Market Definition in Differentiated Goods When the Final Consumer Buys the Good: Insights from the H&R Block Case

Abstract

This article addresses the development of market definition analysis in three recent merger cases: Staples, Whole Foods, and H&R Block. The discussion traces the evolution of the market concept from the naïve Brown Shoe criteria to the price discrimination analysis implicit in Staples to the current application of diversion theory in the H&R Block case. By replacing fact with theory, the diversion approach to market definition runs the risk of returning to the world of Brown Shoe. Additional discussion of H&R Block suggests that price discrimination remains relevant and could have been developed through further factual study. Moreover, even if theory is used to define a narrow market, the analyst must address a range of entry issues before concluding that the merger is likely to substantially lessen competition.