This article is available in Chinese only. The original series of articles can be viewed by clicking on the links in the right-hand column of this page.
The reference indices for range accrual products can vary. An interbank interest rate RAN references an interbank interest rate such as LIBOR or Euribor. Other types of RANs reference swap rates, spreads between interest rates or swap rates, individual stocks or baskets of stocks, or a stock index (e.g., the S&P 500 index). In fact, RANs can reference more than one index. For example, a dual RAN accrues interest at the coupon rate for each day where two reference indices (e.g., LIBOR and the S&P 500) both fall within their respective predetermined ranges. If either reference index falls outside of its predetermined range, interest accrues at a reduced or zero rate.
While the coupon rate is often fixed, some RANs have provisions in which the coupon rate changes over time or is itself tied to a variable reference index. The range of the reference index can also change throughout the life of the product. As with a conventional debt instrument, the principal of the RAN is typically paid at maturity. However, many RANs are structured to be callable by the issuer at par prior to maturity.
A Closer Look
An investor in a daily RAN is effectively selling... (download PDF to read in its entirety).
Clients value our reputation and experience in working closely with antitrust and competition authorities around the world. Our insights often build upon experience gained in academia, business, and enforcement agencies. With this experience comes a dedicated and disciplined approach to economic analysis. NERA economists go beyond abstract principles to analyze all available evidence before presenting the data in a clear, conclusive, and defensible manner. We understand the high stakes involved in most of our assignments, and we take extraordinary measures to make our work robust.
]]>The results observed over the past year are consistent with NERA's conclusions from the 2011 data, indicating a sustained shift in the disease mix rather than a worsening of firms' total liabilities. In 2012, average dollars per resolved claim continued to remain high, but the higher average settlement costs have not led to higher total settlement payments or increased filings. Reserves have also remained at levels established since approximately 2004.
]]>NERA's study analyzes the possibility and impact of "linking" a potential certificate market with such markets in other countries. Finally, the report analyzes how the renewable energy industry structure and the possibility of exercising market power could affect the operation of the different policies.
On the basis of NERA's analysis, the Minister for Economic Affairs recommended to Parliament that The Netherlands keep its current SDE+ system.
The report is also available for download on The Netherlands government website.
]]>This article is © Emerald Group Publishing and permission has been granted for this version to appear here (http://www.nera.com/67_8111.htm). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited (www.emeraldinsight.com).
]]>This article was first published in the March Edition of Water Utility Management International as "Achieving Efficiency of Wastewater: A Survey of International Best Practice" (http://www.iwaponline.com/wumi/00801/wumi008010015.htm)
]]>In addition to our in-house survey and sampling expertise, we offer extensive data processing capabilities that help clients manage and process large, complex personnel databases with maximum efficiency. Clients return to us both in the context of litigation to provide expert testimony necessary to evaluate statistical claims of liability, as well as to ensure equity in all types of employment outcomes in the day-to-day management of their workforces.
]]>This paper was also published as an article on the Italian website AGI Energia.
]]>This article first appeared in the November 2010 issue of the Resource Management Journal, the official journal of the Resource Management Law Association of New Zealand Inc.
]]>The authors find that, in 2012, companies continued to pay substantial amounts to settle lawsuits involving allegations of wage and hour violations. They identify total wage and hour settlement payments of $467 million in 2012, bringing the aggregate amount paid over the past six years to approximately $2.7 billion. A relatively steady number of identified cases settled before trial each year, with 102 in 2012 and a total of 446 over the last six years. They also find that more than 50% of the companies with a wage and hour settlement between 2007 and 2012 had also been investigated by the Department of Labor's Wage and Hour Compliance division
On average, companies paid $4.8 million to resolve a case in 2012, up slightly from the $4.6 million observed in 2011, but lower than the overall average of $7.5 million for the 2007 to 2012 period. The median settlement value for 2012 of $1.7 million was also slightly higher than the $1.6 million median in 2011.
]]>A non-deliverable forward foreign exchange contract (“NDF”) is similar to a regular forward FX contract but does not require physical delivery of the designated currencies at maturity. Instead, the NDF specifies an exchange rate (“contracted forward exchange rate” or simply “forward rate”) against a convertible currency, typically...
[To read more, please download the full PDF]
]]>The study's co-authors, Vice President Bradley A. Heys and Senior Vice President Mark L. Berenblut, report that all of the new filings for 2012 were shareholder class actions, and in contrast to previous years' filings, none involved allegations of Ponzi schemes, claims relating to the credit crisis, or claims against North American-listed Chinese companies. The abatement of these recent trends in filings was consistent with the experience in the US during 2012. However in 2012, none of the nine cases filed in Canada during 2012 appear to be related to the surge in merger objection cases seen in the US over the last three years.
Three Canadian securities class actions were settled in 2012, excluding partial settlements -- two Bill 198 cases and one Ponzi scheme case. The median settlement for all Canadian securities class action settlements (excluding partial settlements) in NERA's database is $13 million. Notably in 2012, Ernst & Young agreed to pay $117 million to settle claims relating to its role as auditor of Chinese company Sino-Forest. This partial settlement, if approved, would represent the largest settlement in a Bill 198 case to date.
The authors also report that, with nine new securities class actions filed and the resolution of five cases during 2012, there were 51 active Canadian securities class actions at December 31. This is nearly double the number of active cases four years ago. NERA's database now includes data for 100 Canadian securities class actions filed since 1997.
NERA has been analyzing trends in securities class actions for more than 20 years. In addition to this Canada Trends report, the firm produces two US Trends studies annually, and reports for the UK, Australia, Japan, and Italy.
]]>Impacts of Renewable Energy Subsidies/Incentives on Costs of Achieving Renewables Goals is part of a series of papers based on NewERA model results that examine the economic impacts of various policy and other developments. This paper, by NERA Senior Vice President Mike King, Vice Presidents Scott Bloomberg, Paul Bernstein, and James Heidell, and Senior Consultant Sugandha D. Tuladhar, evaluates the relative costs of various policy mechanisms designed to promote renewable energy technologies in electricity generation. The authors examined economic impacts of three different policy strategies:
The analysis shows that the most efficient strategies are those that directly reward desired behavior. Therefore, a strategy relying on a credit on capital costs was by far the most costly because of the perverse incentives it would create. Regarding the unstated goal of reducing greenhouse gas emissions, the most direct strategy -- a cap-and-trade system or carbon tax -- would be more efficient than any policy designed to increase electricity generation from renewable sources.
]]>The authors note that total SEC settlements are also up, but the increase is entirely explained by the rise in settlements with individuals. The SEC settled with 379 defendants in 1H12, putting in on pace for 758 settlements in FY12. This would constitute a 13% increase from the SEC's 670 settlements in 2011 and would constitute the most annual settlements since 2005. The pace of settlements with companies is down slightly, with 93 settlements, consistent with an annual pace of 186, as compared with 196 in FY11.
]]>The authors also find that settlements for several categories of allegations reached new highs in FY12. The SEC reached a record number of insider trading settlements in FY12, with 118 individuals and eight companies. These 126 settlements are almost double the total number of FY11 settlements and 21% more than the previous post-SOX record of 104 insider trading settlements in 2003. Settlements involving allegations of misrepresentation and misappropriation by financial firms also hit a post-SOX record high in FY12, with 208 total cases. For the third year in a row, the number of total settlements for allegations of Ponzi schemes reached a post-SOX record, with 92 settlements. Finally, settlements for trading violations hit a post-SOX record in FY12, almost doubling the number of settlements from the previous year to 48.
