Market power is a dynamic concept with a development influenced by perspectives from law and economics, based on which the assessment of market situations occurs. This aspect is of growing importance due to the fact that nowadays market actors are global players. In global markets with an oligopoly structure, as most of the markets nowadays are, market power becomes an extremely important issue. Global actors do have market power. The question of whether they abuse this market power is relevant due to its effects on consumers and as well on the structure of the market. Competition law, or antitrust law as it is known in the United States of America, addresses major issues of multinational market actors. In this perspective, dealing with this topic is interesting and useful at the same time. This aspect is validated by the fact that market power is also approached by EU Competition Law and by US Antitrust Law, as due to globalization, there are domino effects between economies and between the interactions of global acting companies. Globalization is an economic phenomenon that can be defined as an integration of economies and even of societies worldwide ^[1].

Assessed in a multidisciplinary manner, market power is ambivalent. On the one hand, gaining market power validates the fact that a company is competitive and that it is an important actor in its sector. On the other hand, it opens the question of whether an abuse of dominance is likely to occur. Exactly this type of anti-competitive conduct is severely sanctioned by EU Competition Law, which is very strict when assessing abuse of dominance. This aspect is reflected in the practice of the European Commission and in the case-law of the Court of Justice of the EU. Unlike for Article 101 from the Treaty on the Functioning of the EU referring to cartels and other anti-competitive agreements, for which some exceptions and exemptions from applying competition law provisions are provided, for Article 102 from the Treaty on the Functioning of the EU, no exceptions are tolerated. Abuse of dominance cannot find any justification and is not acceptable in the view of EU Competition Law. The US Antitrust Law approach does not encourage abuse of market power either, but it states that this is also a market issue which will be eventually regulated by the market itself. What is not tolerated in any circumstances by the US Antitrust Law are cartels, which are worse than abuse of market power, as is reflected in US Antitrust Law. Given this international and comparative perspective, an assessment of the concept of market power in the context of globalization and of enhanced digitalization is important when dealing with market power situations. This is the objective of the present entry paper.

The context of digitalization might generate a change of paradigm in the assessment of market power, which is analyzed in the present paper. This change of paradigm is reflected in the new dimension of market power and its evaluation. The developments regarding the measurement of market power are assessed, considering the transition from well-established views based on market share to new perspectives of market power in the digital global environment and in the era of delocalization. The financial sector with relevant case studies is being considered as it is a sector where moral hazard occurred, triggering changes at global level, such as the financial crisis in 2008–2009. Linked with the idea of market power, the principle “too big to fail” proved at that time to be false. In order to avoid similar situations, an ethics-based approach has been put in place. Corporate social responsibility became a value that gains increasing importance and that has to be considered by actors with market power. Rating agencies might as well have a role in this assessment. These aspects reflect the developments of the concept of market power and how the perception of influencing factors has changed over time.

The current state of research reveals the concept of market power and its dimensions. According to the studied literature, the economic view defines market power as the ability to set a price “above short-run marginal costs” ^[2]. This definition, though, is not very useful for policy formulation or for a legal interpretation according to EU Competition Law. Regarding pricing matters, companies focus not on “short-run marginal costs”, as knowing these costs is quite difficult, so that they rather focus on average costs, which are easier to be determined. Market power is reflected in the fact that a company is able to raise prices above the level that would exist in a competitive environment. This way, the company having market power increases its profit ^[2]. According to Bishop & Walker, three elements define market power. By increasing prices, the company is ready to renounce at some output.

The next element to consider when assessing market power is the fact that the price increase must have an increase in profitability as a consequence. After the price raise, demand is likely to fall, according to the demand curve that slopes downwards. In order to predict the fall, a company may use the indicator of price elasticity of demand, which is the percentage change in sales divided by the percentage change in price ^[2]: