Publication
The Korean Journal of Economic Studies
Market Definition of Complementary Goods for the Enforcement of Competition Law
Sangkyu Rhee(Chung-Ang University)Year 2013Vol. 61No. 3
Abstract
Market definition refers to the process of determining the set of productsthose are substitutable or interchangeable to the reference good for thepurpose of analyzing the antitrust issues at hand. However there are lots ofcompetition law cases in which the reference good consists of complementarygoods, and/or relevant goods are not substitutable but complementary eachothers. Aftermarkets, two-sided markets, and cluster markets are the typicalexamples. Since goods are not substitutable in those examples, the mechanicalapplication of SSNIP test or critical loss analysis to define relevant good marketcould make serious mistakes. The most possible mistake will be to definerelevant market narrower than actual market since SSNIP test does notconsider the complementarity among goods. Therefore this article try to verifythe most important factors which should be considers when aftermarkets,two-sided markets, and cluster markets are defined. In case of aftermarket,the extent of switching cost, and information asymmetry between consumersand firms, trade practice should be considered to decide whether equipmentand aftermarket service are defined as the same market or not. In case oftwo-sided market, the most important factor that makes difference fromsingle-sided market is cross-network externality. Two distinct groups of usersin the two-sided platform become complementary goods to each other throughcross-network externality. Thus the feedback effect of the action which takeplace in one side should be considered during market definition procedure. Incase of cluster market, transactional complementarity, economies of scope anddiscount rate of cluster price, unbundling cost, extent of technologicalintegration, demand and trade practice should be considered to define the scopof clustering.