The Department of Economic Studies analyses the concepts of dominance and market power

On 23 March 2021, The Department of Economic Studies of the Administrative Council for Economic Defense (DEE/CADE) released the working paper "The problematic binary approach to the concept of dominance". The article aims to improve knowledge on two topics central to competition review: dominance and market power.

Although these concepts are at the core of assessments carried out by competition authorities, both in investigations of anticompetitive conduct and mergers, there is no agreement on how to approach to them. "It may seem simple to define who has market power or not, but the article seeks to demonstrate that in practice this task can be more complex than it seems, making a finished, precise concept of market power something hard to achieve", explains Mr Ricardo Medeiros de Castro, Coordinator of the Unit for Antitrust Violation Studies at the DEE/CADE and author of the article.

Against this backdrop, the work clarifies questions essential to understanding dominance, such as: What type of practice or merger is being analysed? Who are the players involved in the practice or merger at issue? What is the context of the analysed practice or merger? What methodology was chosen to assess players’ profits and market share? How does market power dynamically develops over time? Additionally, the document mentions other factors that can affect the concept of dominance.

Mr De Castro believes the discussion on these matters needs to be deepened and shared with society. "By raising society's awareness on the empiric and methodological issues, the Department of Economic Studies contributes to develop the theory behind them, solve actual cases, and enhance the authority's performance", he says.

The paper, which addresses a topic of global interest, was published in English to reach a broader audience in the international antitrust community.

Access the working paper "The problematic binary approach to the concept of dominance".