Analysis Group Supports Two Experts in Fraud Case

March 21, 2014

Delaware's Chancery Court decided in favor of Dutch company Koninklijke Philips Electronics, N.V. (Philips N.V.) in a fraud case brought by Italian businessman Carlo Vichi, who had loaned €200 million to a now-bankrupt joint venture, of which Philips N.V. was a partial owner. Among other claims, Mr. Vichi alleged that Philips N.V. falsely represented that it would "stand behind" the joint venture's financial obligations and that Philips N.V. withheld from him that the joint venture benefited from a price-fixing cartel.

Attorneys at Sullivan & Cromwell LLP, representing Philips N.V., retained Analysis Group to help address Mr. Vichi's claims. An Analysis Group team, led by Managing Principal Justin McLean and Vice Presidents Ajay Jyoti and Mike Cliff, supported Analysis Group affiliate and independent consultant Roberts Brokaw, who opined on the characteristics of the loan at issue and aspects of the viability of the joint venture at the time of the loan. Another team, led by Managing Principal Tasneem Chipty, Vice President David Mishol, and Manager Jonathan Borck, supported academic affiliate Robert Pindyck, Bank of Tokyo--Mitsubishi Professor of Economics and Finance at MIT's Sloan School of Management. Professor Pindyck responded to the plaintiff's price-fixing allegations.

After a five-day trial, Vice Chancellor Donald Parsons Jr. found in favor of Philips N.V. and cited both Mr. Brokaw and Professor Pindyck favorably in his opinion. Vice Chancellor Parsons stated that Mr. Brokaw provided "unrebutted expert testimony" that the interest rate on the loan made by Mr. Vichi was inconsistent with a promise by Philips N.V. to stand behind it. Vice Chancellor Parsons also wrote in his decision: "As Philips N.V.'s antitrust expert, Robert Pindyck, noted in his expert report, however, [Plaintiff's] approach is problematic, because there is considerable variation in the effect that cartels have on prices and there are numerous examples of cartels that were entirely or nearly entirely unsuccessful at raising prices above competitive levels."