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Simple English definitions for legal terms
Market Definition
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A quick definition of Market Definition:
Market definition is a way to figure out the area where unfair business practices are measured. It helps to determine which customers are most important to a business. Some courts only look at customers who might switch to a different product if the price goes up, but it's also important to consider customers who are very loyal to a certain product. These loyal customers are called "core consumers" and they should be included in market definition.
A more thorough explanation:
Market definition is a term used in antitrust law to determine the economic sphere in which anti-competitive conduct is measured. It helps to identify the boundaries of a market and the competition within it.
For example, in the case of FTC v. Whole Foods Mkt., the court had to determine the market definition for premium organic foods. The court found that there were two types of consumers: marginal consumers and core consumers. Marginal consumers are those who are not strongly committed to premium organics and will switch to conventional produce if the price increases. Core consumers, on the other hand, are strictly committed to organic foods and will continue to shop at Whole Foods even if the price increases.
The court held that core consumers should be included in the market definition analysis because they are an important part of the competition within the market. If Whole Foods were to merge with another premium organic food store, it could potentially harm competition for core consumers, who have limited options for purchasing premium organic foods.
Overall, market definition is an important tool for antitrust law to ensure that competition is protected and consumers have access to a variety of choices within a market.