Empirical Modeling and Its Applications. Chapter 5: Critical Loss Analyses in Korean Liquor Mergers

Abstract

The SSNIP(Small but Significant Nontransitory Increase in Price) test is a well-known conceptual framework of market definition for competition policies in most countries. Critical loss analysis is a practical method that implements the principle of SSNIP test in a quantitative way to determine whether the relevant market for an antitrust case should be enlarged or not. The method and empirical results have been successfully adopted in defining markets relevant to Korean merger cases in soju and beer industries (Moohak-Daesun in 2002 and Hite-Jinro in 2005), providing useful references for the Korean Court and Fair Trade Commission. This paper introduces the actual applications of critical loss analyses in these cases and remarks on several issues brought in the course of applications.