This article explains how the existing HMT framework can be applied to labor markets using standard economic evidence.
In FTC v. Kroger Co., the first merger challenge since the 2023 Merger Guidelines to focus on competition in labor markets in addition to product markets, the court observed that it was “not aware of any standard economic analysis” used to apply the Hypothetical Monopolist Test (HMT) for labor market definition. On this basis, the court found no fault in the FTC’s decision not to subject its proposed labor market to the test.
The court’s view is not surprising when product market definition is taken as the reference point. A long history of litigated cases and merger review has given rise to a set of tools that are often used when applying the HMT to product markets. On the labor market side, an analogous set of standard tools or shortcuts has not yet developed.
In this article, coauthors Justin McCrary of Columbia University and Elisa Olivieri and Graham McKee of Cornerstone Research explain how the existing HMT framework is nevertheless sufficient for labor market definition, and how the test can be applied to labor markets using standard economic evidence.
This article was originally published by Antitrust Source in May 2025.
Chicago 
