In the first case, the question is whether customers for the product in question can readily switch to a similar product in response to a small but permanent price increase (of between 5% and 10%). of customers) and supply-side substitutability (i.e. The Commission therefore carries out an assessment of demand-side substitutability (i.e. Only in the final stage is the relevant market analysed to determine the degree of integration in the EU’s markets. The substitutability criterion enables research to be targeted on any substitute products, making it possible to define the relevant product market and geographic market with a greater degree of certainty. A market is competitive if customers can choose between a range of products with similar characteristics and if the supplier does not face obstacles to supplying products or services on that market. Firms subject to a competitive system must respect two major constraints: demand substitution and supply substitution. Once the product market and the geographic market have been defined, the Commission carries out a more detailed analysis based on the concept of substitutability. It also tries to determine the geographic market by producing an overview of the breakdown of the market shares held by the parties in question and by their competitors, the prices charged and any price differentials. In a preliminary analysis, the Commission attempts to define the product market by investigating whether two products belong to the same market. Therefore, a structured analysis which is also flexible enough to take individual circumstances into account is required. However, this methodology may give rise to different results depending on the nature of the competition in question.
The Commission has identified a number of criteria which can help it to analyse the behaviour of firms in the market and the specific conditions of the relevant market. The relevant market combines the product market and the geographic market, defined as follows.Ī relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer by reason of the products’ characteristics, their prices and their intended use.Ī relevant geographic market comprises the area in which the firms concerned are involved in the supply of products or services and in which the conditions of competition are sufficiently similar. This analysis, which incorporates both the product and the geographical dimensions of the relevant market, can be used to determine whether there are actual competitors which are capable of constraining the behaviour of the firms in question and to assess the degree of real competition on the market. In a spirit of transparency, the notice explains the methods used by the Commission to define a relevant market on a case-by-case basis. Defining the relevant market means determining the scope of the competition rules in respect of restrictive practices and abuses of a dominant position (Regulation (EC) No 1/2003 - see summary), as well as the scope of the merger legislation (Regulation (EC) No 139/2004 - see summary). In the event of a suspected infringement of European Union (EU) competition rules, the first element to be considered is the relevant market. It seeks to provide guidance to companies and other interested parties on the European Commission’s approach to market definition - a crucial first step in the Commission’s assessment in many antitrust and merger cases. Commission Notice on the definition of relevant market for the purposes of Community competition law
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