Inantitrust law, market definitionis what determines the economic sphere in which anti-competitive conduct is measured.
Some courts have determined market definition based only on marginal consumers, to the neglect of core consumers, seeFTC v. Whole Foods Mkt., 548 F.3d 1028, 1033 (D.C. Cir. 2008). In economic terms, marginal consumers are demand-elastic, while core consumers are demand-inelastic. In the example provided by theWhole Foodscase, marginal consumers are only weakly committed to premium organics and will substitute conventional produce in response to price increases. Core consumers, on the other hand, are strictly committed to organic foods and will shop at Whole Foods if it is the only premium, organic option, regardless of post-merger price increases. In that case, the D.C. Court of Appeals held that core consumers should be included in a market-definition analysis.
[Last updated in July of 2023 by the Wex Definitions Team]
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Let's dissect the key elements of the text:
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Antitrust Law:
See AlsoMiFID II- Antitrust law is a body of legislation designed to promote fair competition and prevent monopolistic practices that could harm consumers or limit market competition.
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Market Definition:
- Market definition is a pivotal concept in antitrust law. It delineates the economic boundaries within which anti-competitive behavior is evaluated.
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Whole Foods Case (FTC v. Whole Foods Mkt., 548 F.3d 1028, 1033, D.C. Cir. 2008):
- The case involves the determination of market definition based on the distinction between marginal consumers and core consumers.
- Marginal consumers are demand-elastic, meaning they are sensitive to changes in price and may switch to alternative products.
- Core consumers, on the other hand, are demand-inelastic, showing unwavering commitment to a particular product or service.
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Demand Elasticity:
- Marginal consumers, being demand-elastic, exhibit a greater responsiveness to price changes. They may switch to alternative options in response to price fluctuations.
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Demand Inelasticity:
- Core consumers, characterized by demand inelasticity, remain steadfast in their preferences despite price changes. They are less likely to switch to alternative products.
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Market-Definition Analysis:
- The article emphasizes the importance of including core consumers in the market-definition analysis, as demonstrated in the Whole Foods case. This suggests a departure from approaches that solely focus on marginal consumers.
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Wex Definitions Team (Last updated in July of 2023):
- The information is credited to the Wex Definitions Team, which implies a reliable and up-to-date source. The mention of the last update date, July 2023, reinforces the relevance and currency of the information.
In conclusion, the article explores the nuanced considerations in antitrust law, specifically in the context of market definition. The Whole Foods case serves as a practical illustration, highlighting the significance of incorporating both marginal and core consumers into the analysis, a crucial insight for comprehending the complexities of antitrust regulations.
