Economic and Econometric Evidence in Competition Law: an Empirical Perspective

The influence of economic discourse (Industrial Organization - IO - and welfare economics) on competition law is well documented. The main tenets and principles of competition law witnessed a profound transformation with the systematic recourse to neoclassical price theory as an external source of authority. More than in any other field of law, competition law is intrinsically linked with the discipline of economics, as this is shown by the frequent references to economic concepts and the methodology of competition and regulatory authorities, the case law of the courts and the expanding soft law relating to the interpretation of the competition law and regulatory statutes. A common feature of this transformation of the field of competition law is the emphasis put on a, mostly synchronic, analysis of the welfare effects of the specific commercial practice on consumers, users or more broadly economic efficiency (Lianos, 2007)1 . Indeed, an important part of the evidence presented in competition and regulatory law disputes is of economic nature, such as econometric techniques and economic models (Lianos & Genakos)2 . Starting with merger control and moving slowly but steadily in the area of antitrust, economic evidence has become an essential ingredient of a successful competition law case, either at the level of authorities or courts, in competition law. The increasing importance of private enforcement for competition law violations in national courts raises also important questions of proof and evaluation of damages, thus bringing to the fore the interaction between economic evidence and the legal rules on the gathering and evaluation of evidence for adjudication.

As a consequence of the increasing relevance of economic evidence in competition law cases, the role of forensic expert economists is now pivotal. Evidence is often presented by experts employed by parties and providing advice on the economic merits of the case. Legal professionals are thus working with economists in the preparation and assessment of a competition law case. The legal system has taken stock of the challenges presented by economic evidence and has regulated the way this evidence is assessed and its probative value examined. This is first achieved by the moulding of the law of evidence so as to address the challenges of economic evidence (standard of proof). Competition authorities have also developed soft law guidelines discussing "best practices" for the submission and assessment of economic and econometric evidence in administrative, as well as in judicial proceedings (Bundeskartellamt, Competition Commission, European Commission 2009 & 2011). However, these texts do not engage with the broader legal questions of evidence and how this should be assessed.

There is no comprehensive work in Europe (Sibony 20083 , Lianos 20104 , Lianos & Genakos 2012), but also in the United States, addressing systematically the important issues raised by the transformation of the law of evidence, the extent of regulatory and judicial scrutiny of such evidence or legal concepts, such as causation, following the greater recourse to economics.

Objectives and Project Plan

The case study will briefly describe the main aspects of the most commonly used types of economic evidence in competition law and regulatory analysis and will quantify their use in competition law decisions. The research will analyze the different forms economic evidence may take in competition law proceedings and will codify the different tools as these are listed in the economic literature with the aim to establish a taxonomy of economic evidence, according to a number of relevant factors (e.g. more or less formal - with regard to the use of advanced mathematical modeling) (Phase 1).

Based on the previous categorization of economic evidence, we will collect and codify information on all the publicly available decisions on merger, antitrust and cartel cases of the competition law authorities and court judgments in the selected jurisdictions with a significant content in competition law (from 2004 until 2012) (Phase 2).

Table 1 - Opinion Score Scale
Opinion Score Interpretation
1 The technique was discarded
2 Strong objections were raised on aspects of the technique and the technique had no significant impact on conclusions
3 The technique was taken into consideration as evidence, albeit with reservations
4 The technique was taken seriously into consideration as evidence, however it was not solely relied upon to reach a conclusion
5 The technique was very convincing and constituted a solid basis for a conclusion

We will be proceeding with the coding of all binding individual decisions of the competition authorities and judgments implementing competition law. The aim is to analyze both their frequency of use over time, but also to try to quantify the opinion of the authority or judge for the particular techniques used (hence the need for manual coding). This will be performed according to the following Opinion Score scale (Table 1). For an illustration, see Lianos & Genakos, 2012.

We will then examine, with the support of content analysis software and manual coding, the interaction of these economic arguments in competition cases with other sorts of arguments, roughly classified as following: legal arguments (arguments linked to previous case law and/or interpretation of statutes and principally motivated by requirements of coherence in the legal reasoning), factual arguments (arguments relating to the factual evidence collected in this case and the inferences that can be made from that factual evidence with the help of practical reasoning), administrative/institutional design arguments (arguments relating to the nature of legal procedures, the limits of the competences or powers of the authority, concerns of effective administration of justice). The aim is to explore the relative weight of economic evidence in the decision-making process (Phase 3).

This information will be compared to the institutional characteristics of the legal process. How is the decision-making process organized in competition authorities? Are economists and lawyers working in integrated units or are they complete their analysis separately? What is the part of legal and economic analysis in the published decisions of these authorities? What is the degree of judicial scrutiny of this economic evidence exercised by the courts and the corresponding deference to the analysis of the competition authorities? How courts are organized? Are there any specialized courts dealing with competition cases? Does this make any difference? What is the composition of these courts? What are the available instruments in the civil procedure rules of each jurisdiction for hearing expert economic evidence and assessing it? (Phase 4)

Current Phase of Implementation

The project is currently in Phase 1.

Contact Information

Dr. Ioannis Lianos
Centre for Law, Economics and Society
University College London

Yves Kenfack
Economic Affairs Officer
Competition and Consumer Policies Branch (CCPB)

1Lianos (2007), La Transformation du droit de la concurrence par le recours á analyse économique (Bruylant, 2007).
2Lianos/C. Genakos, Econometric Evidence in EU Competition law: An Empirical and Theoretical Analysis, CLES Research paper 06/12, 1-119 pp.
3A.-L. Sibony, Le Juge et le raisonnement économique en droit de la concurrence (LGDJ, 2008).
4Lianos (2010), "Judging Economists": Economic expertise in competition litigation: a European view, in Lianos & Kokkoris (Eds.), The Reform of EC Competition Law (Kluwer, 2009) 185-320.