The Antitrust Market Does Not Exist; Long Live Market Definition

Abstract

When market definition is criticised, it often reveals an underlying flaw in the reasoning of sceptics: they take market definition too seriously. There is, after all, no such thing as an ‘antitrust market’ (or any other market, for that matter). Markets are merely analytical tools, which serve to structure available evidence and enable a comprehensive answer to a particular question. They do not ‘exist’ as such in the ‘real world’, but are figments of our intellectual imagination. In that capacity, they can be immensely useful. They lend themselves to the nuances and aims of the particular study for which they are constructed. From ‘economic’ markets to ‘antitrust’ markets, the ‘market’ notion enables the study of occurrences which are otherwise too challenging to capture. A pursuit of ‘objectivity’ in the process of product market definition remains in vain as long as we fail to acknowledge that the utility of antitrust markets lies precisely in their reductive and purposive nature. This article intends to make two main arguments. The first argument is simple, yet far-reaching: the antitrust market does not exist, and that is a good thing. The utility of antitrust markets lies exactly in the fact that antitrust markets are not ‘natural’ phenomena, but intellectual fictions. Antitrust market definition is useful because it is a method to enable the answer to a question. The important implication of this argument is that the market is therefore defined by reference to that particular question, rather than as an independent and neutral object. In the context of competition investigations, this question can concern, but does not have to be limited to, determinations of market power. The second argument this article makes is that, even though the market is fictional and purposive, market definition can still be objective. Both enforcers and scholars seem increasingly concerned with coherence and certainty in the process and rationale of market definition. This article therefore explains why calling antitrust markets ‘subjective’, merely because they are purposive, is erroneous. Markets may be defined in order to answer a particular question, which makes them flexible; yet, they should only be condemned as ‘subjective’, where they are defined by reference to the personal views of those engaged in defining them, rendering them, ultimately, arbitrary. Where they are defined by reference to a particular question, even where multiple such questions are possible, markets are not inherently subjective, and objectivity can be attained. The article argues that objectivity in market definition, under a purposive approach, can be achieved by aspiring to process objectivity, rather than to objective outcomes. For the most part discussions about market definition remain too narrow-minded, seeking objectivity by pursuing ‘realistic’ outcomes rather than a coherent process, fuelled by a lack of recognition that market definition’s utility lies in its analytical and imaginary nature. This article, therefore, also seeks to provide a reassurance that a ‘purposive’ antitrust market does not automatically mean a ‘subjective’ antitrust market, and proffers preliminary suggestions on steps to ensure process objectivity in antitrust market definition. This articles marries the poetic with the practical, by describing the rationale behind market definition, the artificiality of any market (and the utility of that artifice), and the purpose for which antitrust product markets can be defined. In doing so, this article hopes to prompt scholars engaged in the improvement, or even replacement, of antitrust market definition to take a step back and see the bigger picture. Objectivity in antitrust market definition will not be achieved by ignoring the functional nature of the concept, but rather by embracing and explicitly acknowledging its nature and scope. This is a much-needed call, currently underemphasised in academic discussion, which can help competition authorities (including, but not limited to, the European Commission) explain the rationale behind maintaining antitrust market definition. It is also quite timely, since the European Commission has recently embarked upon a re-evaluation of its Market Definition Notice, citing efficiency and relevance (including ‘transparency’ and ‘guidance’) as evaluation criteria.