Demonstrating Expertise – Structure and Application in Reporting

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As courts become increasingly more open to the use of expert witness evidence in complex matters, experts should be particularly mindful to demonstrate the relevance of their expertise to key issues. The Court’s discussion of expert evidence in this matter highlights how and why experts should show compliance with the Evidence Act 1995 (Cth).

Background

In Australian Competition and Consumer Commission v Trivago N.V. [2020] FCA 16 the ACCC alleged that Trivago had breached section 18 of the Australian Consumer Law by misleading visitors to the Trivago’s website.

Trivago, a website which allows its users to search for hotel accommodation using city or region, dates of stay, and other search filtering options, had advertised on TV that their search engine could “Find your ideal hotel for the best price” or “Find your ideal hotel and compare prices from many websites”.

When customers searched for accommodation, the site generated a list of hotel accommodation offers, along with booking rates for each offer on different booking sites (e.g. wotif, booking.com). Trivago’s results page would emphasise a ‘Top Position Offer’— a booking site deal highlighted (through webpage placement and larger, bolded text) as the cheapest option.

Trivago’s search engine also relied on an undisclosed ‘Cost Per Click’ (‘CPC’) variable. CPC referred to a fee which Trivago required from online booking websites to display website deals in Trivago searches. The fee took the form of a bid from booking sites, with no specification by Trivago as to its amount other than it should exceed a minimum amount determined by Trivago.

Trivago users were unaware that the site received revenue purely through CPC intake. Contrary to its representation that the site could ‘easily identify the cheapest rates available’, Trivago in fact prioritised offers from sites that paid higher CPC fees and represented these offers as the cheapest amongst booking sites in instances where those ‘top’ hotel offers frequently were not. [14]

Key Issue

The ACCC brought proceedings on the basis that Trivago did not display offers according to a direct price comparison of hotel rates and features as it claimed, but rather by reference to CPC bids. [13] The ACCC argued that the customer’s false impression of Trivago’s accuracy in its accommodation comparisons constituted a contravention of the Australian Consumer Law’s Misleading and Deceptive Conduct provisions.

Expert Evidence

Strength of Consumer Behaviour Evidence

The Commission called Professor Slonim, (a Professor in the School of Economics, Faculty of Arts and Social Sciences at the University of Sydney) to provide expert evidence on the effect of Trivago’s website interface on consumer decision-making, in particular whether ‘top offer’ deals had indeed been construed as the most economical deals.

Trivago sought to dismiss Professor Slonim’s evidence on the basis that his report did not show compliance with section 79 of the Evidence Act. The defendant argued that the report only provided personal impressionistic views” unrelated to Professor Slonim’s expertise. [148] The Defendant further cited caselaw stating that expert evidence on consumer behaviour in purchasing modest everyday items could not be admissible because of its generality, and therefore its susceptibility to personal views removed from expert knowledge.

The court disagreed with this characterisation of the expert’s evidence. Justice Moshinsky firstly affirmed that admissibility under s 79 of the Evidence Act should be considered on a case-by-case basis.

Secondly, the Court emphasised features of Professor Slonim’s report which were significant in distinguishing the expert’s analysis of online purchasing tendencies from layman’s knowledge of their personal use of websites, including that:

  • The report contained “a summary of discipline-specific concepts” and referenced academic sources which could support the explanations of those concepts as Professor Slonim outlined them in his report; [152] and
  • The report explicitly proscribed a behavioural economics context in its analysis of travel booking customers’ evaluations of options when using hotel booking websites. The expert report contained an index of key technical concepts and methods, and clearly underscored the application of these data-analysis concepts, highlighting the direct relevance of his expertise to the facts of the matter.

 

Professor Slonim’s evidence highlighted how behaviours of online booking customers deviated from perfect models of consumer behaviour due to bias in online consumers’ search strategies. The perceived inconvenience of a more thorough search for the cheapest and best quality deal (presenting as “loss aversion bias” and “present bias”, amongst other tendencies) gear consumers towards using ‘short cuts’ that result in deviations from objectively optimal choices. [158]

Trivago’s emphasis on the Top Position Offer therefore reinforced false consumer confidence in the offer value and led consumers to believe that the Top Position offer was the more effectively discriminatory choice than it in fact was.

Strength of Economic Evidence

Mr Patrick Smith, a partner at RBB Economics, presented evidence on behalf of Trivago. The court found the bulk of Mr Smith’s report admissible but ultimately gave it little weight for two main reasons:

  • The expert’s use of certain terminology was misleading or insufficiently justified. Mr Smith opined that the hotel offers, as they appeared on the Trivago site carried a ‘marketing message’ distinct from a direct price and cost-benefit appraisal of each offer. The Court disagreed, finding that Trivago’s Top Offer messaging was still not reconcilable with representations in Trivago commercials that it provided an impartial comparison of the value of booking site deals.
  • Mr Smith incorrectly assumed that CPC bids could reflect the quality of hotel booking site deals. The expert’s report contained neither statistical research to verify this assumption nor any logical explanation as to how CPC bidding could inherently reflect the quality of actual hotel services. [177]

Decision

The Court decided in favour of the ACCC. It gave significant weight to Professor Slonim’s evidence on the persuasiveness of Trivago’s website presentation in its assessment of whether Trivago had contravened s 18 of the ACL.

Takeaways

Expert opinions on consumer behaviour regarding modest everyday purchases is not by default inadmissible because of its generality. Courts will assess the proper application of expertise to material facts on a case-by-case and holistic basis. (This case preceded the judgement in the recent Google Federal Court Decision which also accepted the evidence of Behavioural Economists on consumers’ interactions with digital interfaces).

Expert should always highlight where and how their opinions draw on technical knowledge or expertise. This step demonstrates compliance with section 79 of the Evidence Act and enhances the persuasiveness of opinions by validating them within the context of a technical field of knowledge. For very complex and technical reports, experts should consider including a glossary of terms or key concepts at the start of their report.

 

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