The Willful Acquisition or Maintenance of That PowerĪs noted above, holding market power is not itself illegal. The exercise of market power can be seen directly under those circumstances.Ģ. Thus, market power can be presumed without analyzing market share in some cases, such as a government entity exercising its regulatory control over a market in which it also competes as a commercial participant. There are exceptions, however, for unique markets in which the target firm has market power for some reason other than reflected in its market share. Market power is possible at a lower market share. As a general guideline, courts will typically not find a firm with less than sixty percent market share to have monopoly power. A number of factors can affect the threshold market share, such as barriers to entry and market concentration. Monopoly power is typically, but not always, determined by market share, but not by any particular percentage. Monopoly power is the power to control price (or output) or to exclude competition within the affected market. A commonly used quantitative analysis is SSNIP (or “Small but Significant and Nontransitory Increase in Price”), which uses a hypothetical monopolist to determine mathematically whether that monopolist could impose a significant increase in price in a given area. A qualitative analysis would look at where competitors market products, regulatory requirements that affect the flow of commerce, transportation limitations, etc. Geographic markets can be analyzed using either qualitative and quantitative methods (or both). The scope of the geographic market may be important, particularly in hospital and healthcare cases where the geographic market is often narrow. But you can be sure that if the price of tablets doubled overnight but laptops remained the same price, demand would go up for laptops. Some people prefer laptops, while others prefer tablets. For example, laptops and tablets are similar, but different products. Interchangeability concerns more practical factors, such as the purpose and characteristics of a product. In technical antitrust economics parlance, the market is defined by reference to “cross-elasticity of demand” and “interchangeability.” Cross-elasticity concerns whether a price change of one product will alter the demand for another. For example, some products are not perfect substitutes, but do compete. In each dimension, the purpose is to determine the “area of effective competition.” This can be more difficult than you think. So the more clear the detrimental effects of the conduct, the less a court (or agency) will need to focus on defining the market.ĭefining a relevant market requires analyzing two dimensions: (1) the product or service dimension, and (2) the geographic dimension. As the Supreme Court puts it, defining the market is a means, not an end, of antitrust analysis. But the depth of the analysis will depend on the effects of the conduct at issue. To determine whether an entity has market power, you first have to define the relevant market. The Possession of Monopoly Power in the Relevant Market The willful acquisition or maintenance of that power as distinguished from attaining it by having a superior product, business acumen, or even an accident of historyĪs you can see, these elements still don’t tell you much about whether you have a claim or whether you risk a claim.The possession of monopoly power in the relevant market.Beware, though, because there is a fine line between rigorous competition on the merits and anticompetitive monopolist conduct. A monopolist runs into trouble when it uses its monopoly power or obtains or enhances its market share in an improper way. antitrust laws to be a monopolist in and of itself. In the United States, it is illegal for any person or entity to “monopolize any part of the trade or commerce among the several states, or with foreign nations.” But just because one might be a monopolist doesn’t mean the law has been violated. You can read our article describing the elements of monopolization at The Antitrust Attorney Blog here. Outside the United States, a firm with this extreme market share is called “dominant.” You can read more here about the standards for an abuse of dominance in Europe. If you-or a competitor-has a sizeable share of the market, your (or your competitor’s) conduct might be a monopolist subject to Section 2 of the Sherman Act.
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