Market Definition And Implications For Merger Review

11 July 2011
By Dr. Lawrence Wu with Corey Roush of Hogan Lovells LLP

While the 2010 Horizontal Merger Guidelines de-emphasize market definition analysis and place an increased focus on competitive effects, market definition continues to be central to establishing a prima facie case in court. In this Law 360 guest column, NERA Senior Vice President Dr. Lawrence Wu and Corey Roush, partner with Hogan Lovells LLP, examine the importance of market definition in the courts and in the merger review process.
Based on their review of recently litigated merger cases, the authors note that the US antitrust enforcement agencies are more likely to prevail in court when they are able to successfully defend their proposed market definition (in addition to demonstrating likely anti-competitive effects). Therefore, the Federal Trade Commission and Department of Justice will need to continue to pay a great deal of attention to market definition -- and the evidence that supports it -- during the merger review process. The authors also suggest that practitioners must recognize the continued importance of market definition in the merger review process, and that they should keep in mind the types of evidence and arguments that the courts find valuable and persuasive.
The authors conclude that what happens in the courts must ultimately guide the type of analysis that is done in a merger evaluation; therefore, market definition remains important because courts continue to look to the antitrust agencies to define and defend a relevant market in which the market shares and concentration are sufficient to help support a prima facie case.