Rationalizing Antitrust Cluster Markets

Abstract

Courts have traditionally defined antitrust markets on the basis of substitutability. Several antitrust decisions involving multiproduct defendants, however, have departed from this standard and defined "clusters" of non-substituting and untied products to be the relevant line of commerce. The use of such cluster definitions has preceded the development of a theoretical framework. Courts have not clearly articulated the circumstances in which nonsubstitutes should be included in the same market. Instead of invoking substantive standards, courts have often justified cluster definitions merely by relying on such undefined phrases as trade, commercial or economic "reality." To the extent that courts have proposed any substantive criteria, they have failed to explain how or why their chosen standards form a legitimate basis for market definition. By analyzing the market conditions that cause firms to supply multiple products, this Note seeks to articulate a rational criterion for clustering. In particular, this Note suggests that courts should only cluster together "transactional complements." Goods are transactional complements if buying them from a single firm significantly reduces consumers' transaction costs. Transactional complementarity effectively ties consumer purchases of multiple products to individual firms and thereby makes the cluster the relevant product. Part I of this Note describes the varying criteria that courts have used to define cluster markets and concludes that courts have failed to justify coherently the cluster market concept. Part II analyzes the causes of multiproduct supply and presents a theoretical justification for clustering transactional complements. Part III discusses how the suggested transactional complementarity approach should be applied.