E.CA Economics offers a full range of economic consulting services, focussing on the field of competition economics. As a partner of ESMT Berlin, a leading business school in Germany, we can draw on the latest economic research. We also work closely with Bates White, LLC, a leading U.S. economic consultancy.
Our highly qualified and experienced team provides robust economic analysis of the competitive effects associated with mergers and acquisitions.
E.CA Economics provides economic advice throughout all phases of merger proceedings (Phase I and II investigations). Our experts employ advanced economic tools to define the relevant antitrust markets from a product and geographic standpoint and analyse potential competition concerns of horizontal and vertical mergers. In this context, we apply sophisticated economic and statistical techniques to assess the closeness of competition between differentiated products, competition in bidding markets, potential market foreclosure concerns, and other issues that frequently arise in the context of merger control.
The stakes are high – change in merger prohibition risk
Number of merger prohibitions and withdrawals, average in the last two years compared to long-run average
The figure compares the average prohibition risk in the last two years (with available data) to the previous 10 years. The European Commission reports the number of cases withdrawn in phase 1, the number of cases withdrawn in phase 2, and the number of prohibitions. The prohibition risk is the sum of these three numbers, relative to the total number of notifications. The German Bundeskartellamt reports the number of prohibitions and the number of cases withdrawn (or modified) at any stage of the proceeding, including the pre-notification phase. The prohibition risk is the sum of these two numbers, relative to the total number of notifications. Note that the figure should not be considered a simple measure of regulatory performance.
Source: E.CA Economics based on European Commission and Bundeskartellamt
E.CA Economics has provided economic analysis for merging parties in cases brought before the European Commission and many national authorities including the German, Austrian, Belgian, Dutch and UK competition authorities. Our consultants have worked with numerous renowned legal experts and have provided vital assistance in some of the most high-profile mergers in recent years, including among others:
- Mobile mergers: Telefónica Deutschland/E-Plus (EC, Phase II, M.7018), Hutchison 3G UK/Telefónica Ireland (EC, Phase II, M.6992)
- Cement mergers: HeidelbergCement/Italcementi (EC, Phase I, M.7744), Holcim/Lafarge (EC, Phase I, M.7252)
- Automotive: Federal-Mogul/Honeywell (EC, Phase I, M.7174), Magna/Karmann
- Platforms: Immowelt/Immonet, TomTom/TeleAtlas (EC, Phase II, M.4854), Google/DoubleClick (EC, Phase I, M.4731)
Cartels and other anti-competitive agreements
E.CA Economics conducts economic analysis related to cartel investigations by competition authorities. Our services in the area of (potentially) anti-competitive agreements extend to all types of horizontal and vertical agreements.
E.CA Economics advises clients on potential risk exposure by evaluating the nature of their practices and agreements. Such advice can take place early in an investigation by a competition authority or be conducted in support of internal review processes. During cartel investigations, our consultants prepare empirical analyses on the actual or likely competitive effects of the alleged behaviour and assess the extent to which alternative explanations of certain behaviours apply. E.CA Economics additionally assists clients with self-assessments or in the context of investigations by authorities of horizontal (e.g. technological cooperation agreements) and vertical agreements (e.g. between brand owners and distributors).
The tip of the iceberg - number of prosecuted cartels in Europe
Number of Commission decisions relating to cartels, average in the last two years compared to long-run average
The figure compares the average number of decisions in the last two years (with available data) to the previous 10 years.
Source: E.CA Economics based on Friederiszick/Gratz/Rauber (2018)
E.CA Economics has provided economic analysis to numerous clients involved in cartel proceedings and cases involving information exchange and has presented economic evidence before competition authorities across Europe. For our experience in calculating cartel damages, please see the Litigation, damages and arbitration section. In the area of vertical agreements, our consultants have worked on distribution networks for well-known brands and analysed intellectual property licensing agreements. In the area of horisontal agreements, we have carried out competitive assessments of arrangements such as procurement joint ventures in a wide variety of industries. Our engagements in this area have included advice to:
- Smart card chip cartel: support to Infineon AG, market definition and effects analysis, defendant side, EU administrative proceedings and private litigation
- Companies involved in EU administrative cartel proceedings, including trucks (defendant, proceedings and damages), cold cuts (defendant, proceedings), financial products (defendant, proceedings and damages), beer (defendant, proceedings), bearings (defendant, proceedings and damages), freight forwarding (claimants, proceeding and damages), and several other cartel proceedings
- Companies involved in vertical restraints proceedings including grocery retail and fast-moving consumer goods
- A large pharmaceutical company (competitive impact of a license agreement)
- Leading paper-industry producers (analysis of a procurement joint venture
Litigation, damages and arbitration
E.CA Economics provides expert economic advice to plaintiffs and defendants engaged in private litigation. Our consultants act as independent appointed experts in court and arbitration proceedings and have themselves served as arbitrators.
Through participation in a wide variety of cases, our consultants have helped to expand the toolbox of empirical methods used for damages calculation, cartel analysis and general litigation. They perform in-depth counterfactual scenario analyses to evaluate the economic effects of cartels. With extensive experience in empirical overcharge and pass-on estimation, E.CA Economics is able to produce robust estimates of cartel overcharges and damages, and has provided overcharge estimates for settlement negotiations with national enforcement agencies and in private litigation. Our ability to handle large and complex datasets from multiple sources has also been used by clients to generate their own estimates of cartel-related effects on turnover across activities and national divisions. In addition to cartel-related damages, E.CA Economics has provided expert analysis in several damages cases related to (alleged) exclusionary behaviour.
