Empirical geographic market definition for antitrust: The case of the Russian cement market

Anna I. Meleshkina, Irina N. Filippova and Andrey E. Shastitko
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Anna I. Meleshkina: Lomonosov Moscow State University, Moscow, Russia; The Russian Presidential Academy of National Economy and Public Administration (RANEPA), Moscow, Russia
Irina N. Filippova: The Russian Presidential Academy of National Economy and Public Administration (RANEPA), Moscow, Russia; Gaidar Institute for Economic Policy, Moscow, Russia
Andrey E. Shastitko: Lomonosov Moscow State University, Moscow, Russia;

Upravlenets, 2022, vol. 13, issue 6, 15-29

Abstract: Geographic market definition is an important element of antitrust enforcement in the framework of countering monopolistic activities and M&A (mergers and acquisitions) control. Incorrectly defined geographic market can lead to false conclusions about the state of competition. The main way to identify the geographic market is the SSNIP test, which, however, is not always applicable. The study presents the analytical approach to defining a geographic market based on actual data. The methodological basis of the study is industrial organization theory applied to antitrust. The proposed approach makes it possible to obtain empirically based conclusions about geographic market using statistical tests, such as the Elzinga-Hogarty test together with price action analysis (price correlation and relative price stability). The approach is tested using the case study of the cement industry with Russian producers’ participation in 2014–2020. Based on Rosstat data on monthly price dynamics and cement supplies between the federal districts, we prove that the cement market geographic boundaries were wider than one federal district for all the districts except the Far Eastern Federal District. The paper discusses the possibilities and limitations of the approach, such as the necessity comply with the requirements for the statistical properties of the studied time series, as well as full access to data. The study is vital for expanding the tools of relevant market definition applied in antitrust research.

Keywords: antitrust; geographic market definition; the Elzinga-Hogarty test; cement market; relevant market; price indicators (search for similar items in EconPapers)
JEL-codes: D4 L4 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:url:upravl:v:13:y:2022:i:6:p:15-29

DOI: 10.29141/2218-5003-2022-13-6-2

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