Price-Based Techniques for Market Definition & Buying Power Index

Abstract

This paper focuses on a recent merger in Greek diary sector and empirically investigates the delineation of the market of production and distribution of white milk in Greece, the role of product asymmetries in market delineation along with evidences of unilateral effects of the merger and the existence of buying power of merged entity in the relevant product market for the procurement of raw milk. The empirical results indicate that the markets of production and distribution of fresh, High Pasteurization & Condensed milk in Greece are highly inelastic and constitute distinct relevant product markets. Large product asymmetries lead to broader relevant product markets, while evidences of unilateral effects are present for specific pairs of white milk products. Lastly, the merged entity may exercise its buying power after the clearness of the merger, even thought in the case where the market elasticity of supply and the own price elasticity of demand of the competitive fringe are highly inelastic.

Keywords: Market Definition, Conditional Elasticities, SSNIP test, Critical Loss Analysis, Diversion Ratio, Unit Root tests, Cointegration Analysis, Upward Pricing Pressure, Buying Power Index

JEL Classification: C01, C13, C15, C21, K00, L16