Econometrics Expert Witness Comments on Mushroom Price Fixing

In re: Mushroom Direct Purchaser Antitrust Litigation United States District Court, E.D. Pennsylvania.July 29, 2015

Background:

Plaintiffs in this case were purchasers of mushrooms who claimed that the defendant committed antitrust violations when they agreed to set minimum prices for mushrooms, and to restrict the supply of mushrooms by purchasing mushroom farms. The plaintiffs further allege that, as part of the price-fixing scheme, the defendant cooperative collectively coerced independent growers into joining the cooperative or interfered with the growers’ ability to sell mushrooms at prices below those set by the cooperative.

Econometrics Expert:

To support their motion for class certification and estimation of damages, Plaintiffs submitted an expert report of an econometrics expert. He is a professor at Harvard Law School specializing in antitrust law and antitrust economics. He also provides expert testimony in legal matters and is a graduate of Harvard Law School. Defendants submitted an expert report by another econometrics expert witness in support of their opposition to class certification. Dr. Johnson is the CEO of a consulting firm that provides expert economic and financial analysis. He also teaches a class on antitrust and public policy at Georgetown University. He has a Ph.D. in economics with a specialization in econometrics from M.I.T.

The plaintiff expert made several conclusions:

(1) the cooperative’s minimum pricing policy likely impacted all or nearly all class members;

(2) there were class–wide damages from the defendant’s minimum pricing policy with an estimated damages total of millions of dollars;

(3) the cooperative’s supply control agreement had common anticompetitive impact on the putative class; and

(4) damages resulting from the supply control agreement total millions of dollars.

Daubert challenge:

Defendants argue that the econometrics expert’s opinions in this case were inadmissible. Defendants contended that the expert is not qualified to provide expert testimony in the form of multiple regression analysis because he does not have a degree in economics, econometrics or statistics.

Econometrics:

Econometrics is ”the branch of economics that expresses economic theory in mathematical terms and that seeks to verify theory through statistical methods.”

Court analysis: The court denied Daubert challenge concluding that “the lack of econometric/economic credentials affects the weight” although “not the admissibility”. The econometrics expert called in this case was an expert in antitrust economics generally. Even though antitrust law is a field that has a “more or less direct relationship to economics” compared to most other disciplines or areas of law, the “role of economics in antitrust law” has been described as “the whole game.”

The court made a point that because of the close relationship between the fields, the difference between qualification in statistics as opposed to the application of statistical models in antitrust economics “is of necessity indistinct,” meaning it does not necessarily mean that the expert’s opinions “are beyond [his] sphere of expertise, especially since he is be subject to cross–examination, even though he does not have an education in econometrics”.

The expert has been described as a “highly qualified antitrust titan….[who] studied the economic analysis of law in addition to antitrust law at Harvard Law School. He is the author of numerous books and articles located at the intersection of antitrust law and economics. In addition, one of those works has been cited by the Supreme Court. He has been qualified by the District of Massachusetts to perform “regressions and other technical statistical analyses” in the antitrust class certification context as an expert in the “field of antitrust economics”.

Therefore, the expert clearly demonstrated familiarity with the literature regarding calculation of antitrust damages. The expert is qualified to perform regression analysis in the antitrust context. However, he doesn’t have the same educational background in econometrics that’s typical of experts admitted to conduct regressions.