Monday, October 22, 2007
Posted by D. Daniel Sokol
Expert testimony can make or break antitrust cases- just ask the people involved in the recent Whole Foods/Wild Oats merger. Adding to the literature of how to think about economic experts is Juan David Gutiérrez of the law school of Pontificia Universidad Javeriana with his article Expert Economic Testimony, Economic Evidence and Asymmetry of Information in Antitrust Cases.
ABSTRACT: The objective of this document is to assess two questions that have a positive and normative nature respectively: 1) What incentives does the legal and institutional framework of the European Community (EC) and the United States (federal level) provide to the different agents involved in antitrust proceedings in regards to the use of expert economic testimonies? 2) What legal and social norms could provide appropriate incentives to the different agents involved in antitrust proceedings in order to align the use of expert economic testimonies with antitrust enforcement goals?
To answer the first research question and prepare the settings for the answer of the second question, the nature of the economic expertise applied in antitrust proceedings, its inherent difficulties (section 2), and the legal and institutional framework applied to them (section 3) are presented in detail.
Secondly, a general exposition of the problems posed by asymmetric information in theory (section 4.1) and concerning the relation between the adjudicator and the economic expert (section 4.2) is made, in order lay the foundations to identify the different factors that determine the incentives of the various “actors” in the proceedings (section 4.3).
Finally, to answer the second research question, the regulatory and non-regulatory features of US and EC enforcement systems are analyzed to identify which factors mitigate the information asymmetry problems. The different alternatives are presented in three different categories, namely, “evidentiary rules”, “procedural rules and institutional design” and “a market for experts and the academic community” (section 4.4).
The document contains six conclusions that may be summarized in the following statement: regarding expert economic testimonies, an antitrust enforcement system must aim at the minimization of its costs through the mitigation of the consequences of asymmetric information between the adjudicator and the expert. Therefore a cost-benefit analysis of the use of expert witnesses must take into account the incentives produced by the interaction among the different regulatory and non-regulatory features of the antitrust enforcement system.