Research On The SSNIP Method Of Relevant Market Definition In U.S.

Definition of the relevant market affects the analysis results of the enterprisemarket share,and therefore becomes the focus of antitrust regime.Antitrust legislationstarted relatively late in China,Our country started enforcing the anti-monopoly law in2008, then published the document Guidelines on the relevant market definition in2009. This two basic regulations introduced the content of the relevantmarket,definition method,and provided the international universal applicable ideas:thehypothetical monopolist test,unfortunately they did not specify the operatingprocedures of that method,which brings lots of difficulties in apply to cases.Therefore,we must learn from the United States’ extensive experience in legislation andenforcement,and constantly improve our methods,which is really helpful to thedevelopment of Chinese anti-monopoly system.Hypothetical monopolist test, also known as SSNIP method, is one of the mainapplicable methods in countries with well-developed antitrust system when definingthe relevant market.The core content of SSNIP method is based on the assumptionthat there is a monopoly in this market, what’s more, the enterprise is the onlymanufacturer (distributor) of the target product. When this monopoly implement onetime or more “slight but significant and non-temporary price increase”, we shouldspeculate whether consumers turn to other products and evaluate whether thecandidate market is the most appropriate relevant market. After analyzing theemergence and development process of the SSNIP method in the United States, we would know this method is based on the theory of industrial organization and heavilyinfluenced by the Chicago school liberalism.Since SSNIP method was first stipulatedin the Horizontal Merger Guidelines as a way to define the relevant market in1982,ithas experienced four changes and developed well.In researching the specific contentof SSNIP method, it is necessary to realize several key factors: the benchmark priceand the raising price standard,these two factors directly related to the definition of therelevant market, and is influenced by a country’s economy.Therefore, the UnitedStates set up a more flexible selection standard based on the general data, which isworth our using for reference.Compared with the traditional method of market definition,SSNIP method focuson the own-price elasticity,so it is a more reasonable analysis framework. Whendefining the relevant market, SSNIP method use a large amount of data andeconomics formula instead of studying the commodity price, usage, function to definethe scope of the relevant market, therefore, we can apply SSNIP method to overcomethe subjective arbitrariness of other methods and get a specific relevant marketextension.Of course,although the SSNIP method is a breakthrough for defining therelevant market, there is a significant advancement, this method still has certainlimitation,such as it is difficult to ensure the accuracy of the data.In this regard,American economists puts forward a more reasonable method: critical loss analysis,Which requires lesser data than SSNIP method and the operation process is also moreconvenient.Based on the current situation of domestic economy, if our court directly applythe SSNIP method in the Horizontal Merger guidelines, their results of relevantmarket is likely to be inaccurate.Therefore, it is necessary to analyze the content,limitations and the new development of the SSNIP method first, then construct ourmethod for market definition combined with China’s judicial status and economicstatus. Though this paper I will put forward some suggestions from the aspects oflegislation and law enforcement to perfecting our country’s hypothetical monopolisttest.