Applied Economic Consultants

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Case Studies

Unocal Liability

Liability, Antitrust
United States District Court for the Central District of California

Unocal influenced California regulators to adopt regulations that, unbeknownst to regulators, conferred monopoly power upon Unocal.  applEcon helped California gasoline consumers to win a settlement of $48 million.

Unocal filed patent applications for certain gasoline formulations, and subsequently proposed that formulations covered by its patent applications be adopted as summertime fuel regulations by the California Air Resources Board (CARB), without disclosing to regulators that the formulations it proposed were covered by patent applications.  The patents were granted, and summertime fuel regulations were adopted that made it difficult for refiners to supply gasoline in California during the summer months without paying Unocal royalties.

Suit was brought by representatives of California gasoline purchasers alleging that Unocal achieved monopoly power in the market for CARB-compliant summertime reformulated gasoline (“summertime RFG”) by abuse of the regulatory process.  applEcon was engaged to support the expert analysis and testimony of Professor Robert Hall regarding market definition, market power, antitrust liability, and the but-for world.  Our thorough grounding in the complex overlapping federal and state regulatory environment and command of the facts provided a sound foundation for Professor Hall’s opinions.  To support his testimony, applEcon commissioned studies by experts in gasoline refining and regulation, and acted as liaison between the economic experts, technical experts, and attorneys.  One study we commissioned showed that gasoline formulations could have been found that would have avoided Unocal’s patents without harm to the environment, and therefore could have served as summertime RFG regulations in the but-for world.

applEcon also provided expert testimony on damages in the Unocal case.