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Dissertation
Immaterialgüter- und Wettbewerbsrecht

Market Definition as An Instrument of Competition Law. Comparative Study of Europe and Vietnam

The project seeks to perform an interdisciplinary study of market definition. It focuses on defining the role of market definition in EU and Vietnamese competition law and the development of a new approach where a deeper integration of legal and economic methods allows to correctlydefine the relevant market.

Last Update: 12.01.17

Over the decades, the assessment of competitive effects from mergers and firms’ behavior in the market has become much more sophisticated, and economists question the usefulness of the market definition concept, recommending instead a direct analysis. In 2008, two economists, Joseph Farrell and Carl Shapiro, proposed an economic method named Upward Pricing Pressure, which is based on the incentives for merged firms to increase prices post-merger. This method was recommended as an alternative to market definition in analysing the competitive effects of mergers in markets with differentiated products. It was adopted in the 2010 revision of the US Horizontal Merger Guidelines which imply that market definition is not necessarily the first step in a merger analysis. At the same time, Professor Louis Kaplow from Harvard Law School argues that market definition should be abandoned, claiming that a market cannot be defined without  reference to the magnitude of the market power it is supposed to measure.
Since then, extensive debates have been launched with regard to the role and the importance of market definition as an instrument in analysing competition effects in any particular case. The debate on the changing role of market definition and the possibility of supplanting it with alternative tools has mainly focused on the economic aspects. So, how should EU competition law react to this new approach? Should new guidelines stick to the principle of prescribing that any competition analysis has to start with the definition of the relevant market or should alternative tools be allowed instead of, or in addition to, market definition? Additionally, what legal consequences (that have, however, not been given much attention in the debate) may result from the replacement of market definition with economic tools?
The aim of the research is to produce a precise analysis of market definition from both legal and economic points of view in EU and Vietnamese competition law. The premise introduced in this research is that economic analysis is not used for justifying the need of market definition, but rather for developing methods for defining the relevant markets. In particular, this research will show how and to what extent econometric methods can be used to help correctly assess firms’ market power and competitive effects from mergers in specific types of markets such as dynamic markets. Furthermore, it is important to note that the methods that are already used to define the relevant markets, including those proposed most recently, only take the substitutability on the demand side into account. Yet, the reaction of outsiders to a price increase constitutes a very important factor preventing a firm from exercising market power. One of the objectives of the research is to improve the understanding of the need to take into account the supply-side substitution at the market definition stage and to propose a theoretical approach that considers the supply-side substitution in a more systematic manner than currently practiced.

Persons

Doctoral Student

Thi Thu Ha DAO

Supervisor

Dr. Gintare Surblyte

Doctoral Supervisor

Prof. Dr. Sylvaine Peruzzetto; Prof. Dr. Ngoc Dien NGUYEN

Main Areas of Research

Ökonomisierung des Kartellrechts