive objections to the merger should not come into play due to the overall competitiveness of the market. Brief to Supreme Court re Weyerhaeuser Co. v. Ross-Simmons Hardwood Lumber Co., Inc. Analysis Group sponsored an amicus curiae brief to the U.S. Supreme Court in 2006. Signatories, including several of our academic affiliates and President and CEO Martha Samuelson, argued on behalf of Weyerhaeuser on the application of economic theory to allegations of predatory selling. The Court vacated the lower court’s decision, ruling that “a strategy of predatory

selling makes no economic sense....” The analysis highlighted the sophistication of stock exchange customers and their ability both to compete with existing exchanges themselves (e.g., through order internalization) and to sponsor entry » PeopleSoft v. Oracle by new competitors, and identified the role of new regulatory and technological advances in lowering Analysis Group supported attorneys representing barriers to entry and expansion by competitors. In PeopleSoft in a suit against Oracle alleging that support of Professor Pindyck, we conducted research Oracle’s tender offer and subsequent actions were on customers, actual and potential competitors, and intended to drive down the value of PeopleSoft. regulatory context, and analyzed data on stock Under the direction of our academic affiliate Profestransactions. sor Robert Hall of Stanford University, our team, led by Managing Principal Bruce Deal, undertook a In a related matter, Analysis Group was retained by comprehensive damages analysis, examining sales counsel for NYSE Group to examine factors related data to assess lost sales opportunities associated to the potential benefits of the merger. NYSE with Oracle’s actions. We also developed projections members found the merger terms fair and voted its of the future impact of Oracle’s actions on Peopleapproval by an overwhelming margin. Soft’s sales related to both loss of current revenue streams and a decreasing customer base, and analyzed the impact of lost sales resulting from uncer» P&O Princess Cruises/Carnival Corporation Merger tainty in the marketplace. An Analysis Group team and our academic affiliate Robert S. Pindyck were retained to perform an economic analysis of the cruise industry, and to evaluate the competitive effects of potential industry consolidation that ultimately led to P&O Princess’ merger with Carnival Corporation. Professor Pindyck, Managing Principal Steven Herscovici, and Vice President George Kosicki then submitted a white paper to senior economists and attorneys at the Federal Trade Commission (FTC). After a tenmonth investigation, the FTC allowed the transaction to proceed without challenge. In quantifying damages, Professor Hall drew on Gibrat’s Law of Proportional Effect, which states that the expected growth rate of a firm is proportional to its size. Professor Hall’s analysis focused on the long-term financial implications of a shock to a business, such as that which PeopleSoft would be subject to as a result of Oracle’s actions. Oracle’s attorneys’ attempt to have Professor Hall’s testimony excluded was denied; ultimately, Oracle’s tender offer was increased, the companies were merged, and the case was dropped.
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sELECtEd CasE ExPEriEnCE

» In re VeriFone Holdings Acquisition of Lipman Electronics Engineering VeriFone Holdings, a global provider of secure electronic payment technologies, sought to acquire Lipman Electronics Engineering, a designer, developer and manufacturer of advanced solutions for the electronic payment industry. Counsel for both sides – Sullivan & Cromwell for VeriFone, and Fulbright & Jaworski for Lipman – retained Analysis Group to examine issues related to the competitiveness of the point-of-sale terminal manufacturing industry. We supported our academic affiliate Robert S. Pindyck in his analysis of recent and potential entry to the market, market shares, price and quality competition in the POS space, and buyer power and vertical integration issues. The Department of Justice approved the $793 million acquisition in September 2006.

» In re NBR Antitrust Litigation Analysis Group worked on behalf of three defendants in a case involving allegations of price-fixing and collusion among manufacturers of acrylonitrile butadiene rubber. Our team supported our academic affiliate James W. Hughes, Chair of the Department of Economics and Professor of Economics at Bates College, in analyzing to what extent, if any, there was empirical coordination of prices among the named defendants. We then analyzed prices and transactions to determine if prices moved together in a way that would have affected all members of the alleged class. Professor Hughes’ analysis found that there were many instances of dissimilar price movements during the alleged class period, and that there was no evidence of price increases during the period in question. The case was settled.

saMPLE, Et aL. V. MOnsantO CO., Et aL.
A federal judge denied class certification in an antitrust case in which Syngenta Seeds, Inc. and Pioneer Hi-Bred International, Inc. were accused of conspiring with each other and Monsanto to fix the price of genetically modified corn and soybean seeds. Analysis Group supported our academic affiliate Catherine
Price Premium
$60 $50 $40 $30

For each variety, the vertical line represents the range of average premiums across regions.

