Whether the forum for dispute resolution is an arbitration or a court there are two critical steps to proving and measuring damages: establishing the appropriate counterfactual and applying the appropriate valuation methodology for measuring damages. CEG's economists are experienced in creating the appropriate framework for analysing damages and in the techniques of valuation. CEG economists have applied economic and financial techniques to major commercial and competition damages cases.
In all damages cases the challenge is to:
- Formulate the appropriate counterfactual or "but for" scenario.
- Provide credible evidence to support the "but for" scenario.
- Appropriately quantify the financial effects on the claimant of the difference between the "but for" scenario and what will be the actual outcome for the damaged party.
- Address the critical problem of separating the effects of the wrongful conduct from the effects of other factors that would have impacted the economic welfare of the claimant regardless of the wrongful conduct.
Our experts have specific expertise in economics and finance as it relates to the estimation of damages. In addition, CEG has substantial industry expertise (e.g. telecoms, energy, FMCG) that can be useful in establishing what might have happened in an industry situation absent the alleged conduct.
CEG has been retained to:
- Assess the magnitude of litigation exposure;
- Develop theories of damages;
- Help outside counsel to identify appropriate evidence for liability and damages;
- Calculate damages using sound economic and financial techniques;
- Develop expert reports and provide expert testimony; and
- Rebut the opinions of opposing experts.
We have used our techniques to many different types of dispute:
- Cartel engaged in raising prices – measured as the effect on buyers of higher prices.
- Damages to a party to a JV agreement – measured as the difference between the two implied business strategies of the parties discounted to the present value using an appropriately determined discount rate.
- Lost profits from sales diverted to the offending product or lost revenues from the non-payment of appropriate royalties.
- Dominant firm engaged in a margin squeeze that reduced the value of a rival firm – generally computed as the present value of projected lost profits.