The report's findings are informed by NERA's proprietary database of settlements in SEC enforcement actions, which is based on litigation releases and administrative proceeding documents. SEC Settlement Trends: 2H12 Update and previous SEC settlement trends reports can be viewed on NERA Economic Consulting's Securities Litigation Trends website at www.securitieslitigationtrends.com.
]]>According to the report, the dramatic increase in aggregate fines is the result of a few headline-grabbing penalties against banks, notably those against UBS and Barclays for manipulation of LIBOR and EURIBOR, and against UBS for failing to prevent unauthorized trading by a rogue trader, Kweku Adoboli. Those three fines alone totaled nearly £250 million. The NERA report also finds that, with £284 million in fines already imposed through the first three-quarters of the FSA's fiscal year (ending 31 March 2013), fines against firms have already exceeded the combined total from all previous fines against firms in the FSA's history.
]]>The main output of this work is an investors' "marginal abatement cost curve", or MACC. A MACC is a graphical representation of the emission reductions that can be achieved by investments in different technologies across the economy, and the corresponding benefits or costs per tonne of emissions reduced.
Another key output of this study is an analysis of the impact of policies and market conditions on investors' costs and profits. The study estimates how demand for emissionsreducing investments, and thus abatement, is influenced by specific economic and climate policies that are already planned or could be contemplated by Ukraine.
Download the report in English here.
Download the report in Ukrainian here.
]]>Another key output of this study is an analysis of the impact of policies and market conditions on investors' costs and profits. The study estimates how demand for emissionsreducing investments, and thus abatement, is influenced by specific economic and climate policies that are already planned, or could be contemplated by Kazakhstan.
Download the report in English here.
Download the report in Russian here.
]]>Specifically, the number of settlements in 2012 is expected to plummet to 92, which is 31 fewer than last year and the lowest number since 1996 (following the passage of the Private Securities Litigation Reform Act). The number of cases dismissed is expected to decrease even more to 60, which is 63 fewer than last year and the lowest number since 1998. Meanwhile, the number of securities class actions awaiting resolution is expected to increase to 596 by the end of the year.
]]>In this report, NERA summarizes and discusses the features of the data, considers a variety of ways to estimate the impacts of energy efficiency measures, and then presents models of overall energy demand. The report contributes to a more robust evidence base for assessing the impacts of energy-saving measures, and to understanding household energy demand more broadly. NERA's analysis is relevant to a wide range of past, present, and future government policies and regulations in the UK -- including the EEC, CERT, Warm Front, Renewable Heat Incentive, Building Regulations, and the Green Deal -- and internationally.
]]>To request a copy of the full paper, please contact:
Richard Marsden
NERA Economic Consulting
+1 212 345 2981
richard.marsden@nera.com
The authors use NERA's integrated NewERA model to develop estimates of the effects of these policies in two major areas: (1) electricity and other energy market impacts, which include the potential effects on electricity sector compliance costs as well as on electricity and other energy prices; and (2) economic impacts, which include effects on US economic activity as measured by GDP and personal income.
NERA's project team also includes Vice President Scott Bloomberg, Senior Consultant Dr. Sugandha Tuladhar, Consultants Andrew Foss and Sebastian Mankowski, Analysts Meredith McPhail and Reshma Patel, and Research Associate Andrew Locke.
]]>This article appeared in the 2013 edition of The International Comparative Legal Guide to: Class & Group Actions; published by Global Legal Group Ltd, London. www.iclg.co.uk
]]>Our in-depth practical experience makes us exceptionally well placed to provide advice across all aspects of the regulatory investments tests, including the new regulatory invesment test for distribution (RIT-D).
]]>Learn more about NERA's Role in the Approval of Medco's Acquisition by Express Scripts.
]]>In this new report, NERA and YI followed up with an even larger survey to dig deeper into the role of information in the financial aid process. NERA and YI again targeted high-debt borrowers, who reported receiving higher than average grant aid. With help from YI's partners, NERA surveyed over 27,000 people with at least some higher education about their experience with financial aid. This report focuses on a subset of about 13,000 respondents who received financial aid and are either current students or recent graduates of postsecondary degree programs. The survey results tell a discouraging and familiar tale: financial aid is extremely important to ensure college access and completion, but many students with financial aid desperately need a better information "roadmap" to help them navigate the process.
]]>Reproduced with permission from Tax Management Transfer Pricing Report, Vol. 21 No. 10, 9/20/2012. Copyright 2012 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
]]>This article is available in Chinese only. The original series of articles can be viewed by clicking on the links in the right-hand column of this page.
The following year, the court in Cammer v. Bloom listed five factors that would help establish that a security traded in an efficient market. Since then, dozens of courts have relied on the five "Cammer factors" in evaluating market efficiency. The rulings do not state, however, how the court reached an overall opinion on market efficiency when different factors point in different directions.
In this NERA paper, Senior Vice President Dr. David Tabak reviews class certification decisions from 2002 through 2011 and concludes that, in over 98 percent of the cases, the ultimate ruling on efficiency can be predicted by the number of factors that the court found favored efficiency less the number of factors that the court said argued against efficiency. When this figure was positive, the court found the security at issue to have traded in an efficient market in all but one instance, while when the figure was zero, the court always found the security to have traded in an inefficient market.
]]>In particular, the increase in average settlements per resolved claim appears to be consistent with a reduction in the number of non-malignant claims resolved rather than upward pressure in individual settlement values. The authors find that, on average, resolved claims dropped and dismissal rates continued to decline -- both effects consistent with a decrease in the number of non-malignant claims being resolved, as backlogs are cleared out and new filings hold constant.
According to the report, overall the litigation appears relatively stable for defendants -- total indemnity payments exhibited only a small increase this past year; filings have continued on the plateau reached in 2007, at only 20% of 2001 levels. However, the picture may be different for insurers who have exposure across many different companies, as a number of insurers increased reserves over the past year.
]]>The authors project that settlements of class actions in 2012 will be at their lowest level since 1999 if the current pace is maintained. Only 49 cases have settled in 2012 through June; the projected full-year total of 98 is down sharply from 128 settlements in 2010 and 123 in 2011.
]]>NERA's experts also use econometric skills to provide sophisticated analyses of data. This can involve determining appropriate sampling techniques to create a statistically representative sample of the data for further analysis, or determining the appropriate statistical tools to analyze the data.
]]>The authors also find that the pace of settlements with companies involving Ponzi schemes is up 56% in 1H12, with a projected increase from 27 such cases in FY11 to 42 in FY12. However, this increase was more than offset by decreases in settlement activity relating to misrepresentations to customers and misappropriation of funds by financial services firms, FCPA violations, and illegal securities offerings and market manipulation. Overall, settlements with companies are projected to decline slightly from 196 in FY11 to 186 in FY12.
The report's findings are informed by NERA's proprietary database of settlements in SEC enforcement actions, which is based on litigation releases and administrative proceeding documents. SEC Settlement Trends: 1H12 and previous SEC settlement trends reports can be viewed on NERA Economic Consulting's Securities Litigation Trends website at www.securitieslitigationtrends.com.
