SynthesisTHE LEGAL PERSPECTIVE OF MARKET DEFINITION IN MERGER CASES
Tim frazer (Partner, Arnold & Porter )
Three issues are important from a legal perspective: market definition continues to be relevant from a practical standpoint; market definition is a precondition to merger analysis by the Commission; and it is necessary for the justiciability of merger decisions.
The discussion on the place of market defi nition in merger cases arises in the debate between professor kaplow (of harvard law School) and greg Werden at the US department of Justice and it captures many of the important issues. Werden criticised kaplow’s proposal that it is possible to come to a view on market power for merger analysis purposes without ever having to defi ne markets. Werden took issue with kaplow’s theoretical stance, his conclusions and his use of homogenous markets to illustrate his claims. Moreover, he found that it did not disclose helpful analysis of real-world markets—that are seldom composed of single homogenous products. Of some importance, there are often insuffi cient data to estimate relevant elasticities of demand. Even where data are created, problem s arise in the consistency of approach as between data sets, and the ability of the parties to use the competitively sensitive data of competitors.
