There are two very different sources of market power in antitrust cases. The first is traditional market share-based market power. Market power in antitrust cases also can come from deception, significantly imperfect or asymmetric information, or other types of market failures that usually are associated with consumer protection violations.
When these “consumer protection” market failures are present in antitrust cases, market power can arise even if no firm has a market share large enough for a finding of traditional market share based market power. However, instead of traditional end-use consumers being harmed, the direct victims are businesses.
The “consumer protection” type of market power has been a small part of the antitrust world for decades. Nevertheless, this paper urges that it play an even larger role in the day-to-day world of antitrust. This paper also discusses some of the implications that could arise if we grant this source of market power the attention it deserves. In addition to having an effect on our beliefs as to when market power may be present, it also could have important effects on such related antitrust areas as market definition and entry analysis.
Market Power Without A Large Market Share: The Role of Imperfect Information and other “Consumer Protection” Market Failures, reprinted in Consumer Legal Encounters 138 (2008, D. Naresh Kumar, Ed) (Icfia University Press, Hyderabad, India)