]]>Mr. Heidell and Ms. Ringelstetter Ennis note that the FERC Order is widely viewed as an opportunity to approve and fund more transmission projects associated with renewable resources (siting issues aside). As a result of Order 1000, the evaluation of a transmission project’s benefits can extend beyond the traditional calculations of reliability, congestion reduction, and power price reductions. However, the authors note, the inclusion of public policy may result in a large number of proposed projects claiming either unrealistically high benefit-to-cost ratios, or benefits disproportionate to traditional reliability projects. The implications of including this new category of benefits is uncertain and will be influenced by the actual compliance tariff filings and the inevitable law suits. This article provides a brief summary of FERC Order 1000 as it relates to the issues of public policy benefits and cost allocation.
This article, from the May 2012 (Vol. 9, No. 2) issue of the Energy Committees Newsletter, has been reproduced with permission from the American Bar Association. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
]]>Reprinted by permission of LexisNexis Canada Inc., from the Class Action Defence Quarterly, Edited by Kathryn Chalmers, Copyright 2012.
]]>"Privatization: Could the Benefits Seen in Other Network Industries be Realized in Postal Industries?" was published in Multi-Modal Competition and the Future of Mail, edited by M. Crew and P. Kleindorfer, Edward Elgar, January 2012, chapter 11, pp. 150-164. The book is available for purchase on Amazon.
]]>
The study's co-authors, Vice President Bradley A. Heys and Senior Vice President Mark L. Berenblut, report that driving this increase in filings are so called "Bill 198" cases, which are those involving claims in respect of an issuer's continuous disclosure obligations pursuant to PartXXIII.1 of the Ontario Securities Act (OSA) and analogous sections of the other provincial securities acts. Nine of the 15 cases filed in 2011 were Bill 198 cases, compared to the seven filed in 2010.
The study also notes that three of the new filings during 2011 were made against Chinese companies whose shares trade on the TSX or TSX Venture Exchange. These filings are a reflection of one of the major trends driving class action filings in the United States last year. The filings in Canada include the case against Sino-Forest -- one of the highest-profile suits brought against Chinese companies on either side of the border. There are 45 active Canadian securities class actions as of 31 December 2011. These cases represent a total of approximately CAN$24.5 billion in outstanding claims.
NERA has been analyzing trends in securities class actions for more than 15 years. In addition to this Canada Trends report, the firm produces two US Trends studies annually, and reports for the UK, Australia, Japan, and Italy.
]]>The Political Economy of Pipelines: A Century of Comparative Institutional Development is available for purchase on the University of Chicago Press website.
"More than a story of pipeline markets and regulation, this book also offers a rich study of how asset specificity, non-deployable capital, and high up-front capital costs affect market development, regulation, pricing, and entry. Makholm takes what would otherwise be a pretty unexceptional industry—pipeline transport—and makes it of interest to a broader audience, especially those concerned with the new institutional economics." -- Gary D. Libecap, University of California, Santa Barbara
"This book comes at the right moment. It blends insights into the technology, economics, and institutional development of an industry that has long been ignored in the US and elsewhere. With the ongoing transformation of the energy sector, The Political Economy of Pipelines is a must-read for anyone interested in the natural gas and other pipeline industries as well as those interested in the evolution of economic and institutional thought." -- Christian von Hirschhausen, Berlin University of Technology
"Both invaluable and disheartening, The Political Economy of Pipelines helps readers to understand why the European gas market does not work—not because reforms have not gone far enough, but because they are fundamentally flawed. In place of the current patchwork of nationally regulated pipeline monopolies, Europe must put in place institutions allowing the emergence and evolution of a competitive market for gas transportation capacity rights that ignores national borders. As Jeff D. Makholm’s institutional economic analysis confirms, such a shift is almost as unlikely as it is needed." -- Pierre Noël, University of Cambridge
"Overall, the book is important in understanding the development of regulation and the contribution of New Institutional Economics. In fact, Makholm offers a convincing discussion of how regulatory frameworks have developed and possible implications for future regulatory designs." -- Hendrik Finger, Journal of Regulatory Economics
]]>The authors note that the three-year rise in the percentage of SEC settlements involving misrepresentations or misappropriation by financial services firms suggests a shift in the SEC's enforcement focus since the financial crisis began and the Madoff fraud was revealed. These types of settlements accounted for 41.6% of all SEC settlements in FY11, as compared to the FY03-08 average of 23.7%. Illegal offering and market manipulation cases were the second most common in FY11, representing 27.3% of settlements, the highest level since 2005. Public company misstatement settlements continued to decline for a fourth consecutive year, to 10.4% of total settlements, the lowest level since Sarbanes-Oxley was passed.
The report's findings are informed by NERA's proprietary database of settlements in SEC enforcement actions, which is based on litigation releases and administrative proceeding documents. SEC Settlement Trends: 2H11, historical SEC settlements data, and previous SEC settlement trends reports can be viewed on NERA Economic Consulting's Securities Litigation Trends website at www.securitieslitigationtrends.com.
]]>Meanwhile, average settlement values of securities class actions fell to $31 million, well below the 2010 average of $108 million. However, the annual average settlement figure can be significantly affected by large settlement outliers. Excluding settlements in excess of $1 billion, as well as 309 small settlements related to IPO laddering cases that were approved in October 2009, there was still a substantial decline in average settlements from 2010 to 2011 -- from $40 million in 2010 to $31 million in 2011.
]]>The first article, "Location Specific Advantages -- Principles," by Vice President Sébastien Gonnet and Special Consultant Pim Fris, provides an analytical framework and economic tools for identifying, quantifying, and apportioning super-profits arising from location advantages.
The second article, "Location Specific Advantages -- Case Studies," by Vice Presidents Sébastien Gonnet and Dr. Vladimir Starkov with former Vice President Makoto Ikeya, applies the framework estabalished in the first article in the context of manufacturing, services, and distribution.
The third article, "Location Specific Advantages -- China," by Vice President Sébastien Gonnet, assesses what economic methods can be used to properly quantify and apportion the location specific advantages between a Chinese subsidiary and its foreign parent and/or the other parts of the group to which it belongs.
]]>The full debate, including Mr. Falk's original article, Mr. Borlick's response, Mr. Falk and Dr. Rosenzweig's rebuttal, Mr. Borlick's counter-rebuttal, and Mr. Falk's conclusion on the subject, can be accessed on The Electricity Journal website.
]]>This paper was published as a three-part series in the Employment Law Strategist, July-September 2011.
]]>Dr. Harrison delivered a presentation summarizing this report at a workshop and conference on New Market Mechanisms organized by the International Emissions Trading Association and Enel in Brussels on 13-14 October 2011.
]]>ETFs: Overview and Recent Issues was recognized for being one of the most-read articles on Thomson Reuters' Governance, Risk & Compliance website in October 2011. Thomson Reuters publishes hundreds of articles authored by external contributors on its GR&C website every month.
Exchange-traded fund (ETF) strategies continue to increase in scope, involving active management and more sophisticated financial instruments. Furthermore, the size of the ETF market has more than tripled by number of ETFs, and more than doubled by net dollar value of assets, over the past four years. The increasing flexibility and versatility of ETFs have been accompanied by claims by regulators and others of destabilizing effects on markets and potential for abuse by market professionals. Moreover, the suitability of ETFs for retail investors and even institutions has become a source of greater concern. In this NERA brief, Senior Vice President Dr. Patrick Conroy, Vice President Dr. James Overdahl, and Senior Consultants Robert Patton and Raymund Wong briefly outline several recent ETF issues and follow with an overview of future issues that may impact the growth of ETFs and their regulation.
