1. Use of econometric data in merger review ABA Section of International Law International Association of Young Lawyers Chicago 7 June 2014

2. Economic analysis “For the rational study of the law the blackletter man may be the man of the present, but the [woman] of the future is the [woman] of statistics and the master of economics.” Oliver Wendell Holmes, Jr., The Path of the Law (1897) 2

3. Agenda Introduction and overview of merger analysis Role of economics and economists When to engage an economist What the global agencies are looking for Sources and types of evidence Data gathering issues Preparing the client Engaging with the agencies 3

4. An overview of merger analysis “The goal of merger analysis is to identify and prevent or remedy only those mergers that are likely to harm competition significantly, and to eliminate from consideration as quickly as possible those mergers that do not raise competitive concerns. Economics and economic evidence are central to that assessment.” ICN, Role of Economics and Economic Evidence in Merger Analysis 4

5. Role of economic analyses Key question: Will prices increase or quality/choice, innovation or output substantially decrease as a result of eliminating one competitor? Complicated question – business team’s intuitions often, but not always, on target Economic evaluation key to agencies’ assessment Economic arguments must be key to parties’ defense 5

6. Role of an economist What can an economist do to help get your deal cleared... and fast? How do private and government economists see their role? –Advisor –Investigator –Advocate –Judge 6

7. When to engage an economist When is the best time to engage your economist to work on your case? What are you asking them for, and at what stage? –Risk assessment/feasibility –Post signing Do you need an economist on every deal? 7

8. Sources of evidence Who? –The parties, customers, competitors, analysts What? –Market investigation –Documentary evidence –Market structure statistics –Economic analysis 8

9. What are the agencies’ economic questions? Market Definition –Which products are substitutes? –What does demand depend on? –Is there price discrimination? Are there barriers to entry/expansion? Who are the current and potential competitors? Competitive effects –Are the parties close competitors? –Is one party a maverick? –Is coordinated interaction likely? –What happened after comparable deals? Efficiencies/cost savings from the merger? 9

10. Varying agency focus What are the agencies looking for? US, EU, Canada Role of structural analysis v. competitive effects –Market definition –Concentration analysis Presumptions v. direct evidence 10

11. Data gathering & analysis Why do economists need all of that data? What is the range of data requests that can be expected? When is best to gather data? –Before going to the authority –In response to RFIs How is best to gather data? –Piecemeal –Data dump –Quality v. quantity Will the same data be sufficient for all jurisdictions? 11

12. Preparing the client How burdensome will responding to a data request be? –Company staff & IT resource support –Economic consulting What about document collection? –For substantive assessment, advocacy? –Compliance with Second Request, RFIs Management interviews, time How much is this going to cost? 12

13. Engaging with the agencies Differing jurisdictions (US, EU and Canada): When is the best time to go to the agencies? Do you go in with a white paper? What types of analyses are most useful to the agencies? –Basic analyses (critical loss, diversion/UPP) –Simpler econometric analyses (natural experiments) –More complex econometric analyses (simulations) 13

14. Key takeaways? 14

15. Panel Program Chairs: Imran Ahmad, Competition Associate, Cassels Brock, Toronto Thomas McGrath, Competition/Antitrust Partner, Linklaters LLP, New York Speakers: Dr. Renée Duplantis, T.D. MacDonald Chair in Industrial Economics, Canadian Competition Bureau, Ottawa Dr. James Langenfeld, Managing Director, Navigant Economics, and Adjunct Professor, Loyola University Law School, Chicago Nadine Watson, Senior Vice President, Compass Lexecon, Madrid Ingrid Vandenborre, Competition Partner, Skadden, Arps, Slate, Meagher & Flom LLP, Brussels 15