Division Reply to the submission of 19 October 2009 prepared by LECG

The reply of the consulting company LECG to the Commission’s analysis focuses on four issues:

1. (1)

   Alleged erroneous use of the CAPM model.

   While LECG accepts that a CAPM-based analysis is the correct avenue to pursue, it questions the parameter values that have been used by DG COMP. More precisely, LECG asserts that:

   • the equity premium should have been lower

   • the ‘betas’ should also have been lower

2. (2)

   The Commission should not have limited itself to Consultia IT’s business plan, but should also have used Arthur Andersen’s 2000 business plan to establish the relevant benchmark.

3. (3)

   The Commission did not use the appropriate financial ratios to estimate the expected profitability of the CDL project.

4. (4)

   Furthermore, the Commission did not take into account the expected revenues deriving from the development of hotels and office space.