Class 5. Market Definition I

Market definition focuses solely on demand substitution factors, i.e., on customers’ ability and willingness to substitute away from one product to another in response to a price increase or a corresponding non-price change, such as a reduction in product quality or service. The responsive actions of suppliers are also important in competitive analysis. . . .
Customers often confront a range of possible substitutes. . . . Some substitutes may be closer, and others more distant, either geographically or in terms of product attributes and perceptions. Additionally, customers may assess the proximity of different products differently. When products or suppliers in different geographic areas are substitutes for one another to varying degrees, defining a market to include some substitutes and exclude others is inevitably a simplification that cannot capture the full variation in the extent to which different products compete against each other.” 2010 Horizontal Merger Guidelines § 4.

Demand Elasticity

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Alcoa (2d Cir. 1945)

In March 1942, the federal government released letters announcing the suspension of antitrust enforcement until the end of WWII. The suspension slowed down the prosecution of Alcoa and, ultimately, affected the remedies approved by the court.

du Pont (1956)

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