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Global Competition Review has again included Economists Incorporated among its annual survey of the world’s leading competition economic practices. GCR uses “a variety of criteria to select the consultancies, including size, visibility, historical pedigree, the presence of leading economists, and recent success.”

Dr. Caves has consulted with corporate clients and  law firms in a variety of industries, including cable, broadcasting, telecommunications, freight rail,  healthcare, mobile wireless operators, Internet service providers, and pharmaceuticals. His academic and consulting work spans a variety of topics, including antitrust, applied econometrics, damages analysis, class certification, labor economics, merger simulation, net neutrality, public policy analysis, and vertical integration. He has appeared as an economic expert before a variety of audiences, including the Federal Communications Commission, Department Of Justice and the Surface Transportation Board.

EI Vice President Henry B. McFarland was the moderator for a “The American Express Decision –The Appeals Court Looks at Two Sides,” a program sponsored by the Antitrust Section of the American Bar Association. The program discussed the recent Second Circuit decision in the Antitrust Division’s case against American Express. The decision has had important implications for antitrust in industries with two-sided platforms,-those where firms must attract two distinct sets of customers. The panel discussed approaches to defining markets, measuring market power, and assessing anticompetitive effects in such industries.

Dr. Speakman has significant experience as a testifying expert and consultant on class and collective actions, single plaintiff cases and employer-initiated audits of employment practices.  His engagements have involved statistical assessment of potential employment discrimination and valuation of alleged violations of wage and hour regulations and improper pay practices.  Dr. Speakman earned his Ph.D. degree from Texas A&M University.

Dr. Ahn has expertise in microeconomics, corporate strategy, and quantitative analysis, including modern data science techniques. His work has included estimating damages, developing counter-arguments for proposed regulation, and advising in multi-national tax structure. His experience covers a wide variety of industries, including technology, pharmaceuticals, construction, media and entertainment, financial services, vehicle rental, and SaaS providers.  Dr. Ahn received his doctorate in Strategy from Harvard Business School.  He is fluent in Korean and Japanese.

EI Chairman Barry C. Harris testified in federal court in Madison, Wisconsin on behalf of Inguran, LLC and XY LLC on antitrust liability issues. Inguran and XY were rebutting antitrust claims filed by ABS Global Inc. ABS alleged monopolization in a market for Sexed Bovine Semen Processing. Dr. Harris testified concerning market definition and competitive effects.  He presented evidence of declining prices, increasing quality and increasing sales of the products involved in the case. Dr. Harris also testified about the role of patents and long-term contracts in competition.  The jury found for Inguran and XY. EI economists Stephanie Mirrow, Michael Baumann and Allison Holt worked with Dr. Harris.  Inguran and XY were represented by Akin, Gump, Strauss, Hauer & Feld.

In their study, Drs. Caves and Singer conclude that the Rule “imposes an economically arbitrary threshold, fails to advance the Commission’s stated objective of promoting competition, and proscribes transactions that would likely be deemed procompetitive under conventional competition analysis.” To test the hypothesis that more voices means greater competition, the authors conducted an econometric analysis that exploits the fact that more than half of all DMAs have fewer than eight independently owned stations. After controlling for other factors that could affect local advertising rates, such as a local market’s income, population, and demographics, they find that markets with fewer than eight stations do not have higher local advertising rates than markets with eight or more stations. In fact, a reduction in the number of independently owned stations serving a local market is statistically associated with a decrease in local advertising prices.  See Full Report.

This study is also mentioned in “Broadcasting & Cable” July 20, 2016 issue.

Principal William Hall, Board Chairman Barry Harris, Principal William Myslinski, Principal Joseph McAnneny, Principal Philip Nelson and Special Consultant Bruce Owen are included in the latest edition of The International Who’s Who of Competition Lawyers and Economists 2016.  Economists are selected for inclusion based on Global Competition Review’s independent surveys of general counsels and private practice lawyers wolrdwide.

USTelecom Press Release (link): A Federal Communications Commission (FCC) decision to take over pricing of business broadband services could eliminate up to 43,560 jobs, cut economic output by $3.4 billion over a five-year period and prevent 67,000 buildings from getting access to fiber, according to a study (link to study) by Hal Singer, Principal of Economists, Inc. and adjunct professor with Georgetown University’s McDonough School of Business.

The study comes as some companies competing to provide business broadband services are asking the FCC to set prices in the market and give them special discounts. Other providers want to compete on a level playing field. Singer’s study found no evidence of lack of competition. On the contrary, monthly prices for some business broadband services declined between 7 and 17 percent from 2013 to 2015.  Singer created an economic model to assess the impact of how potential FCC price fixing might affect competition. He used Charlotte, N.C. as a test bed because it has a population and supply of office buildings considered representative of an average U.S. city. Singer extrapolated the results to assess the impact of regulatory change nationwide.

