Doing Good Economics in the Courtroom: Thoughts on Daubert and Expert Testimony in Antitrust

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I. INTRODUCTION

That economics expertise is indispensable in antitrust cases is well understood. Antitrust cases present an array of factual disputes that are bewildering to the ordinary juror and often to the judge who has little experience in the area. What relevant antitrust market is involved in the litigation? Does the defendant possess market power in that market? Were the actions taken by the defendant an anticompetitive exercise of market power, or merely the individually rational choices of a profit-seeking competitor? Did the defendant's actions cause injury to the plaintiff, and, if so, how much injury can be attributed to that action? Each case brings a different context within which these issues must be addressed, both in terms of the industry involved and in terms of the alleged offenses.

In order to present their side of the dispute to the trier of fact, antitrust attorneys almost invariably turn to an antitrust economist as an expert witness. ' Rule 702 of the Federal Rules of Evidence allows an appropriately qualified expert to testify when his or her testimony will be helpful to the trier of fact.2 In practice, the role of the expert economist in antitrust cases is often much more central, reaching conclusions about factual issues like the existence of market power or barriers to entry, and drawing causal links between firms' actions, market outcomes, and claimed damages. Indeed, in some antitrust cases the bulk of the substantive evidence consists of opposing economists presenting and interpreting.

Herbert Hovenkamp devotes a chapter of The Antitrust Enterprise: Principle and Execution to the problems that expert testimony presents in antitrust cases, a topic he has also taken up elsewhere.3 In his view, the problem of expert testimony arises from the incentive to win that faces the "hired gun" expert.4 The payoff for winning, in terms of future business, offers the expert a tempting incentive to align his testimony with his client's interest, a temptation that the clients have little reason to discourage. Dubious testimony can take several forms: ignoring facts that are inconvenient to the desired conclusion; making !insupportable assumptions; manipulating data or statistical results to support the desired result; and reaching conclusions based on unsupported or unsupportable theories. With little ability to understand the technical language and concepts being offered, jurors are more likely to side with the expert who is easier to understand or who is more appealing.

While the lure of future business may be a temptation to engage in sophistry, there are negative consequences to be weighed in the balance by the testifying economist. The opposing side has its own experts, and the prospects of having to defend a dubious position under cross-examination and having to hear the opposing expert explain why one's testimony is worthless are thoroughly unpleasant. Being on the losing side in cases does not enhance one's prospects for future consulting business, particularly if the losses can be attributed to one's having offered !insupportable opinions or, worse yet, manipulated results. The damage to one's professional reputation that accompanies such accusations can be considerable. One can only imagine the feeling of being among the economists whose analyses, rightly or wrongly, are now staple fare for chapters on "quality control" in expert testimony.

The expert testimony problem arises from a more basic problem of asymmetric information: the expert possesses knowledge that the jury and judge do not. To see that this is the more fundamental issue, note that even when both sides' experts refrain from academic malpractice, there can be real disputes between economists about the implications of the evidence, which lead opposing experts to draw opposite conclusions. The jury is still unlikely to appreciate the technical differences that lead them to different conclusions, and again are just as likely to back the better communicator or the more charismatic witness. …