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Supply Substitution and Market Definition: Lessons from FTC v. RAG-Stiftung

Randy Chugh, Nicholas Hill, and Andrew J. Ewalt
Antitrust Source
October 2020
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There is broad agreement that product market definition focuses on demand substitution. In FTC v. RAG-Stiftung, however, the Federal Trade Commission (FTC) relied on a supply substitution theory to define the relevant market in its challenge of the merger of Evonik and PeroxyChem, two manufacturers of hydrogen peroxide. The court concluded that the evidence did not support the FTC’s approach and allowed the merger to close, but it accepted the general proposition that supply substitution can play a role in market definition in narrowly defined circumstances.

In “Supply Substitution and Market Definition: Lessons from FTC v. RAG-Stiftung,” Manager Randy Chugh, Partner Nicholas Hill, and their co-author Andrew Ewalt explore both the economic and legal underpinnings of the FTC’s use of supply substitution as part of its market definition analysis and discuss the implications of the case for market definition in future cases.

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