Economic Testimony Inadequate To Permit Claim Of US Impact From Asian Conspiracy To Proceed To Trial

The World in U.S. Courts: Winter 2018 - Antitrust/Competition/Foreign Trade Antitrust Improvements Act (FTAIA)
December.18.2017

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In re Optical Disk Drive Antitrust Litigation, US District Court for the Northern District of California, December 18, 2017

The opinion in this long-running case addressed claims by a class of indirect purchasers of products containing optical disc drives (ODDs) who allege injury from an Asian price-fixing conspiracy. At issue was the defendants’ motion for summary judgment following completion of fact and expert discovery. As relevant here, the Court discussed whether the plaintiffs came forward with sufficient evidence to show a genuine issue for trial on the questions of causation, injury, and damages. Specifically, the Court stated that indirect-purchaser plaintiffs “must proffer evidence not only as to the calculation of the overcharge on ODDs, that this overcharge resulted in offsetting with other lower quality component parts, and that the offsetting would have occurred at 100% of the value of the overcharge, meaning that no link in the supply chain would have swallowed any portion of the overcharge. This theory of pass-through . . . establishes the necessary link between Defendants’ conduct and [plaintiffs’] injury as alleged.”

The plaintiffs rested principally on the testimony of their expert economic witness, and the Court found it lacking. Observing that an expert opinion may provide guidance as to how to interpret facts but cannot take the place of facts, the Court observed that the facts the expert did rely upon were “often tangentially related and at best, of uncertain application to the pass-through issue.” Indeed, it noted that certain of the facts were “wholly consistent with what any seller in a competitive market would desire,” and thus could not be used to support the allegation of a conspiracy. The Court also rejected the use of “empirical studies” in economic literature that had not been shown to reflect the market at issue. Finally, the Court found testimony of an executive from retailer Circuit City too general in nature to be probative, rejecting it because the executive could provide no instances of overcharges having been passed on to US customers or reductions in quality to save costs. For these reasons, the Court entered judgment for the defendants.

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