]]>Una perspectiva económica sobre las tecnologías farmacéuticas de moléculas pequeñas (productos de síntesis) y moléculas grandes (biológicos o biotecnológicos). El propósito de esta investigación es revisar la estructura de la industria farmacéutica, evaluar los resultados de los análisis económicos, comparar las tecnologías de moléculas pequeñas y las tecnologías de moléculas grandes, y poner de relieve las nuevas cuestiones que los responsables políticos, inversores, y las empresas deben abordar.
La exclusividad de datos es un período de tiempo en que el imitador o copiador no puede basar su producto biosimilar en los datos de la experimentación realizada por el innovador, así como tampoco en los datos resultantes de los ensayos clínicos que se obtuvieron con el producto innovador. La ley de reforma de salud en los Estados Unidos (EE.UU.) (2010) reguló el tema de exclusividad de los datos. Estableció que el innovador recibe 12 años de exclusividad de comercialización de los productos de molécula grande y la FDA debe establecer las normas que regulan los datos necesarios para la aprobación reglamentaria de un producto biosimilar después del vencimiento del período de exclusividad para el innovador.
En Europa rige desde 2005 la estructura conocida como "8+2+1". Tiene tres componentes. A partir de la fecha de autorización de la Comisión Europea para el producto original, no se admiten solicitudes de biogenéricos durante ocho años. Durante los dos años siguientes se permite presentar solicitud de aprobación de un biogenérico, pero ésta no se otorga hasta el cumplimiento de la protección de diez años. Se extiende el período de protección de datos por un año más si se desarrolla una nueva indicación que tenga un efecto importante en el uso clínico del medicamento original. En total hay 11 años de protección de datos.
]]>In addition to a detailed analysis of trends since April 2002, the authors provide background on the role of financial penalties in enforcement, discussion of recent developments in enforcement, and a look ahead to expected changes in enforcement policy in the UK.
Key findings include:
For additional information, and to search summary statistics on UK trends data, visit www.EnforcementTrends.com
NERA’s "Trends" Series
NERA has been analysing trends in enforcement and shareholder class action litigation for more than 15 years. Two reports analysing trends in US Securities and Exchange Commission enforcement actions are published each year. In addition, NERA publishes semi-annual reports analysing shareholder class action litigation trends in the US, and annual reports on trends in Australia, Japan, Italy, and Canada.
]]>This paper is also available in simplified Chinese.
]]>Mr. Shuttleworth concludes that further work would be required to establish whether or not there is asymmetry in price responses, because Ofgem's work cannot be relied on. Even then the existence of asymmetric price responses would not prove (and their absence would not disprove) that there was any lack of competition in retail energy markets.
]]>Their analysis suggests that many different forms of capacity can provide back-up for growth in intermittent generation. It also suggests that a market-wide (or at least "broad") capacity mechanism combined with a variable energy price will encourage the provision of such capacity more effectively than a targeted capacity mechanism. The market-wide capacity mechanism is a more efficient remedy than a targeted capacity mechanism for underinvestment caused by investors' distrust of peak energy market prices. Although the EMR raises the problem of "double payment" in relation to a market-wide capacity mechanism, such a problem does not necessarily exist and, even if it does, there are a number of practical solutions that avoid it.
]]>In this paper, NERA Senior Vice President Dr. Patrick Conroy and Vice President Dr. Graeme Hunter argue that applying greater precision to the financial benefits of bribery is necessary given increasing enforcement, and use economic analysis to shed light on how to evaluate the effect of a bribe and determine what the appropriate fines, if any, should be. Sophisticated economic analysis is necessary to fully account for the numerous considerations based on the incremental probability of winning generated by the bribe, and the opportunity cost of the project won. Applying such analysis can lead to a more realistic (and sometimes lower) calculation of the true economic profits from the bribe. The paper includes hypothetical examples in areas including oil drilling rigs, investments involving sovereign wealth funds, and insider trading.
]]>Recently, the ITC has shown an increasing focus on this issue. For example, in October 2010, the ITC sought public comment on proposed amendments to its Rules of Adjudication and Enforcement that would instruct complainants and respondents to evaluate the effect of exclusion orders on the public interest (see here).
Central to determining the impact on the public interest is the economic concept of "welfare." We discuss the economic factors that determine how an exclusion order would affect welfare.
The ITC's Proposed Amendments and "the Public Interest"
Our reading of the proposed amendments is that the ITC intends to define "public interest" to include both consumer welfare and producer welfare. An economic calculation of consumer welfare can be measured as the value consumers receive from products above and beyond the price they pay for those products. Producer welfare is defined as the profits that firms make on the products that they sell.
The ITC's proposed amendment to §210.12 asks a complainant to "address how an issuance of an exclusion order and/or a cease and desist order in this investigation could affect … competitive conditions in the US economy…or US consumers." Consumers are explicitly mentioned, and "competitive conditions" can be interpreted to mean economic welfare, which encompasses both consumers and producers.
Specifically, the proposed amended §210.12(a)(12) goes on to ask the omplainant to:
"iii) Indicate the extent to which like or directly competitive articles are produced in the US or are otherwise available in the US with respect to the articles potentially subject to the orders; iv) indicate whether complainant, complainant's licensees, and/or third-party suppliers have the capacity to replace the volume of articles potentially subject to an exclusion order and a cease and desist order within a commercially reasonable time frame."
The first of these points appears to be asking whether noninfringing substitute products are available for consumers to purchase in place of the products that would be subject to the orders. The second point appears to be asking whether there are firms that could replace the supply of products subject to the orders.
Although these two points are important, especially for determining the magnitude of the effect of an exclusion order on consumer welfare, they do not exhaust the questions that must be asked to assess the effect of an exclusion order on either consumer welfare or total welfare.
Since an exclusion order effectively eliminates one or more products from the market, it can result in a reduction in consumer welfare if it leads to reduced product variety, increased prices or the need for consumers to incur costs to switch products.
The elimination of products from the market is also likely to harm some firms while benefiting others. The net effect on producer welfare depends on the circumstances. Additional factors, therefore, may need to be considered in order to evaluate the effect of an exclusion order on total welfare.
Additional Economic Factors Affecting Welfare
A nonexhaustive list of additional factors that might be considered in evaluating welfare includes the following:
1) Consideration of the costs and time it would take a customer to switch to substitute products.
Customers (or a subset of customers) who buy the excluded product may face costs in switching to substitute products. The term "customer" may include final consumers as well as firms that are downstream from the excluded product. Switching costs may be direct out-of-pocket expenses or indirect costs (such as loss of sales, e.g., for a downstream manufacturer) associated with the time it takes to switch to alternative products.
The impact of such switching costs should be weighed in the consideration of the availability of substitute products. For example, an infringing product may be a component of a system. Customers may purchase separate accessories or components that are related to the infringing product but these separate products may not themselves infringe. An exclusion order against the infringing product may require customers to switch out the whole system and purchase different accessories or components that are compatible with the noninfringing product.
2) Consideration of loss in consumer welfare due to reduction in product variety in differentiated product industries.
In industries in which product differentiation is important, an exclusion order may cause a loss in consumer welfare from a reduction in product variety.
How close a substitute the "directly competitive articles" are to the infringing product will determine the extent of the loss in consumer welfare. The consumer welfare associated with one given product in differentiated product industries can be large even when there are a number of articles that may be defined as "directly competitive." In this case, the effect of the exclusion order on consumer welfare might be substantial.
