Critical loss analysis for the relevant market delineation: a simulation for the automotive market

Abstract

The relevant market definition is important for merger analysis in the antitrust policy, according to the Hypothetical Monopolist Test (TMH). The critical loss test is used to measure the relevant market to achieve this goal. Thus, this paper apply the Critical Loss Test for the Brazilian car market, specifically for three models (Uno, Gol and Celta), in the subsegment Entrance Vehicle. The main result showed that the definition of the relevant market on the simulations depends on the margin considered. It is observed in the simulations, considering the reference margins, the Gol 1.0 model is a possible candidate to be in the same relevant market as the Celta 1.0 and the Uno 1.0.