Market Definition and Market Power in the British Supermarket Industry

In this report I will explain how to measure relevant antitrust markets for the analysis of the market power of the leading supermarket chains in Great Britain. Given the recent enforcement practices of the Competition Commission and the analyses submitted by, or on behalf of, Tesco, Sainsbury, and other retailers, my explanation necessarily must also continue to the measurement of market power. Non-coordinated competitive effects are also called unilateral effects and I will use that term henceforth in this report. These strategic moves do not require the cooperation of other firms. Coordinated effects (tacit collusion) do depend upon the cooperation of other firms. The exercise of these types of market power is not mutually exclusive (Levy and Reitzes 1993). Both types can elevate prices or otherwise distort the price, quality, reach and service marketing mix in a market.