The Market Definition Trap

In this article for the LPE Project, author Hal Singer (University of Utah) discusses how defendants in antitrust cases strategically broaden market definitions to dilute findings of market power, as seen in examples involving Netflix and Live Nation. By expanding the scope of the “relevant market,” firms make it harder for plaintiffs to prove monopolization, shifting litigation toward complex and resource-intensive debates over market boundaries rather than the actual competitive harm caused.

Singer explains that this dynamic is reinforced by the dominance of the “rule of reason” standard in modern antitrust law, which imposes a heavy evidentiary burden on plaintiffs to demonstrate both market power and anticompetitive effects. Establishing market power often requires either direct evidence (such as price increases or wage suppression) or indirect evidence through detailed market definition exercises using tools like the hypothetical monopoly test and the Brown Shoe Co. v. United States factors—both of which are complex, costly, and prone to dispute.

The article illustrates these challenges through the FTC’s failed attempt to block Meta’s acquisition of Within, where extensive effort was spent proving the existence of a distinct VR fitness market. Although the court ultimately accepted the FTC’s market definition, the prolonged focus on this threshold issue consumed resources and judicial attention, weakening the case’s ability to demonstrate lost competition from potential market entry.

Singer further argues that recent jurisprudence, particularly Ohio v. American Express Co., has compounded the problem by introducing “two-sided market” analysis. This framework allows defendants to offset harms to one group with benefits to another, while also making market definition even more technically demanding. As a result, plaintiffs face increasingly insurmountable hurdles before courts even reach the substantive question of whether conduct harms competition…

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