Edited by John Duns, Arlen Duke and Brendan Sweeney
Chapter 3: Defining and proving markets and market power
Ask a lawyer why market definition is necessary for competition/antitrust cases and the answer is likely to be along the lines of: the statute requires it. In the European Union (EU) Article 102 of the Treaty on the Functioning of the European Union (TFEU), for example, relates to abuse of dominance. A firm may be dominant in a market and so indirectly the statute requires identification of that market. Of more recent origins, Chinese competition law is modelled on EU law and so it too addresses dominance and hence requires identification of a relevant market. This, however, is not always the case. For example the United States Sherman Antitrust Act 1890 makes no specific reference to market in either of the sections outlining the core prohibitions. Even so, the United States (US) courts and regulatory agencies routinely identify the relevant market or markets affected by the impugned conduct to enable the competitive effects of that conduct to be analysed. For the non-lawyer (or for the lawyer experienced in competition cases) the answer is rather different. Market definition facilitates the competition analysis by enabling key analytical measures to be assessed: clearly market shares and measures of market concentration require specification of the relevant market; import penetration must be determined for the relevant group of products; and barriers to entry are obstacles to entry into a market and cannot be identified in the abstract.
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