Private litigation - a race to settlement?
Average number of months from Commission decision to first settlement.
The figure shows the average number of months between Commission decision and first settlement by year of Commission decision (average taken over the respective period). The figure is based on 22 Commission decisions relating to European cartels. Note that the figure is likely truncated towards later years and that there is a potential bias due to the fact that only those settlements can be considered for which information is publicly available.
Source: E.CA Economics based on Friederiszick/Gratz/Rauber (2018)
E.CA Economics has provided expert analysis in most of the major cartel damages actions in Europe in the last 10 years. Our experience ranges across a wide variety of sectors, including among others:
- Automotive and automotive supply: trucks, bearings, car glass, acoustic and thermal management systems, fire engine vehicles
- Financial and related services: Visa/Mastercard interchange fees and several others
- Manufacturing: smart card chips, elevators and escalators, gas-insulated switchgear, tubes for district heating, industrial tubes
- Transport: air cargo, freight forwarding, rail infrastructure
- Retail grocery: drugstore products, washing ingredients, cookies, coffee, beer
E.CA Economics helps companies and public authorities to assess any economic issues related to State aid control. We apply the Market Economy Operator Principle to identify potential State aid and assess compatibility with the provisions of Article 107(3) TFEU.
The E.CA team has helped numerous companies and public authorities to identify and assess instances of State aid. Employing a wide variety of tools, our consultants have worked for various national governments, as well as for a range of aid recipients including Airbus Helicopter, Deutsche Post, Deutsche Bahn, automotive suppliers, paper manufacturers and international airports. Several E.CA directors and staff have further obtained significant experience on the topic while under the employ of the European Commission. Finally, E.CA staff members have published widely on State aid matters, one director being the co-editor of the reference book EU State aid control: Law and economics (Kluwer, 2017).
The difference makes the difference in State aid cases
Methods proposed for ex-post evaluations of State aid, 2014-2016
- 18% Regression discontinuity
- 18% Others
- 64% Difference-in-Difference (and variants)
Source: E.CA Economics based on Umweltbundesamt (Hrsg.) (2018)
Our State aid experience includes the examination of a wide range of state support measures:
- The Market Economy Operator Principle (MEOP): Leipzig Airport, Munich Airport, DB Regio, an international carrier
- R&D aid: Airbus Helicopter
- Regional investment aid: LG Chem, ProPapier
- Services of General Economic Interest (SGEI): Deutsche Bahn
- Ex-post evaluation: report for the German Environmental Agency on how to apply the Commissions guidance paper on ex-post evaluation for environmental aid cases and several other studies and white papers
Abuse of dominance
We offer broad expertise in abuse of dominance (Article 102 TFEU) matters, employing an effects-based approach to cases in this area.
In assessing potential anti-competitive behaviour, detailed economic analysis of conduct is crucial. We combine the latest developments in economic theory with robust empirical analysis, thus providing the best possible advice and results for our clients. We are experts in applying conceptual benchmarks for exclusionary behaviour, such as the as-efficient-competitor test, to real-world cost data. Our experts have implemented these benchmark tests even in non-standard industry environments such as the financial sector. As part of a comprehensive abuse assessment, our advice embeds benchmark test results within an overall economic assessment of the potential to foreclose rivals.
In the spot light: Exploitation of consumers
Abuse of dominance proceedings by the European Commission (Article 102), 2007 – 2017, by type of abuse
Our engagements in this area have included:
- Predatory pricing allegation in the rail passenger transportation industry
- Margin squeeze in the telecommunications sector (for Slovak Telekom)
- Exclusionary conduct in the German gambling industry (for the commercial agent FLUXX)
- Analysis of the empirical relationship between measures of buyer power and the outcome of bilateral negotiations in the grocery retailing industry (for EDEKA)
- Assessments of conditional rebate schemes in TV advertisement sales and marketing
- Support of a complainant regarding Google’s alleged abuse of a dominant position
Regulated industries and market design
E.CA Economics advises firms operating in regulated industries on a wide variety of issues including access regulation and rate setting. We also develop and help implement market-design plans in regulated industries.
E.CA staff advises firms on a wide variety of regulatory issues including access regulation and rate setting. We have also developed and implemented market-design plans in regulated industries such as local and rail transport. Our market-design work has additionally included the development of auctions for customers in the communications and electricity industries.
On the relevance of abuse of dominance cases in regulated industries
Abuse of dominance proceedings by the European Commission (Article 102), 2007 – 2017, by industry
Our work in regulated industries and market design includes:
- Report on the sustainability of future business models for Deutsche Telekom https://www.esmt.org/pub/assessment-sustainable-internet-model-near-future
- Research project for Deutsche Telekom on the relationship between entry regulation and investment in the telecommunications sector https://www.esmt.org/pub/analyzing-relationship-between-regulation-and-investment-telecom-sector
- Critical review of the EU regulatory framework for e-communications
- Quantitative and theoretical analysis of the effect of pricing and reimbursement regulation on pharmaceutical innovation for Novartis
- Expert reports on various topics such as the regulation of mobile-termination rates, Internet regulation, auctions of virtual power plants, price regulation in postal services and market transparency initiatives in the agro and food sector