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2.a Starting from Coco's Peppermint We now begin the main part of the market definition process. Quoting from the merger enforcement guidelines: For each candidate
2.a Starting from Coco's Peppermint We now begin the main part of the market definition process. Quoting from the merger enforcement guidelines: "For each candidate market ,the analysis proceeds by determining whether a hypothetical monopolist controlling the group of products in that candidate market would profitably impose a SSNIP, assuming the terms of sale of all other products remained constant. If the price increase would likely cause buyers to switch their purchases to other products in sufficient quantity to render the price increase unprofitable, the postulated candidate market is not the relevant market, and the next-best substitute is added to the candidate market." A SSNIP is a Small but Significant Non-transitory Increase in Price. In other words, you're asking, "If someone controlled all the products I've listed so far. and ONLY those products, would they be able to increase their revenue by raising their prices by that much for a year, or would they lose too many customers?" The first time you're able to answer, 'Yes, they'd be able to increase their revenue', you're done. That's your market. Whenever you answer 'No, they'd Eose too many customers ', add the next closest substitute to the list, and try again . Starting with Coco's Peppermint Hot Chocolate, use the SSNIP/Hypothetical Monopolist Test to define the relevant market. Remember that you are looking at a 20% price increase, and you are evaluating the products as possible substitutes at their current prices. This matters. You may be willing to use silk scarves as napkins if they're very cheap, but not if they're expensive. The idea is that you'll start with the designated good (Coco's Peppermint Hot Chocolate. 1309.} and then keep adding goods to the list until you end up with a 'market 'that probably passes the SSNIP test. The closest substitute to Coco's Peppermint Hot Chocolate should be the first item added ,and so on. For each product that you add to the list, explain why they're the next closest substitute, and explain why your collection of products does not pass the hypothetical monopolist test (can't be expected to sustain a profitable 20% price increase) after adding in that product - except for the last product on your list, of caurse ,after adding which the test should be passed
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