The Brattle Group evaluates mergers and proposed mergers, provides liability and damage analysis in civil antitrust suits, and investigates alleged anticompetitive behavior. Our work combines thorough factual investigation with rigorous economic analysis.
Our experts have analyzed the effects of increased supplier concentration in petroleum products markets and investigated the effects on product prices of increased concentration in the market for gasoline storage. In Europe, we have presented economic reports to competition authorities concerning almost every major merger in the European natural gas industry since liberalization.
In a FERC proceeding, we examined natural gas price formation in California in the midst of its dramatic electric and gas market failures in 2000-2001. Our assessments of market conduct included review of concentration of firm pipeline capacity holdings, patterns of utilization of pipelines serving the California gas market, withholding of pipeline capacity, and assessments of harm to California gas and electricity consumers. We also testified before the CPUC regarding the storage behavior and physical and financial trading activities of a CPUC-regulated local distribution company during the energy crisis.
On behalf of a group of market participants, we investigated the NYMEX Henry Hub natural gas futures contract for possible price manipulation, following its then-unprecedented price behavior. We focused our analysis on schemes that could be designed to drive up prices. We then performed economic and statistical tests for manipulation, examining data on:
- Natural gas futures contracts' volumes and prices
- Agricultural products futures contracts' volumes and prices
- Natural gas cash market (physical) transactions at Henry Hub and other trading centers
- Weekly position and concentration data on commercial and non-commercial Henry Hub futures' traders
- Natural gas storage inventories
- Week-to-week deviations in nationwide weather levels from normal patterns
- Changes in trading controls
Our analysis found that the data did not support a view of chronic or systematic manipulation of the NYMEX Henry Hub contract.
The Brattle Group has been at the forefront of the transition to competition and the implementation of the European Gas Directive since our report for the European Commission, Methodologies for Establishing National and Cross-Border Systems of Pricing of Access to the Gas System in Europe. Our report developed a vision for the evolution of European gas markets, explained how optimal government policy should depend on each market's stage of development, and made specific recommendations to ensure non-discrimination and transparency in the presence of vertical integration. Since then we have performed several additional studies of policies and practices that would continue to foster market liberalization and harmonization.
The Brattle Group has analyzed horizontal natural gas and vertical natural gas-electricity mergers on behalf of merger proponents and concerned parties. For example, in the U.S. we analyzed the antitrust implications of a potential acquisition of a natural gas pipeline by the owner of another pipeline in the same geographic area. This analysis was used to inform the client’s decision on whether to proceed with the acquisition and assisted in evaluating how regulators would view the proposed transaction.
In Europe, we evaluated the potential impact that the merger between Exxon and Mobil would have on competition in European natural gas markets, and proposed an innovative methodology for analyzing market power which focused on the common shareholdings among different natural gas companies in Germany.
We have also performed analyses of the potential for market power abuse from vertical mergers. We provided testimony before federal and state regulators on behalf of interested parties that demonstrated the potential for vertical market power abuse arising from the proposed merger of Southern California Gas Company and San Diego Gas & Electric (which created Sempra Energy) and the proposed merger of Exelon and Public Service Enterprise Group (PSEG).
Complex business and legal matters require intellectually honest and analytically rigorous solutions that are thoughtfully developed and clearly communicated. We apply economic and finance principles with uncompromising quality to achieve clarity in the face of complexity. Independent analysis, responsive execution, and compelling presentation. That’s Brattle. That’s the Power of Economics.