Empirically, the economics literature has demonstrated that a single product in a differentiated products industry may have large value even if there are substitute products. This literature has also addressed how to measure the loss in consumer welfare arising from the loss of one product from consumers' choice set.
The potential loss in consumer welfare due to the reduction in product variety is particularly relevant in the context of a GEO that would bar imports of final goods ultimately sold to final consumers, since final goods are often differentiated products.
For example, suppose the patent-in-suit reads on a particular type of semiconductor chips used in cellphones. Even if the chips of different suppliers may be relatively homogenous (as in the case of dynamic random access memory), the final product — cellphones—may be much more differentiated.
A general exclusion order would result in withdrawal from the market of all cellphone models containing the infringing chips. Even if there are other cellphone models available in the market, and consumers could quickly switch to those cellphone models without incurring any cost, there could still be a substantial loss in consumer welfare. Some consumers would no longer be able to purchase the specific cellphone model they most preferred (i.e., one of the excluded cellphone models). This effect will be smaller the "closer" the available substitutes are.
3) Consideration of the potential for a price increase from the reduction in competition.
An exclusion order eliminates a firm from the market. This can have an adverse impact on competition, leading to effects on the prices of products in the market in question. These price increases in turn harm consumers. Economic models of competition show that eliminating a supplier can lead to price increases, even if the remaining firms have capacity to replace supply and offer a substitute for the excluded product.
As an extreme, but instructive example, consider two suppliers of a perfectly homogenous product, each with substantial excess capacity. If one supplier was blocked by an exclusion order, the remaining supplier would be a monopolist, and accordingly it would have the incentive to increase its price. This price increase would occur despite the fact that the remaining supplier offers a perfect substitute for the excluded product and has substantial excess capacity.
Outside of this example, the magnitude of the price increase and its impact on consumer welfare will depend on the specific context of the industry. The price increases by remaining suppliers after a supplier has been excluded depend on, among other things, the extent to which the remaining products are substitutes for the excluded product, the excess capacity of remaining suppliers and the nature of competition between the remaining suppliers.
The impact of a price increase on consumers may also be different in cases where the exclusion order blocks the final good than when it blocks an intermediate good. The price effect on consumers is direct, or nearly so, for an exclusion order that blocks a final good.
When the exclusion order blocks an intermediate good, the price effect is indirect and will depend on whether and how much the downstream firms pass through the price increase to final consumers. The amount that a company passes through a price increase depends on cost, demand and competitive conditions in the industry, as well how quickly such intermediary producers respond to changes to input costs.
4) Consideration of the ability of noninfringing firms to offer close substitutes and the time required to do so.
As previously mentioned, the impact on prices will depend on the availability of close substitutes to the infringing product. This consideration should include products that are already on the market, but should also account for the ability of noninfringing firms with capacity to expand production to offer close substitutes to the excluded products.
The impact of an exclusion order will be greater if there is a mismatch between firms with lots of capacity and the type of product that needs to be replaced, or if it takes a long time to expand capacity or switch production.
5) Consideration of potential entrants. The economic theory of competition suggests that, even if there are currently no firms with capacity, a new entrant (or entrants) could enter the market and lead to lower prices.
Evaluating the impact of potential entrants on price outcomes requires assessing barriers to entry, the amount of time it would take for new firms to enter the market, and the competitiveness of potential entrants. The impact of an exclusion order may be greater in industries with significant barriers to entry. On the other hand, in some industries just the threat of quick and easy entry may be sufficient to deter significant price increases
6) Balancing the potential profit lost by vertically-related firms against the potential profit gained by competitors and competitors' vertically-related firms.
An exclusion order may cause firms that are vertically related to the excluded firm to lose profits. This consideration, however, needs to be balanced against the increased profits of nonexcluded competitive firms, and firms that are vertically related to the nonexcluded firms in order to calculate the total net effect on producer welfare.
Going back to the cellphone chip example, a general exclusion order that barred cellphones containing the infringing chip would potentially harm the chip manufacturer and the cellphone manufacturers that had been using the infringing chip, while potentially benefiting noninfringing chip manufacturers and the cellphone makers that use those noninfringing chips.
But the general exclusion order would also potentially harm the cellphone service providers who sold the cellphones at issue, while benefiting other cellphone service providers.
Addressing Questions of Equities
As a final but separate matter, another economic consideration that the ITC might take into account when considering the impact of an exclusion order is the question of equities. For example, in some situations, the infringing article may be a small value component of the imported product that would be subject to the exclusion order. In such a case, the exclusion order would stop the importation not only of the infringing article, but also of noninfringing components of the product.
In addition, it may be difficult for the manufacturer of the imported product to switch to a noninfringing component. These considerations could play a role in the ITC’s decision when choosing a remedy.
Conclusion
Our discussion provides a list of significant factors that may affect consumer and total welfare from an exclusion order arising from a Section 337 ITC investigation. Because different issues will arise in each case brought before the ITC, companies should consider “public interest” as defined by general economic principles related to consumer welfare and producer welfare, rather than any one set of specific factors.
By adopting a general but structured economic framework, complainants and respondents can address public interest issues that are likely to be relevant to the ITC in Section 337 cases while maintaining the flexibility to handle the specific circumstances of each individual case.
NERA Economic Consulting's Intellectual Property Practice is a bi-monthly Law360--Expert Analysis contributor.
The opinions expressed in this article are those of the authors and do not necessarily reflect the views of the firm, its clients, or Portfolio Media, publisher of Law360. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
US courts, government agencies and practitioners rely on those models and economic techniques derived from them to predict the economic effect of alleged anti-competitive conduct and to make decisions about challenging proposed mergers and acquisitions. However, a growing body of research shows that people and firms do not always behave like Spock.
An entire field of research — behavioral economics — has emerged that is devoted to understanding how consumers and firms depart from the standard assumptions. A primary goal of the “behavioralists” is to understand consumer and firm decision-making in order to make economic models more realistic.
Behavioral researchers have identified many real-world examples of irrationality. Consumers may not take simple steps to maximize their welfare, for example, failing to enroll in 401(k) plans or accepting the employer-provided default investment when another option would serve them better.
This body of economic research has sparked a debate about whether the conventional economic models used in antitrust analyses adequately account for real-world behavior. One assumption that has been questioned is whether firms maximize profits as the models used in antitrust analyses assume they do.
The standard model of firm decision-making assumes that a firm makes choices about price, quality, innovation and output to maximize its profits. And for many, if not most, firms, this is likely to be a reasonable assumption.
But for some firms, it may not be. Some enterprises by their nature may not maximize profits. It seems sensible to question whether a not-for-profit university or a not-for-profit hospital should be modeled as maximizing profit. And even for-profit companies may depart from strict profit maximization over the short or medium term. In the short-run, they might choose instead to increase revenues or market share. Or a firm’s managers may simply grow complacent and pay insufficient attention to the firm’s bottom line.
If the models used to evaluate potential antitrust concerns rest on assumptions that are flawed, then the resulting analyses may not provide useful predictions.
As an example, conventional economic models of firm pricing yield a relationship between a firm’s gross profit margin and its own-price elasticity of demand. In merger analysis, this relationship, coupled with an estimate of the acquiring firm’s gross profit margin, is sometimes used to draw inferences about the elasticity of demand faced by the acquirer.
However, if the firm’s short-run goal is something other than profit maximization, then an analysis based on a flawed inference about the firm’s own-price elasticity of demand drawn from the firm’s gross profit margin may not be useful for making predictions about post-merger market power and post-merger pricing.
