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In 2012, Generic Health released a generic version of Bayer's best-selling oral contraceptive, Yasmin. Bayer was denied an interim injunction but in June 2014 it succeeded in stopping the sale of the generic. Bayer then applied for damages on the basis that each unit sold of the generic was one less unit sold of Yasmin.

Today, Justice Jagot of the Federal Court of Australia awarded damages of more than $25 million plus interest and costs (amounting to a total of around $30 million) to Bayer for Generic Health’s infringement of its patent. The award represented the full claims by Bayer except for a discount of 2% for the uncertainty about Bayer Pharma AG’s costings. Frontier Economics (Asia-Pacific) was retained by lawyers for Bayer and gave expert evidence in the proceedings for damages.

Frontier regularly provides companies and their legal representation with expert economic advice in legal disputes. In particular, we have recently advised on a number of cases relating to damages arising from alleged infringement of patents.

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In their role as the independent regulator responsible for determining the maximum prices that can be charged for certain water services in New South Wales, the Independent Pricing and Regulatory Tribunal (IPART) today released their Draft Determination regarding WaterNSW’s prices for NSW Rural Bulk Water Services to be applied from 1 July 2017.

WaterNSW provides a range of services to different users (some of whom are customers), and a key step in determining the prices charged for WaterNSW’s services is to determine the sharing of the costs of WaterNSW's rural bulk water supply between customers and the NSW Government.  While prices and charges for water should, in general, recover the full efficient cost of providing the service to water users, in some industries there are economic arguments for some government contribution to the cost of providing WaterNSW services. These arguments include the existence of public goods and unavoidable legacy costs, or where it is impracticable to recover costs from specific users of these services.

IPART engaged Frontier (Asia-Pacific) to prepare a report providing expert economic advice on the regulatory framework for sharing the costs of WaterNSW's rural bulk water supply between customers and the NSW Government. The report recommended a new long-term sustainable approach to cost sharing based on sound and well-accepted economic principles, which were ultimately adopted by IPART. In particular, in line with recommendations, IPART has opted to move towards an approach that involves:

  1. identifying the different services being delivered by WaterNSW in each valley
  2. establishing the efficient costs to specific services provided by WaterNSW
  3. subtracting legacy costs to determine the efficient forward-looking costs to be recovered from current and future impactors
  4. allocating efficient forward-looking costs between current and future impactors
  5. recovering costs from customers or NSW Government through prices and NSW Government contribution (or other cost-recovery mechanism).

However, given implementing aspects of the proposed approach requires a range of detailed information and potential changes to billing systems and/or legislative, policy or regulatory change, IPART has opted to retain the original cost share allocation throughout the 2017 determination period, with a move to undertake a targeted review to consult upon and implement aspects of Frontier’s proposed cost sharing approach for the 2021 determination period.

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The Victorian Government today released its findings on the social and economic impacts of the Murray-Darling Basin Plan in Victoria. This includes a joint report by TC&A and Frontier Economics (Asia-Pacific) which the government commissioned to assist its own analysis.

The Murray-Darling Basin Plan formally commenced in November 2012 and sets limits on the amount of water that can be extracted from the Basin. The recovered water will be used to help improve the environmental health of Basin rivers, wetlands and floodplains and the habitats of plants and animals that rely on the river system. The Basin Plan’s overall Sustainable Diversion Limit (SDL) aims to recover 2750 gigalitres (GL) of water for the environment and comes into effect in 2019. There is scope within the Basin Plan, however, for the SDL to be in the range of 2100 GL to 3200 GL with the use of offsetting measures and on-farm efficiency measures.

The report by TC&A and Frontier Economics was commissioned to assist the Victorian Government undertake a socio-economic analysis into the impacts in Victoria of water recovery through the Basin Plan. This analysis will inform discussions with the Commonwealth Government and help to make sure that all future water recovery from Victoria is based on robust evidence that it can be done with neutral or positive social and economic impacts. The report sets out a systematic and repeatable method for analysing the impacts of the Basin Plan in Victoria. It is not a comparison of irrigation before and after the Basin Plan, rather it is a comparison of what happened after the Basin Plan was implemented with what could reasonably have been expected to have happened if the Basin Plan had not been implemented.

The report found that characteristics of water use in the southern-connected Basin have changed significantly as a result of the Basin Plan. The consumptive pool has decreased significantly and the mix of industries has changed; horticulture, with its relatively fixed water demands now accounts for a larger proportion of the consumptive pool. Irrigators have been adapting, but the recent relative abundance of water since buyback was completed (with the notable exception of 2015/16), has enabled many irrigators to maintain water use though water allocation purchases. Consequently many of the socio-economic impacts of the Basin Plan may not be observed until the next drought.

Frontier Economics regularly advises governments, regulators and businesses in the water sector in Australia and the region.

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Frontier Economics is an associate sponsor of the GCR Live Singapore: 6th Annual Asia Pacific Law Leaders Forum, currently underway in Singapore.

The conference this year focuses on the new antitrust regimes that have been put in place within the region, particularly those in ASEAN nations. Frontier (Asia-Pacific)’s head of legal and competition, Dr Philip Williams, moderated a session today, “Disruptive Technology and Two-Sided Markets – Competition Law Approaches to a New Way of Doing Business”.

Frontier regularly advises clients in the region on a range of dispute support and competition matters.

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