What is Economic Consulting and How Can an Economic Expert Assist in an Antitrust Case

Antitrust economic consulting is vital in any antitrust case, providing a strong analytical foundation to evaluate competitive dynamics and bolster legal arguments. Economic experts analyze market competition, conduct rigorous data-driven analyses, and deliver objective, evidence-based insights that support legal and regulatory decisions. Their expertise is critical for defining relevant markets, evaluating market power, and understanding the competitive effects of mergers or specific business practices.

Moreover, economic consultants are instrumental in calculating damages and quantifying lost profits, offering courts or regulatory agencies a reliable measure of the harm or impact caused by alleged anti-competitive conduct. This article delves into the essential role of economic experts in antitrust cases and explores how their insights contribute to fair and informed outcomes in complex legal disputes.

What is Economic Consulting?

Economic consulting provides specialized analysis, research, and expert testimony that helps clients navigate complex issues across business, law, and policy. Economic experts work with a wide range of clients—including law firms, corporations, government agencies, and regulatory bodies—to deliver insights that support litigation, compliance, and strategic decision-making. This field spans numerous sectors, from healthcare and financial markets to labor and energy markets.

Using quantitative methods like statistical and econometric modeling, financial analysis, and market research, economists provide data-driven insights that strengthen client cases. Their expertise often includes serving as expert witnesses, preparing expert reports, and offering testimony that explains complex economic concepts in an easy to understand way.

Together, these skills and methodologies make economic consulting indispensable in addressing the complex economic questions central to antitrust and other legal matters.

Understanding Antitrust Cases

Antitrust laws are designed to promote competition, safeguarding consumers from practices that can lead to higher prices, reduced innovation, and limited choices. The Department of Justice (DOJ) and the Federal Trade Commission (FTC) play a key role in enforcing these laws to maintain fair and open markets.

Common antitrust violations include price-fixing, bid-rigging, market allocation, predatory pricing, collusion, and tying and bundling. Each of these practices limits competition or unfairly manipulates market dynamics, ultimately harming consumers and/or other businesses.

Antitrust cases are primarily filed under the Sherman Act and the Clayton Act. Enacted in 1890, the Sherman Act targets anti-competitive practices such as monopolization and collusion, prohibiting agreements that restrict trade or actions that establish monopolies, with the goal of preserving competition.

Passed in 1914, the Clayton Act builds on the Sherman Act by targeting practices like price discrimination, exclusive dealing agreements, and certain mergers and acquisitions that could reduce competition. Together, these laws empower regulatory agencies and companies to prevent and address a broad range of anti-competitive behaviors.

The Role of an Economic Expert in an Antitrust Case

Antitrust cases often hinge on economic data and analysis, with economic experts playing a crucial role in evaluating antitrust liability, market definition, pricing trends, consumer impact, barriers to entry, and other competition matters. Expert economists are well trained to handle economic issues ranging from defining relevant markets to assessing market power and competitive effects, calculating damages, and providing testimony.

These experts are indispensable in navigating the complexities of antitrust litigation. They bring clarity to the competitive effects of the behavior in question, ensuring their work and findings are well grounded in economic theory.

Below, we examine the specific areas and analyses that economic experts often undertake in antitrust cases, including those involving class certification.

Defining a Relevant Market

Defining the relevant market is central to many antitrust cases. Economic experts analyze which products or services consumers see as interchangeable, establishing the scope of competition within the market. They also identify the geographic area where a company’s products or services compete, which can differ significantly by industry. This process is essential for understanding the competitive boundaries for a specific product or service.

To define these boundaries, economic experts often assess how one economic variable, such as demand, responds to changes in another, like price—a concept known as elasticity. This analysis helps reveal if consumers would shift to alternative products in response to a price change. Tools such as the Small but Significant and Non-transitory Increase in Price (SSNIP) test are commonly used to determine whether a hypothetical price increase would lead consumers to consider other options.