$39.11 $30.43

$23.49
$20 $10 $0 -$10 -$20

$25.50 $21.31 $18.70 $19.88 $20.30 $22.00 $22.35

Morrison Paul, Professor of Agricultural and Resource Economics at the University of California, Davis, in evaluating whether common evidence could be used to determine the extent of any injury suffered by farmers as a result of the alleged conspiracy. After analyzing approximately 40 million transactions from Syngenta and Pioneer and third-party survey data covering farmers’ purchasing patterns, Professor Morrison Paul found that premiums for genetically modified seeds varied by region,

$3.23

For each variety, the orange shaded area represents the 25th through 75th percentile of regional premiums. -$9.69 -$12.80 -$19.00

-$30 -$40

Variety 1

Variety 2

Variety 3

Variety 4

Variety 5

Variety 6

Variety 7

Seed Variety

purchase size, variety of seed, and customer. The findings also showed that many farmers paid no premium, and therefore suffered no harm. Based on these findings, Professor Morrison Paul concluded that individual impact could not be established from class-wide evidence.

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» Virgin Atlantic v. British Airways Virgin Atlantic claimed British Airways’ incentive agreements with travel agents and corporate customers were anticompetitive and predatory. We supported our academic affiliate Robert S. Pindyck of MIT in his analysis of the competitive effects of incentive programs on routes between London and five U.S. cities – finding that Virgin’s claims were theoretically unsound. Moreover, Professor Pindyck’s empirical analysis indicated that British Airways’ fares fell as competition grew on particular routes. In granting summary judgment for British Airways, the judge concluded that Virgin could not prove that British Airways engaged in predatory or otherwise anticompetitive conduct.

» Vitamins Antitrust Litigation We assisted a group of law firms representing large vitamin manufacturers in multiple federal and state litigations. The lawsuits were brought by direct and indirect purchasers of vitamin products. In the direct purchaser litigations, we developed pricing models to compute but-for prices for bulk vitamin products. In the indirect purchaser litigations, we evaluated class certification and calculated damages to plaintiffs. We applied advanced econometric models to transactional and aggregate data to assess passthrough along complex supply chains. Our team supported several academic affiliates.

» Electric Utility Mergers and Acquisitions Analysis Group has provided competitive analyses for several recent proposed and consummated transactions including: ƒ Ameren’s acquisitions of Central Illinois Light Company and Illinois Power Company, and acquisition of the Audrain, Raccoon Creek and Goose Creek generating stations; ƒ Constellation’s acquisition of the Ginna and Nine Mile Point nuclear generating stations; ƒ PacifiCorp’s proposed acquisition of the Chehalis generating station; ƒ PSEG Power’s acquisition of the Bridgeport Harbor and New Haven Harbor generating stations in Connecticut, ƒ Public Service Enterprise Group’s proposed merger with Exelon; and ƒ Southern Power’s acquisition of the Oleander, DeSoto, and Rowan generating stations. These analyses, presented in expert testimony, applied the “delivered price test” technique used by FERC to examine the horizontal competitive effects of proposed transactions involving “jurisdictional” facilities. Where appropriate, they also have addressed potential vertical competitive concerns.

“In over 10 years of antitrust litigation work with Analysis Group, I have found them to be rigorous, smart, and insightful. They consistently respond to extraordinary demands under intense time pressures. Whether they are analyzing massive amounts of data or assisting with expert depositions or motion practice, I know that they will get the job done in exemplary fashion.”
stEPHEn J. KastEnbErG, Partner, ballard spahr andrews & ingersoll, LLP

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Selected ProfeSSional Staff
Managing PrinciPalS and PrinciPalS almudena arcelus M.S., applied economics and finance, Sloan School of Management, MIT Jonathan arnold Ph.D., business economics; MBA, finance and accounting, Graduate School of Business, the University of Chicago; CPA t. Christopher borek Ph.D. and M.A., economics, Cornell University Paul E. Greenberg M.S., applied microeconomics and finance, Sloan School of Management, MIT; M.A., economics, University of Western Ontario d. Lee Heavner Ph.D., economics, and M.B.A., Graduate School of Business, the University of Chicago steven Herscovici Ph.D. and M.A., economics, the University of Chicago Laura stamm M.S., management, Sloan School of Management, MIT; CPA bruce E. stangle, Chairman Ph.D., applied economics; M.S., management, Sloan School of Management, MIT bruce a. strombom Ph.D., economics, University of California, Irvine

Maureen M. Chakraborty Ph.D., economics, University of Notre Dame

Jeffrey H. Kinrich MBA, finance and quantitative methods, University of Maryland; M.S., statistics, Stanford University; CPA rebecca Kirk Fair M.B.A., financial management, Sloan School of Management, MIT r. Jeffrey Malinak MBA, finance and accounting, Graduate School of Business, University of Texas Michael J. Quinn Ph.D. and M.A., economics, Princeton University

