Beyond Critical Loss: Properly Applying the Hypothetical Monopolist Test

Posted by D. Daniel Sokol

Greg Werden of DOJ Antitrust discusses Beyond Critical Loss: Properly Applying the Hypothetical Monopolist Test in his latest article.

ABSTRACT: The hypothetical monopolist test (HMT) for market delineation holds that a group of products and associated area constitute a market only if a profit-maximizing monopolist over them would increase price significantly.

This test was prominently articulated in the 1982 Merger Guidelines issued by U.S. Department of Justice, and it greatly influenced courts in the United States and competition agencies around the world. In no recently litigated U.S. merger case has there been any dispute regarding whether to apply the HMT.

What is disputed—both in the courtroom and in the commentary—is the utility of a particular way of applying the HMT.