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Key Concepts:

Terms in this set (64)

Actions contrary to self-interest, phenomena explained only as the result of concerted action, evidence that defendants created opportunity for regular communication, industry performance data that suggest successful coordination (high profits), absence of legit business rationale for conduct.

Examples:
(1) Indications of express collusion: extraordinary coincidence (e.g. Interstate), simultaneous change of conduct, evidence of communications (opportunity for regular communication);

(2) Motivation: but presence of motive for common action is yet not enough;

(3) Acts against self-interest: can each firm's behavior be independently explained? Contrary to self-interests unless pursued as part of collective plan? To be conspirational, you need both a motive and some reason why. Act contrary to self-interest of the actor is evidence of conspiracy.
· Self-interest unrelated to rivals' behavior
· Self-interest that depends on rivals' behavior acts contrary to self-interest unless undertaken by all the firms... rule out independent behavior. Indicate interdependence, but doesn't indicate what sorts of interactions there are among the firms

(4) Phenomena that can be explained rationally only as a result of a concert of action;

(5) Absence of plausible legitimate business rationale... suspicious conduct; or presentation of contrived rationales for certain conduct;

(6) Performance data (e.g. extraordinary prices or profits, increased prices when demand declines) à suggest successful coordination. Yet, hard to find this data
Step 1: Define the narrowest relevant geographic / product market:

a. Product market: largely determined by consumer preferences & extent to which physically dissimilar products can be reasonably interchangeable

b. Geographic market: area where D can impose a small but significant and non-transitory increase in price

- TESTS:
(1)Cellophane approach: are products reasonably interchangeable by consumers (at competitive price levels)?

(2) Hypothetical Monopolist Test: ask whether a hypothetical monopolist can profitably impose a small but significant and non-transitory increase in price in the product market as defined.

Step 2: Determine monopoly power (market share) in that relevant market
[SHOW: (1) market share high enough to infer power; AND (2) relevant factors]

(1) Market share:
(a) >70%: strongly suggestive of monopoly power
(b) 40 ~ 70%: uncertain
(c) <40%: likely insufficient to connote monopoly power
(d) Note: the more elastic the demand, the less market power the firm has.
(e) Note: "market share" NOT sole determinant of monopoly power

(2) Relevant Factors:
(a) Barrier to entry (gov't regulation; IP rights; access to resources) (Microsoft);
(b) Future market potential (less likely to find monopoly power if co has nearly depleted its reserves and will not continue to dominate the market) / capacity limits of existing competitors;
(c) Product differentiation within the market;
(d) Elasticity of market demand;
(e) Products that are outside the market but almost close enough substitutes to be within the market;
(f) Patent, copyright, trademark, trade secret provide some exclusive rights