Market Definition in Differentiated Goods When the Final Consumer Buys the Good: Insights from the H&R Block Case

Abstract

This paper addresses the development of market definition analysis in three recent merger cases (Staples, Whole Foods, and H&R Block). The discussion traces the evolution of the market concept from the naïve Brown Shoe criteria to a price discrimination analysis implicit in Staples to the current application of diversion theory in the H&R Block case. By replacing fact with theory, this theoretical approach runs the risk of returning to the world of Brown Shoe. Additional discussion of H&R Block suggests that price discrimination remains relevant and could have been developed through further factual study. Moreover, even if theory is used to define a narrow market, the analyst must address a range of entry issues before concluding that the merger is likely to substantially lessen competition.

Keywords: market definition, differentiated goods, H&R Block, price discrimination, merger policy

JEL Classification: K21, L40