Assessing Market Power, Competitive Effects, and Market Dynamics

Economic experts often assess a company’s market share to determine whether it controls a substantial portion of sales, influence, or overall market presence within the relevant market. They also examine barriers that might prevent new competitors from entering, such as high startup costs, regulatory restrictions, or limited access to essential resources. This analysis helps identify potential anti-competitive behavior and provides insight into the broader competitive landscape.

Experts evaluate whether a company has the ability to raise prices without losing customers, a key indicator of market power. They analyze the number and strength of existing competitors to determine if a single firm holds disproportionate influence within the market.

Furthermore, experts assess whether actions such as mergers or agreements are likely to drive up consumer prices by diminishing competition. By examining demand and supply trends, they identify market shifts that could affect competitive dynamics.

Economic Modeling and Data Analytics

Using econometric models, economic experts quantify harm caused by alleged anti-competitive actions, such as lost profits, overcharges, or reduced market access. They develop counterfactual, or “but-for,” scenarios to estimate how the market would operate without the disputed behavior, providing a baseline to assess competitive impact. These models are essential for understanding the full effect of the practices in question.

Experts also leverage statistical and econometric tools to analyze large datasets, uncovering critical insights for antitrust analysis. This rigorous approach builds a clear, data-driven picture of the competitive landscape and related economic issues.

Calculating Damages/Lost Profits

Economic experts estimate the revenue a company would have earned in the absence of alleged anti-competitive actions, using sales data, historical trends, and financial projections. By comparing projected “but-for” profits with actual outcomes, they determine the financial impact of these practices.

To ensure reliable results, experts control for unrelated factors such as economic downturns, regulatory changes, and industry-specific variables. This method yields a credible and defensible estimate of damages or lost profits.

Offer Advice and Insight on Case Strategy

Economic experts also often help legal teams pinpoint the core economic issues, such as market power or barriers to entry, that are most likely to influence the outcome of the case. Providing data-backed insights equips attorneys with quantifiable evidence to support legal arguments, enhancing credibility in areas like competitive harm or consumer impact. This strategic advice is invaluable in litigation matters.

Expert Testimony

Economic experts translate intricate models and data into clear, straightforward language, making complex findings accessible to judges, juries, and other non-experts. They explain the methods and assumptions underlying their analyses, helping the court understand the basis for their conclusions and reinforcing the credibility of their findings. This role is critical in ensuring that economic evidence is effectively communicated at trial.

The ability to present findings clearly and defend methodologies under scrutiny is what makes expert testimony so impactful in antitrust and competition litigation. Often, an economic expert’s testimony becomes a cornerstone of the case, shaping the court’s understanding and influencing its decisions.

How to Choose the Optimal Antitrust Expert for Your Case

When selecting an antitrust expert, look for professionals with a proven track record in antitrust litigation, particularly in areas relevant to your case, such as monopolization, price-fixing, or merger analysis. The expert should be highly skilled in economic modeling, statistical analysis, and data interpretation, as these are essential for producing rigorous, defensible antitrust analyses and reliable economic evidence.

The ideal expert can explain complex economic theories and data insights in straightforward terms, making their findings clear and understandable for judges and juries. Additionally, seek someone with experience presenting findings in court, defending their methodologies, and withstanding scrutiny from opposing counsel—experience that is crucial in high-stakes antitrust cases.

Industry-specific expertise can also be advantageous. An expert with a background in the same or a similar industry will have a deeper understanding of unique market dynamics, the competitive landscape, and the regulatory environment, adding valuable insight to the analysis

Summary

Economic consulting provides the essential analytical foundation for navigating complex antitrust cases. From defining relevant markets to calculating damages, economic experts play a crucial role in promoting fair competition and protecting consumer interests. Their skill in translating complex economic data into clear, actionable insights is invaluable in legal proceedings.

Engaging an experienced economic expert, like the antitrust experts at Econ One, can make a significant difference in the outcome of an antitrust case. With deep expertise, they isolate the economic impact directly attributable to anti-competitive conduct and deliver clear, data-driven insights that help courts and juries grasp the broader effects of these practices. In today’s evolving antitrust landscape, the role of skilled economic consulting is indispensable.