The Arbitrariness of Market Definition and an Evolutionary Concept of Markets

• Author: Rupprecht Podszun
• Published date: 01 March 2016
• Date: 01 March 2016
• DOI: http://doi.org/10.1177/0003603X15625109

Article

The Arbitrariness of Market

Definition and an Evolutionary

Concept of Markets

Rupprecht Podszun*

Abstract

Market definition is highly relevant in European case practice in competition law. Yet the tools and also

the concepts are far from being very sophisticated. The critique of market definition by Richard

Markovits is far-reaching: not only is market definition arbitrary, but current approaches also have an

in-built bias towards a static snapshot understanding of the economy. Yet it would be wrong to give up

this important step in antitrust analysis, since otherwise antitrust loses its function as the fundamental

set of governing rules for markets. Instead, it is necessary to develop a more evolutionary concept of

markets.

Keywords

market definition, SSNIP-test, dominance, evolutionary approach

I. Market Definition—A Base Without Superstructure

At an international competition law conference, I recently heard a puzzling statement that crossed my

mind when I read Richard Markovits’s comments on the arbitrariness of market definition. At this

conference, I came to sit next to an esteemed lawyer. We found out that in former times we had been in

the backseat of case teams in the same competition matter. At the time, he was an associate with an

international law firm, and I was a junior case handler at the German Federal Cartel Office. Our case

had been on abuse of dominance under Art. 102 of the Treaty on the Functioning of the European

Union (TFEU) and dealt with the practices of a company called Soda Club: Germans love to drink tap

water (and they luckily can since it is clean enough), but they love to have it with bubbles. Soda Club

catered to this desire by producing and distributing soda-carbonating machines. The Soda Club kits

allow you to pump carbon dioxide into bottles filled with tap water. The kits include an empty bottle,

the pumping machine, and a gas cylinder filled with CO

2

. These cylinders need a refill from time to

time or need to be exchanged. Such refills are easy to handle; basically, every retailer, gas station, or

supermarket could be in that business. Soda Club, however, tried to monopolize the refills—at least

*Chair for Civil Law, Intellectual Property and Economic Law, University of Bayreuth; and Affiliated Research Fellow, Max Planck

Institute for Innovation and Competition

Corresponding Author:

Rupprecht Podszun, University of Bayreuth, Bayreuth, 95440, Germany.

Email: LS-Podszun@uni-bayreuth.de

The Antitrust Bulletin

2016, Vol. 61(1) 121-132

ªThe Author(s) 2016

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DOI: 10.1177/0003603X15625109

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