Projecting over a five-year period,  the study found:

•    If there is no regulation of fiber-based networks – providers would be able to light up nearly 122,000 buildings nationwide, representing $9.9 billion in capital expenditures and 4,900 new fiber route miles.

•    New regulations would cut projected investment in half to an estimated $4.4 billion, providing fiber to only 55,100 buildings with 2,200 new fiber route miles.

•    New regulations would eliminate 43,560 jobs and reduce economic output by $3.4 billion, while preventing 67,300 buildings from getting new fiber investment.

•    Investment by multiple providers is ongoing and robust. Nearly 30 competitive broadband providers service over 267,000 buildings with fiber across the country, laying over 650,000 route miles of fiber, or 2.42 route miles per building.

•    From 2010 to 2015, four major fiber service providers – Zayo, Level 3, Lightower and TW Telecom – invested about $6 billion in infrastructure in over 40,000 buildings, creating about 60,000 miles of metro fiber.

•    The aggregate capital expenditure needed to wire all unlit buildings in the United States would be between $52 to $75 billion, based on costs per building in Charlotte.

USTelecom commissioned the study to examine the impact of policies that could alter the competitive dynamics that have been increasing choice and lowering costs for business broadband customers.“It is unfortunate that some are calling on the FCC to adopt policies that meddle with the competitive dynamics that have been increasing choice and lowering costs for business broadband customers,” said USTelecom President Walter McCormick. “As this paper illustrates, a competitive business broadband marketplace has emerged in the United States just as Congress envisioned when it passed the 1996 Telecommunications Act. We hope the FCC will choose a path that will build upon these successes, so we can build new broadband infrastructure to better serve American businesses and consumers.”

See the full press release from USTelecom at: “New FCC Regs Will Stifle Business Broadband & Kill Jobs”.

Also see “How Banks, Hospitals and Universities Buy Broadband Could Soon See Big Changes,” Washington Post, 4/8/16.

EI President Jonathan Walker testified at trial on behalf of Taco Bell Corporation and Taco Bell of America, Inc. in Medlock v. Taco Bell et al. regarding alleged violations of California wage-hour laws. Dr. Walker’s testimony concerned liability to members of two classes of present and former Taco Bell employees. Plaintiffs had sought over $169 million in damages and penalties on behalf of these classes. A federal jury rejected both classes’ claims. The jury found in favor of a third class and awarded $496,000 in damages to its members. EI Sr. Economist Erica Greulich, Sr. Economist James Bono and Economist Anna Koyfman also worked on the case. Taco Bell was represented by Shephard, Mullin, Richter & Hamilton.

U.S. District Judge Michael Baylson granted CertainTeed’s motion for summary judgment in a multi-district price-fixing litigation but ordered all other remaining drywall manufacturers to remain in the case.  EI Chairman Barry Harris testified at deposition on behalf of CertainTeed.  Plaintiffs alleged that beginning in 2011 the defendants conspired to raise prices by 35% and stop providing customers with job quotes.  The opinion agreed with CertainTeed that it had independently followed pricing moves by its competitors.  Dr. Harris’ analysis considered whether CertainTeed’s pricing actions were in its independent economic interest, which included consideration of CertainTeed’s cost structure and product mix.  EI economists Stephanie Mirrow and Su Sun also worked on the case.  CertainTeed is represented by White & Case.

EI Chairman Barry Harris testified in federal court in Denver in February on behalf of Inguran, LLC and XY LLC on antitrust liability issues and damages.   Inguran and XY alleged patent infringement and contract breach against Trans Ova Genetics, LC, while Trans Ova asserted antitrust counterclaims against Inguran and XY.  Trans Ova alleged monopolization of two markets related to artificial insemination of dairy cattle: (1) the technology related to sorting bovine semen by sex and (2) the market for sorting bovine semen by sex (the sorting market).  Dr. Harris’ analysis found that the appropriate antitrust market included conventional or non-sorted straws, because farmers are sensitive to relative prices in deciding whether to use the sorted or non-sorted product.  His analysis also considered the large reduction in price, plus the large increase in both quantity supplied and the quality of the product over the past decade.   Sorted semen accounts for less than 10% of total straws used in artificial insemination by U.S. dairy farmers.  The jury found there was no unique antitrust market for either the technology or the sorting service associated with sex-sorted bovine semen and, thus, found for Inguran and XY on all antitrust claims.  EI economists Stephanie Mirrow and Michael Baumann worked closely with Dr. Harris on these analyses.  Inguran and XY were represented by Akin, Gump, Strauss, Hauer & Feld.

