Seminar Two - Market Power and Market Definition

Question 1

Q1: What is market power in competition law?

Answer 1

A1: The ability to price above competitive levels, limit output, suppress innovation, or reduce quality over a period of time.

Question 2

Q2: What factors influence market power?

Answer 2

A2: Market shares, barriers to entry, actual competition, potential competition, countervailing buyer power, and barriers to expansion.

Question 3

Q3: What is the Herfindahl-Hirschman Index (HHI) used for?

Answer 3

A3: To measure market concentration. HHI < 1000 indicates low concentration, 1000-1800 indicates moderate, and > 1800 indicates high concentration.

Question 4

Q4: What is the SSNIP test?

Answer 4

A4: A test to see if consumers would switch to alternatives after a small but significant non-transitory increase in price (5-10%).

Question 5

Q5: What is the difference between the relevant product market and the relevant geographic market?

Answer 5

A5: The product market defines which products are interchangeable/substitutable, while the geographic market refers to the area where competition is homogenous.

Question 6

Q6: What is the importance of the Coca-Cola case in market definition?

Answer 6

A6: The European Commission defined carbonated soft drinks (CSDs) as a distinct market, separate from other beverages like water and juice.

Question 7

Q7: What is a challenge in defining markets for two-sided platforms?

Answer 7

A7: The market must assess both the users and advertisers, and it may be difficult to apply the SSNIP test where users do not pay with money but with data.