Contract analysis

I. Introduction and Purpose This memorandum summarizes the principal findings and conclusions of the economic expert report (the "Report") prepared by Dr. Henrik Johansson, Professor of Economics at Georgetown University and Senior Consultant at Apex Economics LLC, 900 G Street NW, Suite 700, Washington, DC 20001. The Report was completed on June 27, 2025 and delivered to Calderwood & Harkness LLP on that date. Dr. J

II. Expert Qualifications Dr. Henrik Johansson is a Professor of Economics at Georgetown University, where he has held a tenured faculty appointment since 2009. He received his Ph.D. in Economics from the Massachusetts Institute of Technology in 2003 and his B.A. in Economics (summa cum laude) from the University of Chicago in 1997. Dr. Johansson's areas of academic specialization include industrial organization, ant

III. Transaction Overview (As Presented in the Report) The Report provides a detailed overview of the Transaction and the parties, which is summarized below. A. The Buyer Cascade Retail Holdings Inc. is a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol CRHI. Cascade is headquartered at 4500 Elliott Avenue West, Suite 3200, Seattle, Washington 98119. Cascade is a diversified omn

IV. Scope of the Economic Analysis Dr. Johansson's Report addresses the full range of economic issues relevant to the DOJ's review of the Proposed Acquisition under Section 7 of the Clayton Act. Specifically, Dr. Johansson was asked to analyze the following: (a) The appropriate relevant product market or markets in which to evaluate the competitive effects of the Transaction; (b) The appropriate relevant geographic m

V. Relevant Product Market Definition A. Analytical Framework Dr. Johansson's analysis of the relevant product market follows the standard framework established by the Merger Guidelines and widely accepted in antitrust economics. The cornerstone of this framework is the hypothetical monopolist test, also known as the "SSNIP test" (Small but Significant and Non-transitory Increase in Price). Under this test, the relev

VI. Relevant Geographic Market Definition Dr. Johansson concludes that the relevant geographic market for the analysis of the Proposed Acquisition is the United States (nationwide). This conclusion is based on several factors. First, both Cascade and NovaMart serve customers throughout the United States. NovaMart's online marketplace platform is accessible to buyers in all 50 states and the District of Columbia, and

VII. Market Participants and Market Share Analysis A. Identification of Market Participants Based on his analysis of the relevant product and geographic markets, Dr. Johansson identifies the following key participants in the market for online marketplace platforms for specialty consumer goods in the United States:

1. Cascade Retail Holdings Inc. (CascadeDirect.com marketplace function): As described above, Cascade operates a third-party marketplace on CascadeDirect.com that enables independent sellers to list and sell specialty consumer goods, home décor, artisanal products, and consumer electronics accessories. The marketplace function was launched in October 2022 and has been growing steadily but remains a relatively modest

2. NovaMart Global Inc.: NovaMart is one of the largest independent online marketplace platforms in the U.S. dedicated to specialty consumer goods, with approximately 62,400 active sellers and 9.1 million registered buyers, and FY2024 GMV of approximately $6.2 billion.

3. BrightBazaar Inc.: BrightBazaar is identified in the Report as the next-largest competitor to NovaMart in the specialty consumer goods marketplace segment. BrightBazaar is a publicly traded online marketplace platform that focuses on curated home décor, lifestyle products, and artisanal goods. BrightBazaar has experienced rapid growth in recent years and is itself a relatively recent entrant into the specialty con

4. Other competitors: The remaining market share is distributed among numerous other marketplace platforms and niche specialty ecommerce platforms. These include range smaller curated marketplaces focused on specific product categories (e.g., handcrafted goods, vintage items, boutique electronics accessories), as well as certain hybrid platforms that operate both as first-party retailers and third-party marketplaces

VIII. HHI (Herfindahl-Hirschman Index) Analysis A. Pre-Merger HHI Calculation The Herfindahl-Hirschman Index ("HHI") is a widely used measure of market concentration that is calculated by summing the squares of the market share percentages of all firms in the relevant market. The Merger Guidelines use HHI thresholds to classify markets as unconcentrated, moderately concentrated, or highly concentrated, and to assess

IX. Merger Simulation Analysis A. Model Description In addition to the structural market share and HHI analysis, Dr. Johansson conducted a merger simulation analysis to predict the likely post-merger pricing effects of the Transaction. Merger simulation models are a well-established tool in antitrust economics and are frequently employed by both merging parties and government agencies to estimate the competitive effe

X. Entry and Expansion Analysis A. Low Barriers to Entry Dr. Johansson's Report includes a detailed assessment of the conditions of entry into and expansion within the relevant market for online marketplace platforms for specialty consumer goods. His conclusion is that barriers to entry are relatively low compared to traditional brick-and-mortar retail and many other industries. This conclusion is based on several ke

XI. Efficiencies Analysis A. Procompetitive Efficiencies Dr. Johansson's Report identifies several categories of significant procompetitive efficiencies that are expected to result from the Transaction. These efficiencies are expected to benefit consumers and sellers alike and to enhance, rather than diminish, competition in the relevant market. Logistics and Fulfillment Integration. The combination of NovaMart's 14-

XII. Potential Divestiture Contingency (Brief Reference) While Dr. Johansson's primary and strong conclusion is that no divestiture or other structural or behavioral remedy is warranted in connection with the Proposed Acquisition, the Report briefly addresses a potential divestiture contingency that the merging parties have identified in the event that the DOJ were to require a remedy as a condition of clearance. Spe