In recent years, the FTC has achieved significant victories in health care merger cases based on traditional geographic market analysis under the Merger Guidelines. However, the FTC appears to be contemplating a new enforcement frontier that stretches into an area beyond the standard Guidelines analyses: “cross market” transactions between providers in different geographic markets. This theory has the potential to expand significantly the scope of mergers subject to increased antitrust scrutiny. It is not apparent, however, that the theory or empirical analysis have reached the level to justify expanding merger reviews. The article describes the development of cross-market merger theory and examines the emerging economic literature.

Global Competition Review has again included Economists Incorporated among its annual survey of the world’s leading competition economic practices. GCR uses “a variety of criteria to select the consultancies, including size, visibility, historical pedigree, the presence of leading economists, and recent success.”

EI Economist Kevin Caves recently published an article on productivity measurement in Econometrica, consistently ranked among the top scholarly journals in economics. The article analyzes widely used techniques for econometrically estimating production functions,  which relate output to inputs (e.g., capital and labor). Because production functions capture total factor productivity—the overall efficiency with which inputs are utilized—these techniques have been used to analyze performance and competitiveness in a wide range of firms and industries throughout the global economy. Caves and his co-authors show that commonly used production function estimation techniques can suffer from functional dependence problems, and propose a novel econometric approach that produces consistent estimates under alternative data generating processes using non-parametric statistical techniques.

 

 

Hal Singer, Kevin Caves and Anna Koyfman examined whether next-generation, fibre-to-the-premise (FTTP) broadband deployment has the potential to stimulate economic development, including through employment effects. In contrast to first generation broadband, FTTP is not ubiquitously deployed—at least not yet. By 2013, 15 percent of Canadian homes were covered by FTTP.

Although prior studies attempting to assess the economic effects of broadband deployment have often found significant effects, they have also been characterized by various limitations. By observing the effects of a new technology very much in the process of being rolled out, one can exploit a richer source of variation compared to prior studies of first generation deployment. This paper makes use of a proprietary deployment database from Bell Canada to study the impact of FTTP on Canadian employment.

The authors construct a region-level balanced panel dataset spanning 2009 through 2014. During this critical timeframe, many of the regions studied began with little or no FTTP, and ended with substantial or even ubiquitous coverage. Using a fixed effects regression, they estimate that fibre deployment to 100 percent of a region is associated with an increase in employment of approximately 2.9 percent.

This study is the first to precisely observe deployment of a specific technology in a specific region at a specific point in time, and to identify the effect of deployment through variation over time within a given region, allowing the authors to control for many region-specific confounding factors. The results of the analysis point to a statistically and economically significant effect of deploying FTTP technology.

Based on the empirical linkage between FTTP deployment and employment, the authors conclude that policymakers should exercise caution when considering regulations that reduce incentives to invest in FTTP deployment, such as mandatory unbundling. Click here for full document.

 

 

EI Economist Keith Everhart served as an expert witness faculty member in the National Institute of Trial Advocacy’s “Deposing the Expert Witness” Program.  This is a day-long event in which he was deposed by participating attorneys in a mock proceeding relating to damage calculations related to employee discrimination and defamation.  Keith also helped critique the participants’ performance by providing feedback after each session in coordination with other members of the faculty.

 

 

Plaintiff Citizens for Responsibility and Ethics in Washington, who had prevailed in its Freedom of Information suit to obtain material regarding the Department of Justice’s criminal investigation of former senator John Ensign, sought to recover attorney fees from the Department of Justice.  EI Vice President Laura A. Malowane submitted a declaration on behalf of the Defendant which stated that the National Law Journal’s annual survey of the nation’s largest firms relied on by the Plaintiff is not a useful resource for estimating attorney billing rates outside the context of the largest firms in the country. Dr. Malowane provided evidence from other sources that showed that the attorney rates proffered by the Department of Justice are more in line with the prevailing rates charged by attorneys such as those of the Plaintiff’s counsel. In rejecting the Plaintiff’s request for large firm billing rates, the Court accepted Dr. Malowane’s testimony that billing rates are not comparable across firms of all sizes and that the rates charged by partners in the largest firms do not necessarily reflect the prevailing rate in the community for attorneys at all other sized firms.

 

 

At the Asia Forum organized by the ABA Section of International Law held in Beijing on November 16-17, EI Vice President Su Sun spoke on a panel about economic analysis of unilateral pricing conduct, such as bundled discounts, loyalty rebates, MFN, price squeeze, and RPM. Some of these pricing practices have come under antitrust spotlight in Asia in recent years.

 

 

An article authored by EI’s Senior Economist Lona Fowdur and Vice President John Gale was recently spotlighted by Competition Policy International.  The article, “Health Care Reform; Provider Affiliations and Health Care Risks” originally appeared in the CPI Antitrust Chronicle in Summer 2012.  Click here to access the complete article.