As another example, conventional economic models predict that variable cost savings, such as lower input costs, are more likely to lead to lower prices post-merger than fixed cost savings, such as lower overhead costs. These economic models provide the basis for the U.S. merger enforcement agencies putting more weight on efficiencies generated from variable cost savings than those generated from fixed cost savings.
However, too little credit may be given to fixed cost savings if the conventional economic models do not describe adequately how firms set prices. If an acquiring firm sets prices taking explicit account of fixed costs, then a reduction in fixed costs post-merger may well lead to lower prices post-merger.
There is precedent for antitrust agencies entertaining the notion that a firm may have goals besides profit maximization. The Federal Trade Commission investigated Genzyme Corp.’s acquisition of Novazyme Pharmaceutical in 2001, focusing on the extent to which the transaction might lessen the pace of research and development for a treatment for Pompe disease. Given that both firms were developing treatments for the disease, a reduction in head-to-head competition could have slowed the pace of R&D post-merger.
The FTC, however, took account of facts that conventional models did not capture. In closing the investigation without taking any enforcement action, then-FTC Chairman Timothy J. Muris noted that the structure of the Genzyme/Novazyme transaction would not dampen incentives to develop a treatment because the manager slated to be in charge of the Pompe disease research program had two children afflicted with the disease.
In making that decision, the FTC was, in effect, tweaking its models so that they better accorded with the facts about how individuals and firms made decisions in that specific situation.
How closely models’ assumptions track actual behavior determines, in part, how useful these models are in predicting potential anti-competitive effects. The rational “behavior” embedded in neoclassical economics is likely to be a reasonable assumption a lot of the time. It is important, however, to test whether modeling assumptions accord with the facts.
It is also important to assess whether behavior that deviates from the conventional assumptions is systematic and persistent. If the relevant facts suggest that a firm might behave in ways that depart from conventional assumptions, then private parties, government agencies and the courts should be willing to consider alternate economic models that account appropriately for the observed behavior.
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This article was published in the European Journal of Risk Regulation, Issue 1, 2011, pp.92-103.
]]>NERA's Global Transfer Pricing network offers a full range of transfer pricing services, independent advice, and valuation by world-class experts and dedicated teams of transfer pricing economists.
]]>Clients come to NERA because of our decades of experience dealing with antitrust and cartel issues, our experts' unparalleled depth of knowledge and experience—not only of industries and issues, but of technical skills and capabilities—and our commitment to deliver unbiased findings. NERA's reputation for independence and integrity gives our testimony substantial weight with regulators and in the courtroom.
]]>This article was published in The Electricity Journal, Volume 24, Issue 1, January-February 2011, pages 57-64.
]]>Outstanding securities class actions reached a new record in Canada in 2010, according to this newly released edition of NERA's study, Trends in Canadian Securities Class Actions: 2010 Update. The study's co-authors, Senior Vice President Mark L. Berenblut, Vice President Bradley A. Heys, and Senior Analyst Tara K. Singh, report that as of the end of 2010 there were a record 28 active securities class actions in Canada, representing approximately CDN$15.9 billion in outstanding claims. In 2010, eight new securities class actions were filed during the course of the year, with claims of more than $870 million. Filings in 2010 dropped slightly compared to the nine securities class actions filed in 2009 and the record 10 cases filed in 2008.
The study also notes that five securities class actions settled in 2010 for payments by defendants of $67.6 million. The average settlement for these cases was $13.5 million and the median settlement was $10 million—compared to the average and median settlement of $9 million in 2009. A total of 25 cases have now been brought under the recent secondary market liability provisions of the provincial securities acts (commonly referred to as “Bill 198 cases”). Of these cases, nine have been settled and 16 are still active. The average settlement defendants have paid was $10.7 million. Seven of the new class actions filed in 2010 include claims under these secondary market provisions.
Many Canadian-domiciled firms also face the risk of class action litigation in the US, and several of these cases correspond to similar cases in Canada. As of 31 December 2010, there are 13 active US securities class actions against Canadian-domiciled companies, three of which also have parallel Canadian class actions. Between 1996 and 2010, Canadian-domiciled companies were named as defendants in 71 securities class action filings in the US—17 of which of had parallel class actions in Canada. However, these risks may be somewhat reduced going forward in light of the recent decision of the US Supreme Court in Morrison v. Australia National Bank, which places limits on US private securities litigation relating to trading of securities outside the US.
]]>We have extensive experience presenting analyses related to such damages in mediations and arbitrations, in expert reports and declarations, and in testimony both at deposition and at trial. We also provide consulting services related to wrongful termination and personal injury allegations, helping parties evaluate the potential scope of the claims.
In addition to evaluating damages claims, NERA experts often provide economic analyses of issues related to liability in wrongful termination cases where they assess the merits of the discriminatory claims. While many wrongful termination and personal injury cases involve a single plaintiff or small group of plaintiffs, NERA's labor economists also have extensive expertise evaluating such claims in the context of class actions, frequently providing testimony at the class certification phase.
]]>This primer is intended to assist employers and their counsel as they embrace this tool, with all its complexities, to evaluate equity in their workforce.
]]>The technique, which is widely used in shareholder class actions and other litigation in the US, is increasingly being applied elsewhere, including Australia, Canada, and Europe. In this article, the authors describe the many ways event studies can be used and provide an overview of the event study methodology.
]]>The authors note that their review of OXERA’s reports indicates that GTS’s cost of capital lies at or above the upper end of the range that OXERA has provided. They note that the NMa instructed OXERA to update parameters “based on the methodology established in previous decisions.” Given that instruction, OXERA’s report does not represent an independent expert opinion and should not be treated as such.
]]>NERA’s Global Transfer Pricing network offers a full range of transfer pricing services, independent advice, and valuation by world-class experts and dedicated teams of transfer pricing economists.
]]>This article was published in Antitrust, Vol. 25, No. 1, Fall 2010, and is reproduced here with permission from the American Bar Association.
]]>The Dodd-Frank Wall Street Reform and Consumer Protection Act ("the Act"), which was enacted into law on 21 July 2010, is the most significant piece of financial legislation since the 1930s and is expected to affect every aspect of the US financial services industry. Regulators now face the daunting task of writing rules for securitizers to comply with the Act's requirements, and the new risk retention rules require securitizers to retain not less than 5% of the credit risk for most asset-backed securities without hedging or transferring the credit risk.
In this paper, the third in a NERA series examining the impact of the new financial regulations, Senior Vice President Dr. Faten Sabry examines economic evidence indicating that the contraction in the credit markets observed since 2007 may be exacerbated by strict adherence to a "one size fits all" risk requirement. Dr. Sabry discusses the recent academic literature on the optimal design and types of risk retention rules, and notes that recent studies show that different retention mechanisms can have different effects on the incentives of the securitizers and there is no economic basis for a "one size fits all" rule. Finally, she argues that economic modeling can be used effectively to design the appropriate risk retention rules to take into account the significant heterogeneity across different asset classes and deal structures, which would help the alignment of incentives.
Other papers in the series: Summary of Dodd-Frank Rulemakings and Studies
Economic Analysis in the Federal Rule-Making Process to Implement the Dodd-Frank Wall Street Reform and Consumer Protection Act
By Dr. James Overdahl
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This chapter originally appeared in Recent Trends and Prospects of Transfer Pricing, ed. Arun Kumar, Reseach India Press, 2011, and is republished here with permission from the publisher.
