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Five things not to do when submitting economic evidence to an authority

Five things not to do when submitting economic evidence to an authority. Contents. The five things Courts vs. authorities The unwitting testimony of strategic play Summary. Five things not to do when submitting economic evidence to an authority. 1: Misunderstand the objective of the law.

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Five things not to do when submitting economic evidence to an authority

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  1. Five things not to do when submitting economic evidence to an authority

  2. Contents • The five things • Courts vs. authorities • The unwitting testimony of strategic play • Summary

  3. Five things not to do when submitting economic evidence to an authority

  4. 1: Misunderstand the objective of the law • Submission to authority: “Don’t worry, I know our pre-merger market shares look high, but after the merger we’ll raise our prices. That means our market shares will be lower that it looks!” Objective of the law: prevent mergers that would lead to high prices Economics: if firms have a high market share they are more likely to be able to raise price Legal test: high market shares are a cause for concern Economics: what is the market share

  5. 1: Misunderstand the objective of the law High level law Economics helps create more detailed tests Practical law Economics helps apply the law Legal decision

  6. 2: Argue all sides of the argument • Submission to authority: “The relevant market shouldn’t be online search. It’s too broad. It should be just ‘real-time socially informed search from an HTML5 browser’. And also we should include the encyclopaedia Britannica. That tells you things too.” There are two objectives to submitting evidence to an authority: • Make their lives difficult • Convince them that they shouldn’t do what you don’t want them to do Going for the first option is a risky business

  7. 3: Assert without evidence • Submission to authority: “The market is very competitive, and even a slight increase in price will lead a mass exodus of consumers to our competitors. Promise, cross my heart and hope to die.” Supplying evidence can seem “fractal”. Every extra detail looks like it requires more detail. But ensure that all important links in your chain of argument are supported by something. It saves time, and enhances credibility.

  8. 4: Write only for the digitheads • Submission to authority: “Since solving the local profit maxima against a full set of competitive factors leads to a corner solution when applied to monetary considerations the authority errs by excluding non-price elements from it’s econometric specifications.” Your first objective is getting the authority economists on side. The second is helping them convince everyone else. If you do the first without the second, you’ve failed.

  9. 5: Present a brittle argument • Submission to authority: “If the market definition is cheese and ham club sandwiches then we’re not dominant. If you think the market definition is different then tell us and we’ll work out if we’re dominant in that new market and then get back to you.” The authority may not agree with all of your case. Maybe they made a mistake. Maybe reasonable people can differ. Anticipate disagreement and present scenarios and sensitivities. Keep your central case in mind – remember lesson 2.

  10. Courts vs. authorities

  11. You want to get the economists in the authority on your side • Competition authorities often have a lot of power. • If you lose a bond of trust, you are largely at their mercy: • You probably can’t convince them that they shouldn’t do what you don’t want them to do • All that is left is making their lives difficult Economic submissions should be clear, positive, and constructive.

  12. In a court, you can play a negative game • “If you put two economists in a room, you get two opinions, unless one of them is Keynes, in which case you get three.” • I don’t think economists lie. • But economists do disagree with each other. • And most firms are likely to find someone who believes in their case… • …and can then make it very very complicated… • …and confuse the Court into ignoring all economic evidence all together.

  13. The unwitting testimony of strategic play

  14. Most people think “conspiracy” not “cock up” • If you’re evidence is weak, negative, defensive, inconsistent, incomplete, too complex, hard to understand, based on assertion… • …why is this? • You’ve cocked up • You don’t have a case and you’re trying to hide it

  15. Summary

  16. Mnemonic • P ositive argument with a consistent thesis • O bjective of the law understood • E vidence based • M alleable argument that anticipates mistakes • S imple and clear explanation

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