Market definition with differentiated products: a spatial competition application

Evolving market boundaries and competition policy enforcement in the pharmaceutical industry

“…Moreover, in this case we have a history of actual market data because generics have already entered, and the effect of new competitors entering a market provides an additional direct basis to evaluate the question of supracompetitive 61 Since monopoly profits are (by definition) greater than the sum of oligopoly profits, there exists a compensation such that both parties (originator and generic supplier) will enter into such an agreement. In the US, since the Supreme Court's seminal decision in FTC v. Actavis, Inc., 133 S. Ct. 2223(2013, these agreements can be deemed to violate US antitrust laws. The EU Commission has also fined a number of firms on the basis of Art.…”

“…10 In practice, demand-side substitution has been the main focus of competition authorities in the determination of antitrust market boundaries. For (rare) examples of the use of econometric techniques to delineate antitrust markets, see Ekelund et al, (1999), Argentesi and Ivaldi (2007), Ivaldi and Lorincz (2011) and Elizalde (2013). 11 The HMT takes the narrowest product and geographical market as a starting point and evaluates whether a hypothetical monopolist would find it profitable to increase price by 5%-10%, assuming that all other prices remain fixed.…”