]]>Broker-Customer Disputes
Valuation and Risk Management
Broker-Customer Disputes
Valuation and Risk Management
The analysis is relevant for understanding the dynamics of insurance markets. A typical method for assessing insurance markets involves comparing actual insurance prices to those that would prevail in a perfectly competitive marketplace. In such assessments, perfectly competitive insurance prices are usually measured as the present value of expected claims plus expenses. Such prices, however, assume that the financial capital held by insurers can adjust quickly and costlessly. The two models of insurance market pricing provide different interpretations of high insurance prices in hard markets. The traditional competitive insurance pricing model interprets high prices as a departure from competition and possible evidence of cooperative behavior among insurers. Under the capacity constraint model of insurance pricing, failure of insurance prices to follow the present value of costs does not, by itself, indicate noncompetitive behavior.
]]>New Zealand Competition Law and Policy is now available as an online updating competition law service in New Zealand.
]]>The analysis that is most helpful at the class certification stage may differ in personal injury class actions from noinjury class actions, and in cases alleging product defects from those involving misrepresentations of product features or performance. Empirical analysis -- using sales data, public demographic information, or the results of specially designed surveys -- can help inform the class certification inquiry in a wide range of product liability and consumer class actions.
]]>Farrell and Shapiro's writings suggest that they will pursue aggressive antitrust enforcement in a number of areas. Moreover, all signs indicate that they will require that economic arguments -- whether put forward by parties or by the agency staff -- be coherent and well-supported. Certainly, the authors note, merging parties, their counsel, and their economic advisors will face significant challenges in the years ahead.
]]>The recent financial crisis was, in large measure, precipitated by the subprime crisis, and has raised concerns about securitization and the originate-to-securitize model. Depository institutions and other participants in the mortgage market are focused on alternatives to fund mortgage originations. In that context, attention has turned to covered bonds, which have been relied upon for more than two centuries in Europe to provide reliable funding. Indeed, covered bonds may become an important new source of liquidity for US financial institutions.
PLI's Covered Bond Handbook is a comprehensive guide to these time-tested financing alternatives. The Handbook explains how covered bond transactions are structured in Canada, in European jurisdictions, and in the US; provides a comparative analysis of the jurisdictional framework; discusses the rating agency view of covered bonds; describes the many benefits associated with covered bonds; and discusses proposed US legislation designed to codify the treatment of covered bonds and provide a statutory framework for their issuance.
]]>View abstract and text on the Revue Concurrences website, or download a PDF of the article by using the link on the left.
Citation: Joseph Vogel, Fabien Curto Millet, Complex pricing strategies , Concurrences, N° 3-2010, n°31903, www.concurrences.com.
]]>In this paper, the second in a NERA series examining the impact of the new financial regulations, Dr. Ethan Cohen-Cole -- Assistant Professor in the Finance Department of the University of Maryland Robert H. Smith School of Business and Special Consultant to NERA -- discusses key provisions of Dodd-Frank that pertain to the consumer finance industry. As Dr. Cohen-Cole notes, the consolidation of consumer regulatory authority into a single agency that has both rulemaking and enforcement authority will enable the BCFP to highlight potential consumer issues, issue new rules, and enforce them with minimal complication. The newly streamlined process will likely mean stricter rules on disclosure for retail financial products, including disclosures on product design and a greater chance of regulatory action.
Other papers in the series:
Economic Analysis in the Federal Rule-Making Process to Implement the Dodd-Frank Wall Street Reform and Consumer Protection Act
By Dr. James Overdahl
What Do the New Risk Retention Requirements of the Dodd-Frank Act Mean for Securitization?
By Dr. Faten Sabry
Summary of Dodd-Frank Rulemakings and Studies
In this paper, the first in a NERA series examining the impact of the new financial regulations, Vice President Dr. James Overdahl provides an overview of the rule-making process and warns of a potentially combative process among the regulators and various stakeholders as the new rules are drafted and opened to public comment. He also examines the potential for future court challenges to federal rules, and notes that the outcomes of recent court challenges of this nature have turned on the adequacy of the economic support considered by regulators when they adopted new rules. As a result, parties submitting comments should pay particular attention to the quality of their economic arguments.
Other papers in the series:
What Do the New Risk Retention Requirements of the Dodd-Frank Act Mean for Securitization?
By Dr. Faten Sabry
Summary of Dodd-Frank Rulemakings and Studies
Anche l'Italia ha ora adottato la propria normativa sulla class action. L'analisi economica è uno strumento fondamentale nelle class action sia in fase di ammissibilità, sia in fase di responsabilità e danno. Questa breve nota illustra alcuni dei tipi di analisi economica che NERA ha sottoposto innumerevoli volte al vaglio delle corti americane e che sono potenzialmente rilevanti anche in Italia.
]]>"Prediction Markets: A New Tool for Strategic Decision Making" was published in California Management Review, Volume 52, Issue 4 - Summer 2010.
]]>In litigation, NERA experts are familiar with the types of analyses typically introduced by plaintiff experts and frequently provide expert testimony demonstrating where such analyses are unfounded or unreliable. In addition, NERA’s workforce studies are often used by companies to ensure compliance with federal and state regulations, as well as to determine if proposed actions will meet such guidelines. NERA’s analyses have been used in the following areas:
In this overview, we address five questions typically posed by companies considering workforce reviews.
]]>The authors suggest that, as ETFs continue to expand beyond traditional strategies, it is not entirely clear that they will be able to maintain their original advantages. If successful, future innovative ETF products may provide a challenge to the dominance of mutual funds beyond traditional index strategies. However, the history of past regulatory scrutiny and litigation risk for other similar types of investment funds suggests that ETFs may still have certain hurdles to overcome.
]]>The median settlement in the first half of 2010 was considerably higher than in any prior year. At $11.8 million, the median settlement exceeded 2009's value of $9 million by almost one-third, crossing the $10 million mark for the first time. According to the authors, one factor driving the increase in median settlement values was a substantial increase in median investor losses—a variable which correlates strongly with settlement size. Median investor losses in cases settled in the first half of the year were $436 million, the highest level since 1996.
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In the report, the team discusses the policy implications of the results for the Thames Gateway, including whether the costs of installing and maintaining sprinklers in new homes would be justified by the potential benefits; and comments on the applicability of the results to other parts of the UK. The team also provides suggestions for possible further analysis.
Learn more by visiting the CLG website.
]]>Dr. Becker and Dr. Martin note that the resolution of this split in support of the application of Daubert may play an important role in ensuring the efficient allocation of judicial resources on alleged Title VII violations. Currently, approaches used by trial lawyers leave larger employers uniquely vulnerable to bet-the-bank class actions relative to small and midsize employers -- even in circumstances where women and minorities are treated better by these large employers. Statistical evidence in support of class certification is frequently relied upon by district courts, despite arguments by defense counsel that excessive aggregation and omitted variables negate the reliability of the reported statistics. Application of Daubert to class questions could eliminate potential waste of judicial and litigant resources in situations where discrimination is alleged to exist on the basis of superficial analysis, but where a proper statistical analysis would show these results to be spurious.
]]>These two zones are currently split in the day ahead market due to transmission constraints, thereby limiting Sicily's ability to import from the South Italy zone. A new interconnection will be authorized in the near future, which will increase transmission capacity. The draft legislation asks to combine Sicily and the South of Italy in the same zone, in order to create only one price in the day ahead market for the whole area. Congestions will be solved by the TSO in real time. The stated goal is to decrease electricity prices.
