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Gregory Leonard, Parker Normann, Mar 13, 2014
Because merger cases get litigated to judgment only every so often, when such a case comes along, it is useful to take stock. We reflect on issues of interest to us as economists that are raised by the recent ruling in the United States Department of Justice’s challenge of the Bazaarvoice acquisition of PowerReviews.
Many economists see little utility in market definition, particularly when direct evidence regarding competitive effects is available. Yet, historically, courts have routinely required that a market be defined in an antitrust case, and we have found that many lawyers support this position.
In our view, Bazaarvoice illustrates the problems with making market definition a requirement. The court devoted considerable effort to describing the relevant market and the importance of the relevant market definition to its conclusion that the merger was likely to lessen competition. Indeed, dozens of pages of the court’s opinion explicitly covered topics related to market definition. Yet, given the direct evidence of competitive effects presented and relied upon by the court elsewhere in the decision, there seems to have been little need to undertake the extensive effort involved in the market definition exercise.