Should Market Definition Be Abandoned in Estimating Market Power? An Affirmative Answer from Qihoo v. Tencent
China Legal Science, Volume 5 Issue 1, 133-156, 2017
Posted: 9 Mar 2017
Date Written: March 7, 2017
Professor Louis Kaplow’s proposal to abandon market definition in estimating market power has been criticised by a number of scholars. Both the proposal and its criticism were analysed theoretically. The recent Chinese case of Qihoo v. Tencent provides an empirical examination of the proposal and its criticisms, because the courts deciding the case applied market definition analysis to identify market dominance. The facts and analysis in the decision provide support for Kaplow’s proposal because, despite clear facts proving a direct relationship between a firm’s unilateral conduct and competitive harm, neither the so-called relevant market nor the dominant firm were successfully identified. By examining the facts and analysis in the decision, this article concludes that the market definition approach to identifying market power is misleading and counterproductive, supporting the position of Professor Kaplow. This conclusion further supports an argument that the market definition methodology provisions of Article 19 of China's Anti-Monopoly Law 2008 (AML) and of the Anti-Monopoly Committee of the State Council Guidelines for the Definition of the Relevant Market (Guidelines) should be repealed or modified.
Keywords: market boundary, hypothetical monopolist test, homogeneous goods, substitution analysis, market power, market definition
JEL Classification: K 21
Suggested Citation: Suggested Citation