Market Power and Antitrust Enforcement

59 Pages Posted: 30 Mar 2017 Last revised: 8 Nov 2018

Date Written: March 23, 2017

Abstract

Antitrust has returned to the national agenda. Leading Senators, progressive organizations, and many scholars are calling for stronger antitrust enforcement. One important step, overlooked in the discussion to date, is to reform how market power—an essential element in most antitrust violations—is determined. At present, the very definition of market power is unsettled. While there is widespread agreement that market power is the ability to raise price profitably above the competitive level, no consensus exists on how to determine the competitive level. Moreover, courts virtually never measure market power (or, its larger variant, monopoly power) by identifying the competitive level and comparing a defendant’s price to it. Rather, courts define a relevant market and calculate the defendant’s market share, a process that is often complex and misleading. This Article proposes a new approach that would infer market power from the likely effects of the challenged conduct. Courts ought to identify market power by asking whether the challenged conduct is likely to enable the defendant(s) to raise price above the prevailing level or maintain price above the but for level (the level to which price would fall absent the challenged conduct). This method would not only close the definitional gap, it would simultaneously enable courts to resolve two critical elements of most antitrust offenses—market power and anticompetitive effects— while inferring the relevant market from the result. By reducing the cost and improving the accuracy of antitrust enforcement, this step would enhance its impact.

Keywords: Antitrust Law, Competition Law, Market Power, Monopoly Power, Market Definition, Market Share, Dominance

Suggested Citation

Kirkwood, John B., Market Power and Antitrust Enforcement (March 23, 2017). 98 B.U. L. REV. 1169 (2018), Available at SSRN: https://ssrn.com/abstract=2942315 or http://dx.doi.org/10.2139/ssrn.2942315

John B. Kirkwood (Contact Author)

Seattle University School of Law ( email )

901 12th Avenue, Sullivan Hall
P.O. Box 222000
Seattle, WA n/a 98122-1090
United States

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