Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
Global Competition Law also provides insight into possible future developments in the field.

Global Competition Law

   Market power is defined as the power to control prices or exclude competition. The most important factor in determining the existence of monopoly power is the alleged monopolist's market share. Although the Supreme Court has refused to specify percentage figures, a market share in excess of 70 percent in the relevant market almost always supports an inference of monopoly power, although this ma …

Market power

      Section 2 of the Sherman Act sets a prohibition on monopolizing, attempting to monopolize, or combining or conspiring with any other person or persons to monopolize any part of the trade or commerce among the several states or with foreign nations (15 U.S.C. § 2). A violation of Section 2 occurs where an individual firm or a group of firms willfully acquires monopoly power in the relevant market, “as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident”, as the Supreme Court clarified it in United States v. Grinnell Corp., (384 U.S. 563 (1966). The implementation of Section 2 thus requires to determine the relevant market and the existence of market power, and to assess the behavior or the monopolist.

Definition

The relevant market is considered both in terms of product and geographic market. To define the relevant product market the control authorities notably look at both the existence of reasonably interchangeable products to those of the defendant and the cross-elasticity of demand, that is, the extent to which consumers are likely to shift from a product to another in response to changes in their relative cost. In addition, practical indicia of product markets or submarkets that were initially developed in the context of merger cases have been applied in monopolization cases. These include industry or consumer recognition of products as distinct, peculiar characteristics or uses of a product, unique production facilities, distinct customers, distinct prices, sensitivity to price changes and specialized vendors. The Horizontal Merger Guidelines jointly issued by the DoJ and the FTC in 1992 and replaced in 2010 elaborate further on these standards. Moreover, the Supreme Court has affirmed that in some instances one brand of a product can constitute a separate market (Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992)).

  Defining the relevant geographic market focuses on the geographic area within which the defendant operates and to which customers can practicably turn for supplies. Key factors may include the area in which the defendant markets its products, the area within which the plaintiff seeks to compete, the characteristics of the products, regulations affecting the flow of goods, shipping limitations etc.

Relevant market

   Market power is defined as the power to control prices or exclude competition. The most important factor in determining the existence of monopoly power is the alleged monopolist's market share. Although the Supreme Court has refused to specify percentage figures, a market share in excess of 70 percent in the relevant market almost always supports an inference of monopoly power, although this may be overcome by other evidence. (United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956)). On the other hand, courts rarely find monopoly power where the market share is less than fifty percent.

  Other evidence used to establish such power includes the ability to apply supra-competitive prices or to force actual or potential competitors out of the market. The strength of competition whether actual or potential, the size of the defendant compared to that of its competitors, the probable development of the industry, barriers to entry, the elasticity of customer demand are also useful indicators of monopoly power.

  Lastly, in a regulated industry, where regulatory authorities exercise control over prices and market entry, courts are less likely to find that defendants are able to control prices or exclude competition even if they enjoy a high market share.

    The offense of monopoly under Section 2 of the Sherman Act implies the existence of two elements: first, the possession of market power in the relevant market and, second, the willful acquisition or maintenance of that power. Thus, according to the first element, the control authorities consider only whether monopoly power exists rather than whether it is exercised. Courts have held that in considering whether a monopoly exists it is not material whether prices are raised or competition actually excluded, but only whether the undertaking has the power to do so. Where a monopoly power exists for only a short time, however, this may not support a monopolization claim.

  Although the vast majority of cases address the monopoly power of sellers, a buyer may also possess power over prices and entry to the market (monopsony power).

  With regard to the second element, the “deliberateness” requirement, it is well established that the mere possession of monopoly power is not unlawful if a firm has gained market dominance simply by being the most successful competitor. Section 2 makes it unlawful “to monopolize,” which requires that the defendant willfully acquire or maintain its monopoly power. A willful monopoly is easy to identify where the defendant has engaged in clearly illegal practices such as boycotts, tying agreements and other anticompetitive practices. However, where the defendant's conduct would not be illegal absent its market power, courts ask whether its conduct had a rational business purpose other than its adverse effect on competitors.

Behavioral requirement

     Section 2 of the Sherman act also prohibits attempts to monopolize by companies that do not yet possess market power but use anticompetitive conduct in an attempt to achieve it. The plaintiff must establish: i) the relevant market; ii) predatory or anticompetitive conduct from the defendant; iii) a specific intent to monopolize; and iv) a dangerous probability of achieving monopoly power (Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, (1993)).

Attempting to monopolize

   Finally, Section 2 of the Sherman Act prohibits combining or conspiring to monopolize, both where the conspirators jointly possess actual monopoly power (joint monopolization) and where monopoly power has not yet been achieved.

  With regard to joint monopolization, if the existence of a conspiracy is established and it is shown that the participants jointly possess monopoly power, the plaintiff need only establish that the necessary and direct result of their joint conduct is the expansion or maintenance of their combined monopoly position; it is unnecessary to show that the conspirators acted with a particular purpose.

Global Competition Law

1437. Market power

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Les notions juridiques connexes

1437. Market power

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Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise