Competition Law Reading Room
When is a market a market?
Rhonda Smith and David Round
(2003) 31 Australian Business Law Review 412
In 1976 the Trade Practices Tribunal discussed “market” as a concept, but was concerned primarily with market delineation based on actual and potential demand and supply. In the intervening years this method has been much discussed and elaborated upon. A particularly interesting episode was the High Court’s deliberation in 1989 on the finding that absent actual transactions, a market could not exist. Whilst rejecting this proposition, it focused mainly on the function of the market and did not address the issue: what is a market? The application by AuIron for declaration of the services of the Wirrida-Tarcoola railway line in 2002 raises this question. This article seeks to clarify the meaning of “potential” demand and “potential” supply, and in the context of Pt IIIA, to consider what the absence of actual demand or supply means for establishing that access will promote competition in a market. It identifies various situations where there is no actual demand or alternatively no actual supply. The article seeks a basis for establishing that the potential demand or supply necessary for establishing the existence of a market is more than merely speculative, and concludes that it is important not to focus on one specific entrant. A broader canvas is necessary, one that evaluates the strategic behaviour of all relevant current and potential participants on both sides of the market, with a view to assessing the impact of the conduct in question on the future of the competitive process.
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