oa Journal of Economic and Financial Sciences - Bargaining power and market definition : a reflection on two mergers
|Article Title||Bargaining power and market definition : a reflection on two mergers|
|© Publisher:||University of Johannesburg|
|Journal||Journal of Economic and Financial Sciences|
|Affiliations||1 University of Johannesburg and 2 University of Johannesburg|
|Publication Date||Aug 2011|
|Pages||147 - 166|
|Issue||Special issue 1|
|Keyword(s)||Bargaining power, Buyer power, Countervailing power, Market definition, Market power, Merger analysis, Outside options and Unilateral effects|
When assessing whether a merger is likely to substantially prevent or lessen competition, the Competition Act, No. 89 of 1998, as amended, specifies that the Commission should assess the strength of competition by taking into account the degree of countervailing power in a market. We highlight the importance of understanding this in terms of the factors underlying bargaining power, such as the alternative sources of supply available to buyers, the alternative sources of demand to sellers, cost structures, and information asymmetries. To do this we critically compare the approach adopted by the Competition Tribunal in evaluating two mergers: Sasol/Engen and Chlor-Alkali Holdings/Botash. We find that in both cases an analysis of bargaining power should play an important part in the assessment of the effects on competition, including the identification of competitive constraints that fall within market definition.
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