Comparison of the Notions of Relevant Market between EC and the US: What Can China Learn from Both Sides?

Abstract: Anti-monopoly laws play an important role to protect the market economy and maintain healthy environment for competition. After China joined WTO, the anti-monopoly problems are becoming more and more obvious. Anti-monopoly rules are needed urgently. It is inspiring that finally the Draft Anti-monopoly Law was passed preliminarily by the State Council in June 2006 after a more than ten years' gestation. The proposed Anti-monopoly Law provides the definition of both relevant product market and relevant geographic market. However, the principles and process of defining the market still remain a big gap to fill. Market definition is crucial in competition law. Without a definition of the relevant market, it is impossible to determine market share or assess market power. The absence of the notion of relevant market will make the implementation of Anti-monopoly Law extremely difficult and might cause divergence of the decisions of anti-monopoly authority as well as the judgments given by different courts. Market definition is a tool to identify and define the boundaries of competition between firms. It serves to establish the framework within which competition rules are applied. The main purpose of market definition is to identify in a systematic way the competitive constraints that the undertakings involved face. The objective of defining a market in both its product and geographic dimension is to identify those actual competitors of the undertakings involved that are capable of constraining those undertakings' behaviour and of preventing them from behaving independently of effective competitive pressure. It is from this perspective that the market definition makes it possible to calculate market shares that would convey meaningful information regarding market power for the purposes of assessing dominance and merger or for the purposes of applying other anti-monopoly rules. The US is the pioneer of anti-trust law. Europe has learned a lot from the US within this field. After many years of interaction between the two legal systems, the notions of relevant market seem to be quite similar to some extent, but there are still fine differences in many important aspects. It is no doubt that the Chinese legislators will make analysis to the 1997 EC Commission's notice on the definition of the relevant market and the 1992 US Horizontal Merger Guidelines. The legislators will try to transplant suitable parts of the notion in both legal systems into the Chinese legislation. This thesis is going to introduce systematically the notions of relevant market in both the EC and the US perspectives through legislation study and case law study. Then a comparison will be made between EC and the US of several important aspects and respective proposals will be made to the Chinese legislation.