Why Is Market Power Relevant to Antitrust?
The antitrust laws prohibit business practices that harm consumers through higher prices, lower output, or reduced product quality or choice, slowed innovation, or other anticompetitive effects. To unfamiliar observers, the market power inquiry may seem a circuitous route to determining whether conduct, agreements, or transactions have harmed consumers. Why not simply examine whether the conduct has resulted in the effects that the laws are designed to prevent?(20) There are several reasons. First, courts and agencies routinely assess transactions whose effects will occur in the future and remain unknown at the time of review. There are no actual economic effects to evaluate as of yet. Instead, courts and agencies must resort to less direct methods of determining whether the transaction could harm consumers. They must define product and geographic markets and ascertain the defendants’ position in those markets to determine whether, for example, the transaction would give the parties th
