Back to First Principles of Market Definition: The New Zealand High Court Air Cargo Cartel Case.

In prosecuting a price-fixing agreement among airlines – one of several such cases around the world – the New Zealand Commerce Commission faced a jurisdictional challenge as to whether there is a market for inbound air cargo services 'in New Zealand'. At a time when competition authorities increasingly skip market definition and assess competitive effects directly (especially in merger inquiries), this case turned almost entirely on the delineation of the relevant market. It revisited some of the first principles of market definition – including the product and geographic dimensions of the market where transport services are concerned, supply-side substitution, and the role of derived demand – and highlighted shortcomings in existing guidelines in the USA and elsewhere. Five economic experts took part in a 'hot tub' process in the High Court of New Zealand. Setting some useful criteria for defining markets in the context of derived demand from downstream customers, the court ruled in favour of the Commission. [ABSTRACT FROM AUTHOR]