AREAS OF ACTIVITY

Regulatory consulting

Firms subject to regulation duties often have to get in touch with specific Authorities concerning themes such as the tariff regimes, the remuneration of capital, service quality, investment incentives. CE supports these firms in these situations, helping them to identify the problems in the general framework of regulation by combining the theoretical model, which Authorities implicitly have to comply with, with the practical point of view. The wide experience of our consultants allows us to compare the national proposals with other countries’ experience, with the results achieved and the problems arisen in different sectors or countries.

Sometimes – often – the Authorities’ provisions encourage the firms to take legal action, and that creates the issue to illustrate a complex economic problem to the administrative courts. Under the circumstances, the economist’s role is to explain difficult formulas – and their repercussions on the firm’s problems – to magistrates more accustomed to thinking about general legal issues rather than to understanding mathematical relations or economic principles. The strong experience and track record of CE allows us to do a mediation work, translating economic principles and technicalities into a clearer language in order to represent effectively, together with the legal team, the firms’ rights.

Assistance in financial transactions for infrastructures

If an institutional investor evaluates an equity acquisition (or the financing) of a regulated firm, as for instance a gas pipeline or an airport, an analysis of the regulatory framework is necessary, the so called “regulatory due diligence”, to be carried out together with the legal one. For us this is not only the plain identification of the rules of the sector, but also and especially the identification of the risks the firms have to undergo and the potential opportunities and upsides.

It is then an analysis of the credibility of regulation, both on the basis of the past experiences and with reference to the issues arisen from the current (and forward looking) political debate. CE’s expertise in the field of regulation and its direct knowledge of the Authorities and their internal mechanisms allows us to lead the investment options with higher awareness of the risks and of the possible upsides.

If the asseveration of economic-financial plans of firms which operate in regulated sectors is required, a similar analysis is executed in order to verify that revenue forecasts mirror faithfully the tariff rules, that the accounting rules are satisfactorily interpreted and that the whole project is sustainable.

Energy markets

Our consulting firm has a long experience of activity and research in the energy field, where there are very peculiar problems, linked to the specificity of such sector, i.e. to the operation of the wholesale and retail markets and of the regulated segments. In these markets the public intervention and firms’ free decisions intersect and overlap in an extremely particular way, where long period choices (capacity) and short period choices (prices) interact in such a way, that only an accurate economic analysis can understand.

CE assists clients both during the evaluation of regulatory/law reform proposals, in the definition of competitive strategies or while evaluating alternative future scenarios. This specific know-how helps supporting our clients in consultation processes and in a trial or in judicial procedures relative to this sector.

Support in antitrust proceedings before Agcm

The antitrust authority (Agcm) tackles problems, where it is not easy to mark the border between law and economics; in case of abuse an economist has to verify the violation itself, both by determining the dominance and by qualifying the behaviour at hand. In cartels as well, the market definition and the qualification of the behaviour observed (and the analysis of possible competitive explanations) are traditional activities of our consulting firm.

In case of major mergers, in many countries the support of an economist is sought immediately, so that from the very beginning the data can be presented in the most correct way. In this phase the capability to apply economic theories to practice is essential, because the market definition and a detailed analysis of the competitive processes are fundamental, in order to avoid the risk to block important industrial transactions. The impressive experience and credibility of CE with the Authorities help the dialogue and encourage the correct organization and the success of these transactions.

Damage evaluation - antitrust and intellectual property

The situations where, for anticompetitive behaviours, it is necessary to quantify the losses suffered by a party are numerous: antitrust violations (the so-called private enforcement cases), unfair competition in its several meanings, the possible different industrial property rights violations (brands, patents, industrial secrets, copyrights). In each of these cases the main point is how to build the counter-factual scenario, i.e. to suppose in a reasonable way the outcomes which would have emerged absent the illegal behaviour at stake.

The difference between the activity of an economist and an accountant is that in the economist’s DNA resides the construction of (abstract) models – which are the necessary background of any counterfactual scenario – and their adjustment to the available data. The skill in using these models allows us to evaluate wholly and consistently the effects of the violation, considering every aspect and avoiding damage duplication.

State aids

Public utilities as well as firms operating in competitive markets which receive subsidies or financial interventions by the government – as for instance the energy market, and sometimes also the automotive and steel ones – are beneficiaries of provisions that can be labelled as state aids, sometimes incompatible with the European Union’s treaties.

To answer these doubts (and to represent the firms’ rights before the Bruxelles authorities) it is fundamental to carry out an economic analysis, that persuades the authorities that these aids are respectful of the European principles concerning the horizontal aids, i.e. the regional ones. CE combines the research experience on the state aids, necessary to examine the public policies, with the consulting experience, equally essential to conjugate the analysis of the policies with the firms’ point of view.

Arbitrations

Arbitrations request several skills of different nature: the economist intervenes typically as expert and has to bear the debate with an equally technical counterparty, but, on the other side, he has to persuade arbitrators, who normally are jurists. The first necessary requisite is that credibility that, before the arbitration tribunal – as well as in Courts – originates from a deep and well documented analysis of the problems and from a rigorous but balanced use of the data.

The second key-element is the capability to communicate with effectiveness, capability we developed thanks to a long experience with civil and administrative magistrates.