However, Dr. Lo Passo argues that the proposed solution will increase the final price of electricity because of the existing physical transmission constraints. Plants in Sicily and South of Italy will offer electricity at a price that will take into account existence of physical transmission constraints; furthermore, the TSO will have to pay constrained off plants that have been contractualized in the day ahead market, and purchase ancillary services from plants located in the import constrained area (i.e., Sicily) in order to grant delivery of electricity.
Dr. Lo Passo contends that the outcome would be opposite to the one envisaged by the draft Law. In addition, the draft legislation would significantly differ from recent international decisions. In a proceeding against Sweden, in fact, the EU Commission and Sweden have agreed to solve congestions by splitting the market in order to preserve price signals.
]]>A key question is whether the benefits offered by small reactors will be enough to overcome these challenges. NERA believes that a well-structured economic analysis can help resolve this question. Such an analysis can also provide a useful tool to help small reactor vendors and potential buyers in their decision-making process.
NERA plans to undertake a comprehensive analysis of small reactor economics. Our small reactor economics research study will examine benefit/cost issues associated with size and other relevant reactor design attributes. We will include a range of small, advanced, and alternate reactor designs in the study, and the final study report will provide an overall economic assessment of each of these small reactor designs.
To learn more or to participate in this study, please contact NERA Vice President Edward Kee.
]]>The authors also offer suggestions as to how to approach these issues while maintaining the standards of quality, reliable survey research.
NERA experts help companies, or their insurers, to set reserves and plan for the future, and to aid with litigation. Successfully resolving litigation and achieving beneficial outcomes in settlements and mediations requires an understanding of the available coverage, the ability to value that coverage, and the expertise to forecast the expected insurance recoveries. We have written expert reports, offered economic testimony, and provided litigation consulting expertise for disputes involving mass tort and product liability claims and the insurance coverage for those claims.
]]>By drawing on the combined expertise and knowledge of specialists in its Transfer Pricing and Securities and Finance Practices, NERA is uniquely positioned to assist in-house tax practitioners and tax advisors in delivering maximum value in this area.
]]>NERA's relevant expertise includes:
The authors' suggestions on how the Proposed Guidelines could be further revised or clarified fall into four categories:
Additional information regarding the Horizontal Merger Guidelines Review Project is available at http://www.ftc.gov/bc/workshops/hmg/index.shtml.
]]>To order a copy of Economics of Antitrust: New Issues, Questions, and Insights ($21.95 USD) or to request a chapter, please visit www.economicsofantitrust.com.
The first book in NERA's Economics of Antitrust series, Economics of Antitrust: New Issues, Questions, and Insights contains perspectives that should prove indispensable to attorneys, government regulators, economists, academicians, students, and others seeking a full understanding of the topic. The chapters show how economics is applied in the "real world," providing insights into a number of compelling issues.
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To order a copy of Economics of Antitrust: Complex Issues In a Dynamic Economy ($29.95 USD) or to request a chapter, please visit www.economicsofantitrust.com.
The second book in NERA's Economics of Antitrust series, Economics of Antitrust: Complex Issues in a Dynamic Economy is a compilation of articles and case studies complementing the fundamental issues that were covered in the previous volume, Economics of Antitrust: New Issues, Questions, and Insights. The chapters in Economics of Antitrust: Complex Issues in a Dynamic Economy illustrate the complexity of modern antitrust analysis, using practical examples and case studies from a variety of industries, including telecommunications and pharmaceuticals.
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The Line in the Sand: The Shifting Boundary Between Markets and Regulation in Network Industries reflects the thinking of some of the best minds in regulatory economics today. It is an invaluable tool for regulators, industry leaders, economists, academics, and others involved in the constantly changing regulatory issues in electricity and other network industries.
The Line in the Sand: The Shifting Boundary Between Markets and Regulation in Network Industries can be purchased from www.amazon.com with a cover price of $39.95.]]>
Copies of the Japanese edition are available for ¥2400 and may be ordered via the Amazon.co.jp website. More information on the Economics of Antitrust book series may be found at www.economicsofantitrust.com.
As with the original English edition, the Japanese translation contains perspectives that should prove indispensable to antitrust attorneys, government regulators, economists, academicians, students, and others seeking a full understanding of the topic. The Japanese edition also features an additional foreword written by Professor Kotaro Suzumura of the Institute of Economic Research at Hitotsubashi University, who is also Director of Japan's Fair Trade Commission Competition Policy Research Center.
By showing how economics is applied in the "real world," the book provides insights into compelling issues including:
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More information is available at www.economicsofip.com.
Complimentary copies are available for selected industry participants. To request a copy of the book, please fill out our Publication Request form.
Co-edited by NERA Vice President Christian M. Dippon and K&L Gates Partner Martin L. Stern, the K&L Gates–NERA Global Telecom Review includes insights from a diverse range of legal, economic, and industry professionals from markets around the globe. These chapters offer thoughtful and practical approaches to some of the most pressing litigation, regulatory, and antitrust matters being debated in courtrooms and agencies around the world, including such topics as:
The K&L Gates–NERA Global Telecom Review is an invaluable tool for attorneys, company executives, industry leaders, economists, academics, and other industry stakeholders and participants.
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NERA has used the NERA Carbon Financial Impacts Model to evaluate financial impacts and implications for key decisions for companies in many sectors, including electricity, oil and gas, refining, petrochemical, cement, pulp and paper, iron and steel, chemicals, and aluminum.]]>
The authors note that these 31 settlements averaged about 71% of the amount predicted by NERA’s settlement prediction model. By contrast, the first eight backdating class actions to settle did so, on average, for less than 38% of the predicted amount. For the 31 backdating class actions that have settled to date, the difference between settlements in backdating cases and in other cases with similar characteristics is not statistically significant, whereas the difference was significant for the initial eight cases. These latest findings provide additional support for the hypothesis that the initial settlements were low because some of the weakest cases settled most quickly, rather than because backdating class actions generally settle for less than other, similar cases.
This is the second update to the fourth installment of the NERA Insights: Options Backdating Series, a series of papers dedicated to the analysis of options backdating. All papers in the series include an updated, detailed table summarizing the companies that have been identified for potentially improper option-granting practices. Part I, "Options Backdating: A Primer," provides an introduction to the properties of options as a financial instrument and how these properties relate to the practice of backdating. Part II, "Options Backdating: Accounting, Tax, and Economics," provides an overview of the potential accounting, tax, and economic consequences stemming from the practice of backdating. Part III, "Options Backdating: The Statistics of Luck," sheds light on the limited extent to which academic literature on options timing may be used to draw direct conclusions about specific company practices.
]]>This paper examines the current trends in filings, settlements, recent decisions, and the changing nature of allegations in credit crisis lawsuits. The lawsuits, just like the credit crisis, have evolved towards more complex financial products and the trends in allegations, defendants, and plaintiffs have shifted accordingly. The authors discuss trends in filings and Director and Officer (D&O) liability, examine the types of claims alleged in the lawsuits, and review both the types of defendants facing these claims and the plaintiffs asserting them, and assess the types of products involved, and review trends in bankruptcies. The paper concludes with a discussion of recent decisions.
This is the seventh installment of the NERA Insights series of articles dedicated to the analysis of the credit crisis (the others are available on the right-hand side of the page).
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