applEcon

Applied Economic Consultants

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Case Studies

CRT Class Certification

Antitrust, damages analysis, class certification
U.S. Northern District of California

Testimony from Dr. Janet Netz of applEcon assisted purchasers of cathode ray tube (CRT) televisions and computer monitors in obtaining a recommendation for class certification from the Interim Special Master who wrote: “Having undertaken a rigorous analysis of plaintiffs’ evidence (particularly, the reports of Dr. Netz), the Interim Special Master finds that plaintiffs have satisfied their burden of showing that common questions predominate on proof of the cartel’s price-fixing activities, the direct purchasers’ payment of supra-competitive pricing as a result of the alleged cartel, on proof of common impact on class members, and on proof of damages.”

CRTs were the dominant technology used to display pictures in televisions and computer monitors in the 1990s and early 2000s. The class covers purchases made in 22 states from roughly 1995-2007. Defendants are CRT manufacturers that collectively controlled approximately 90% of worldwide CRT production. Plaintiffs allege that defendants formed a cartel to fix prices to direct purchasers, and that these direct overcharges were subsequently passed on to end-consumers who purchased CRT televisions and monitors.

applEcon has supported class counsel throughout the legal process including during discovery, depositions, and the class certification hearing. Dr. Netz’s testimony relied upon her economic expertise regarding the industry structure, market shares, damages, pass-through, and cartel effectiveness. In addition to Dr. Netz’s written testimony in support of class certification, applEcon examined and responded to the defendants’ expert report. applEcon assisted plaintiffs’ counsel in their opposition to defendants’ Motion to Strike Dr. Netz’s testimony, including an additional Declaration submitted by Dr. Netz. The Interim Special Master also recommended that the judge deny defendants’ motion to strike.

Because applEcon approaches cases by developing a deep understanding of the industry and products at issue, we were able to overcome gaps in data and documentary evidence that resulted from several defendants being defunct and not providing evidence. applEcon’s depth of understanding allowed Dr. Netz to show that U.S. consumers were impacted by the cartel’s actions, although the firms themselves were based in foreign countries.

applEcon takes a comprehensive approach to data analysis: Dr. Netz’s testimony is based upon all the data available, rather than isolated anomalies that might appear convincing; this approach produces robust and reliable conclusions. The Interim Special Master recognized the difference between these two approaches: “As stated above, the Interim Special Master rejects defendants’ reliance on anecdotal testimony of outlier circumstances as a substitute for Dr. Netz’s detailed, record-based analysis.”

Additionally, applEcon was able to show the extreme diversity of products claimed by defendants arose from conflating minor, economically insignificant product variety and economically meaningful product differentiation. applEcon demonstrated that a limited number of product attributes explained the great majority of price variation, and that the cartel’s price fixing practices focused on exactly these attributes. The Interim Special Master agreed: “Dr. Netz quite intentionally and with legitimate empirical reasons controlled only for the major variables of date, application, size and finish.”

Showing that a price structure existed for defendants’ CRT sales was instrumental in proving common impact. A price structure implies that if the cartel is effective, the entire price structure increases relative to the prices that would hold but-for the collusion. In regards to Dr. Netz’s testimony regarding the existence of a price structure, “the Interim Special Master concludes that Dr. Netz’s response is in accordance with sound economic logic. A reading of Dr. Netz’s reports shows that she did not in any way ‘ignore’ data regarding individualized discounts; rather, she demonstrated why they do not invalidate her theory.”

Because the class is made up of indirect purchasers of CRTs, showing common impact on class members involved extensive pass-through studies. CRTs change hands several times as they move through the manufacturing and distribution channel before ultimately being purchased by end-consumers as part of a television or computer monitor; therefore, calculating pass-through throughout the entire chain of distribution was essential. In total, Dr. Netz performed 47 pass-through studies covering all types of at-issue CRT products, being sold by all types of resellers operating at all levels of the distribution channel. In his recommendation against defendants’ Motion to Strike, the Interim Special Master stated that, “Dr. Netz did not reach her conclusion based on a naked assumption. She relied on sound economic theory that pass-through occurs when price increases are significant, industry-wide and not transitory.”

Additionally, Dr. Netz showed that damages could be calculated using common proof. This required proving that valid methods can be employed to determine the prices of CRTs that would have occurred absent the cartel. In his recommendation to certify the class, the Interim Special Master “concludes that Dr. Netz has offered a reliable methodology to assess classwide damages using common proof. Indeed,as discussed above, Dr. Netz has substantively described four detailed and widely-accepted methodologies to calculate the ‘but for price’ that consumers would have paid absent the conspiracy.”

applEcon is a team of economists specializing in antitrust, intellectual property and commercial damages issues.  We offer a complete range of services: expert testimony, consulting experts, or staff support for outside experts.

Read the Interim Special Master’s recommendation to grant plaintiff’s Motion for Class Certification Part 1.

Read the Interim Special Master’s recommendation to grant plaintiff’s Motion for Class Certification Part 2.

Read the Interim Special Master’s recommendation to deny defendants’ Motion to Strike Dr. Netz’s expert testimony.