Keith r. ugone Ph.D., economics, Arizona State University; M.A., economics, University of Southern California Marc a. Van audenrode Ph.D., economics, University of California, Berkeley; M.A., economics, University of California, Los Angeles

Laurits r. Christensen MBA, financial management, Sloan School of Management, MIT

Jeffrey a. Cohen MBA, finance and strategy, the University of Chicago

Pierre Y. Cremieux Ph.D. and M.A., economics, University of California, Berkeley bruce F. deal MPP, public policy, Kennedy School of Government, Harvard University Mark H. Egland MBA, finance, Anderson Graduate School of Management, University of California, Los Angeles

Martha s. samuelson, President and CEO M.S., management, Sloan School of Management, MIT; J.D., Harvard Law School robert a. sherwin J.D., the University of Chicago Law School; CPA

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Vice PreSidentS Michael beauregard M.A., economics, University of California, Los Angeles Michael J. Chapman Ph.D., economics, MIT; J.D., University of Michigan Law School adam decter M.B.A., strategic management and operations management, The Wharton School; M.A., international economics and finance, Lemberg School, Brandeis University George Kosicki Ph.D., economics, Cornell University Patrick Lefebvre M.A., economics, Laval University at Québec david n. Mishol Ph.D., economics, Boston College stanley i. Ornstein Ph.D., economics, University of California, Los Angeles; M.S., business administration, San Diego State University Peter P. simon Ph.D. and M.A., economics, Princeton University tamar sisitsky M.A., economics, Tufts University david W. sosa Ph.D. and M.S., agricultural and resource economics, University of California, Davis samuel Weglein Ph.D., economics, Columbia University alan G. White Ph.D., economics, University of British Columbia; M. Litt., economics, University of Dublin, Trinity College Kristen Leigh Willard Ph.D. and M.A., economics, Princeton University

For more information on our Antitrust practice, including staff and expert biographies and additional case experience, visit our website: www.analysisgroup.com.

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Selected acadeMic affiliateS and exPertS
dennis J. aigner University of California, Irvine susan C. athey Harvard University ray ball The University of Chicago Booth School of Business arnold i. barnett Sloan School of Management, MIT Lawrence M. benveniste Goizueta Business School, Emory University Ernst r. berndt Sloan School of Management, MIT robert C. blattberg Kellogg Graduate School of Management, Northwestern University Karl E. Case Wellesley College Judith a. Chevalier School of Management, Yale University iain M. Cockburn School of Management, Boston University Michael r. darby Anderson Graduate School of Management, University of California, Los Angeles Paul J. Feldstein Merage School of Business, University of California, Irvine George Foster Graduate School of Business, Stanford University Jonathan Gruber Massachusetts Institute of Technology robert E. Hall Hoover Institution and Economics, Stanford University John r. Hauser Sloan School of Management, MIT James W. Hughes Bates College Chris F. Kemerer Graduate School of Business, University of Pittsburgh Michael F. Koehn Analysis Group, Inc. William H. Lehr Computer Science and Artificial Intelligence Laboratory (CSAIL), MIT Joshua Lerner Harvard Business School burton G. Malkiel Princeton University John W. Mayo McDonough School of Business, Georgetown University Catherine Morrison Paul University of California, Davis sharon M. Oster School of Management, Yale University nicholas E. Piggott North Carolina State University robert s. Pindyck Sloan School of Management, MIT a. Mitchell Polinsky Stanford Law School K. ramesh Eli Broad College of Business, Michigan State University Frank sloan Duke University richard L. smith Graduate School of Management, Claremont Graduate University Edward a. snyder The University of Chicago Booth School of Business Walter n. thurman North Carolina State University roger Ware Queen’s University Lee-Jen Wei School of Public Health, Harvard University Michael K. Wohlgenant North Carolina State University susan E. Woodward Sand Hill Econometrics, Inc. Karen Hopper Wruck Fisher College of Business, The Ohio State University richard J. Zeckhauser Kennedy School of Government, Harvard University Jerold L. Zimmerman William E. Simon Graduate School of Business Administration, University of Rochester

a LEadinG PrOVidEr OF ECOnOMiC anaLYsis

Analysis Group provides economic, financial, and business strategy consulting to leading law firms, Fortune 500 companies, and government agencies. Founded in 1981, with over 475 professional staff, we assist law firms with all aspects of litigation and advise corporations and government clients on business issues that require expert analysis and interpretation of economic and financial data. We also help organizations create strategies for innovation and growth.

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