Group test, it is capable of knocking out competitors or raising price after a predator. If a company does not have market power, then it will not be capable of such activity, and its conduct is not predatory. Market power is therefore a very important determinant of whether a company can actually raise prices and engage in activity that damages consumers. Without this power, low prices charged by the alleged predator would simply invite others into the market.

In the US, Section 2 of the Sherman Act prohibits the abuse of monopoly power once acquired as well as attempts to monopolize. It is important to note that there is no antitrust bar to simply attempting to increase market share even to 100%. The cases interpreting Section 2 of the Sherman Act have suggested that market share of greater than 70% rises to the level of being problematic from this perspective. $ ^{88} $ A snap-shot analysis of the market has usually been used to establish the level of market share at any given time. However in markets that are rapidly changing, such as after a privatization, a fixed (in time) reference for market share does not make much sense. Instead the dynamic view we suggest is more accurate. Market power is important, as without it, there would be no ability for the SOE to recoup lost profits. Its low prices would only invite others into the market, and these would discipline its price-hiking tendencies.

In the case of SOEs, there are also different factors that need to be considered, based on their status as government entities. They are as follows:

(i) Government as revenue-maximizer can sustain predatory prices for longer than can a private company. It can do this because the threat of bankruptcy is not as real – governments tend to bail-out their failing enterprises. SOEs also receive other aids and hand-outs from government. These benefits need to be factored into the analysis above, but they also mean that SOEs with lower than 60 percent market share can still be engaged in harmful predatory conduct.

(ii) The other factor to consider is the impact that such behavior is having on market share. If $ M(x) $ is the market share of SOE x, then $ \left(\frac{\mathrm{d}M(x)}{\mathrm{d}t}\right)/\mathrm{d}t $ – the rate of change of market share – will help determine the true dynamic market power of SOE x. Where $ \left(\frac{\mathrm{d}M(x)}{\mathrm{d}t}\right)/\mathrm{d}t $ is large, and particularly in cases where $ \left(\frac{\mathrm{d}^{2}M(x)}{\mathrm{d}t^{2}}\right)>0 $ , then even relatively low levels of $ M(x) $ can lead to market power, that can enable an SOE (or indeed a private competitor) to engage in and sustain harmful predatory conduct.

### 14. Prevention is Better Than Cure

In our experience, around the world, once an incumbent is allowed to engage in anti-competitive practices, it is very difficult to discipline the incumbent because of its significant political power. It is much better to ensure that the regulatory design precludes anti-competitive practices, and monies are not available to JPCo from the outset to engage in such behavior. This is why it is important to limit the size of the reserved sector, to ensure that the postal sector is competitive as possible, and to make certain that opportunities for the exploitation of bottleneck facilities are very strictly limited.