┌─────────────────────────────────────────────────────────────────────────┐ │ │ │ │ │ │ │ _ __ ____ _ │ │ | |/ /___ _ _ / ___|___ _ __ ___ ___ _ __ | |_ │ │ | ' // _ \ | | | | | / _ \| '_ \ / __/ _ \ '_ \| __| │ │ | . \ __/ |_| | | |__| (_) | | | | (_| __/ |_) | |_ │ │ |_|\_\___|\__, | \____\___/|_| |_|\___\___| .__/ \__| │ │ |___/ |_| │ │ │ │ │ │ │ │ │ └─────────────────────────────────────────────────────────────────────────┘ SILICON VALLEY ANTITRUST V.5 BOALT HALL SCHOOL OF LAW (2015) Hanno Kaiser UNILATERAL CONDUCT - We want firms to act unilaterally, as a result: ROR (no per se rules) - Monopoly is not illegal, monopolization is (big + bad) §2: MONOPOLIZATION ┌───────┐ │ §2 │ └───────┘ │ ┌─────────────────┴──────────┬───────────────┐ │ ┌───────┼───────────────┼───────┐ | │ | | ROR │ ┌───────────┐ │┌─────────────┐ ┌─────────────┐│ │ Monopoly │ ││Exclusionary │ │ No business ││ ┌─>│ power │<--Causation---+ conduct │ │justification││ │ └───────────┘ ││ P: AE │ │ D: PE ││ │ ┌───────────┐ │└─────────────┘ └─────────────┘│ │ │ Market │ └───────────────────────────────┘ ├─>│definition │ Common categories │ └───────────┘ - Tying │ ┌───────────┐ - Bundling/loyalty discounts │ │ Market │ - Exclusive dealing ├─>│ share │ - Refusals to deal │ │ (>60%) │ - Strategic incompatibility │ └───────────┘ - Predatory pricing │ ┌───────────┐ - Predatory overbidding │ │ Entry │ └─>│ barriers │ └───────────┘ MARKET DEFINITION AND MARKET POWER ================================== - Market definition is a critical element of a plaintiff's case and often the primary battleground in a monopolization suit - STEP 1: PRODUCTS: Identify the "competing products"? - "Reasonable substitutes" from the buyer's point of view - What's reasonable? In an ideal world, determined by a hypothetical monopolist + SSNIP test. In the real world, often determined by: - Win/loss records - Industry partipants' views (strategic plans, marketing plans) - Customer views/actions - STEP 2: COMPETITORS: Who supplies those products to the customers? - STEP 3: MARKET POWER: How significant are the competitors? (= market power) - A market with 4 equally strong competitors is usually more competitive than one with 1 strong and 3 weak competitors. - The stronger the competitors, the more limited a company's market power - STEP 4: ENTRY BARRIERS. Is entry into the market easy or are there barriers that protect the incumbents' market power?