Question

1. What is the ‘textbook’ definition of the term “relevant market”?
2. What, exactly, is ‘product versioning’? Please give an example.
3. A. What is ‘product bundling’?   B. What is the essence of the European commission’s claim of ‘bundling’ against Google?   C. Please give me an example of bundling that is separate and apart from the Google case (Apple has been accused of this activity as well).
4. A key concept in antitrust law is to prevent firms from “collusion….to restrain trade”. Please give me an example in real life where two (or more) firms colluded in order to restrain trade. In your example, did the firms involved get caught and punished?

Answer 1

RELEVANT MARKET : The relevant market defines whether the two or more products can be considered substitute goods and whether they constitute a particular and separate market for competition analysis. Relevant market comprises all the products and services which can be regarded as interchangeable or substitutability by reason of product characteristics, prices and intended use.

PRODUCT VERSIONING : Product versioning is done for the products which requires large fixed costs of production ans small variable costs. Many versions are created out of the single product. By doing product versioning of a product new and different  features are added and different versions are created of a single product. And the different versions are sold at different prices. For Example: software like intel, we have intel i3, i5., different mobile phones .

PRODUCT BUNDELING : Product bundeling is the type of marketing strategy in which two or more products or services are sold together as a combined product. For examples, laptops with antivirus, with extra mouse or keyboard, software packages with free services for 1 year. A very good example is coming up below.

The European commission’s claim of ‘bundling’ against Google: Google is known to everybody today, it is a well known browser,everybody has their accounts on google.Every mobile phone user uses google services.

Google has been fined by the European commission for breaking the antitrust law. it has imposed restriction of android mobile companies and other mobile network operators to dominant its position in general internet search.

Today when you buy a android mobile phone you are asked to signup to google, your photos are saved in photos service of google.

Example of bundling: bundled computer packages, nowadays we get such offers in beautysalon , mcdonald's etc.

COLLUSION : A key concept in antitrust laws is to prevent firms from collusion to restrain trade. As collusion is seen bad for consumers and economic welfare of a country and therefore collusion is mostly regulated by governments.

Example: Milk price by supermarkets 2002-03

Supermarkets such as Asda and Sainbury's colluded with dairy suppliers, Dairy Crest and Wisemen Dairies to increase the price of milk, cheese and other dairy products in supermarkets. After an Office of Fair Trading (OFT) investigation , supermarkets and suppliers were fined a total of 116 million euros.