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Market definition in the media sector

The current partners of Reckon LLP were the main authors of a research report entitled "Market definition in the media sector: economic issues" (146 pages, PDF) prepared in 2002 for DG Competition of the European Commission.

Overview of the report

The report considers media market definition in detail, drawing on two complementary lines of analysis:

While the nature of media markets means that there can be no recipe book of market definitions, the report discusses how some of the key challenges may be addressed. It also provides examples of how market definition may be taken forward in the sector on a sound economic basis, even in cases where rapid change means that relevant precedents and quantitative data are absent.

A key conclusion of the report is that, in cases where supply chains are complex and relevant services are interrelated, market definition, drawing on the hypothetical monopolist thought experiment, can make a substantial contribution to a robust understanding of the competitive process and competitive effects.

Implications for market definition more generally

Whilst the report was prepared in the context of relevant markets in the media sector, the analysis of the role and nature of market definition has wider relevance.

The report addresses the arguments advanced by some economists and other practitioners that market definition is an inappropriate tool in the context of dynamic markets, or that the hypothetical monopolist test is not applicable in these markets.

The report concludes that market definition, if properly done, is a relevant and useful tool in these markets. It is not market definition as a concept that ceases to be valid when markets are fast-moving. All that happens is that some of the techniques, particularly those that draw heavily on quantitative evidence from market outcomes, cease to be reliable in dynamic markets (if they ever were reliable in other markets).

Selected links

Research reports:

Official guidelines on market definition:

Related Reckon Open pages:

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Last changed by Franck at 7:23 AM on Saturday 24 March 2007.

Reference for this page:
Reckon Open "Market definition in the media sector" 2007-03-24T07:23:04