Redefining the Relevant Market: Abandonment or Return to Brown Shoe

Authors

Daniel A. Hanley

Abstract

Defining a relevant market is arguably the most important requirement in antitrust litigation. Between the 1890s and the 1940s, defining a relevant market was a simple and generalized process, typically undertaken by courts as a cursory matter. However, in the 1960s, defining relevant markets became a centerpiece of antitrust litigation. The modern method originates from the Supreme Court’s landmark 1962 decision in Brown Shoe v. United States. The method commonly known as the Brown Shoe test requires judges to construct relevant markets by carefully analyzing accessible and understandable qualitative data, such as internal corporate documents and consumer surveys. Since the Brown Shoe decision, the Supreme Court has continuously refined this process.

After 1982, however, defining a relevant market consists of the parties applying the Brown Shoe test and complex econometric tests. Concerning the use of econometrics, the process is almost entirely based on abstract, confusing, highly subjective, and unnecessary economic theory. The high cost and complexity of econometric tests deter and inhibit antitrust litigation because judges often dismiss plaintiffs’ claims that fail to construct relevant markets that comply with the tests’ stringent requirements.

This Article recommends two alternative approaches to remedy the problems created by the econometric process. The first option is to abandon defining relevant markets altogether. Instead, clear, bright-line rules should determine the illegality of most antitrust conduct—particularly for mergers, exclusive deals, and tying arrangements. The bright-line rules should be fixed to easily calculate financial metrics such as revenue, profit, total assets, or transaction size. This proposal can be implemented through the Supreme Court overturning its Brown Shoe precedent, amendments to the antitrust laws from Congress, or from federal administrative agencies (such as the Federal Trade Commission) employing their broad rulemaking power to regulate unfair methods of competition. Alternatively, when bright-line rules cannot be used, or it would not be prudent to do so, enforcers and judges should exclusively use the Brown Shoe test.

This Article illustrates how both proposals offer significant benefits to antitrust enforcers and the public. Many criticisms of these proposals are unfounded, misguided, and overblown; what is critiqued may, in fact, be desirable.

Recommended Citation

Daniel A. Hanley, Redefining the Relevant Market: Abandonment or Return to Brown Shoe, 129 Dick. L. Rev. 571 (2025).
Available at: https://ideas.dickinsonlaw.psu.edu/dlr/vol129/iss2/5