Relevant market
Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT
Meaning
The relevant market is the market in which competition law judges competition and dominance. It has two parts:
- Relevant product market: all the goods that buyers treat as substitutes (close alternatives) for one another.
- Relevant geographic market: the area where the conditions of competition are similar.
Defining it is the first step in any abuse-of-dominance case. A narrow market makes a firm's share look large, while a wide one makes it look small.
Example
Suppose a cement maker has 40% of sales in one region but only 8% across India. Cement is heavy and costly to transport over long distances. So the region may be the right geographic market, and the firm could count as dominant there.
Don't confuse with
- Market structure: this is an economic grouping of markets, such as perfect competition, oligopoly or monopoly. The relevant market is a legal boundary drawn case by case to test competition.
Related concepts
- Anti-competitive agreements
- Appreciable adverse effect on competition
- Horizontal agreement
- Bid rigging
- Vertical agreement
- Resale price maintenance
- Leniency programme
- Dominant position
- Abuse of dominance
- Predatory pricing