Antitrust and competition policy has many facets, from merger control and the assessment of horizontal and vertical agreements, to investigations of abuse of dominance or monopolization and general market-wide investigations of a particular business or industry practice. Despite this array of issues, in almost all cases market definition analysis plays a significant role.

Market definition is typically the first step in a competitive analysis. As described by the European Commission in its notice on market definition, the purpose of the analysis is to “identify and define the boundaries of competition between firms” and to “establish the framework within which competition policy is applied.”

In this article from the 2007 edition of The Asia-Pacific Antitrust Review, a Global Competition Review special report, the authors explain the economic foundations of market definition. The authors note that, although the conceptual underpinnings of market definition analysis may appear straightforward, practical application will vary from case to case. Indeed, the potential for price discrimination, the position of the product in question in the supply chain (i.e., whether it is an input or a final product sold to consumers), and the possible asymmetry of antitrust markets are just some of the factors that make market definition analysis challenging and complex.

Reproduced with permission from Law Business Research Ltd. This article was first published in Global Competition Review - Asia Pacific Antitrust & Trade Review 2007 (published in May 2007). For further information please visit www.globalcompetitionreview.com.