European Commission adopts revised Market Definition Notice

European Commission adopts revised Market Definition Notice

The European Commission has adopted a revised Market Definition Notice.

Market definition requires identifying the boundaries of competition between companies when assessing mergers and most antitrust cases.

The revised notice brings the Commission’s guidance in line with new market realities, as well as with developments in the Commission’s case practice and EU case law. It will enhance transparency and legal certainty for businesses, facilitate compliance and contribute to a more efficient competition enforcement.

The revised Notice is the first revision of the Market Definition Notice since its adoption in 1997. It reflects the significant developments of the intervening years, in particular the increased digitalisation and the new ways of offering goods and services, as well as the interconnected nature of commercial exchanges.

It includes the following key elements:

  • More accessible guidance thanks to a detailed structure and concrete examples, illustrating the practical application of market definition concepts.
    A description of the general principles of market definition.
  • A recognition of the importance of non-price parameters for market definition, including innovation, quality, reliable supply and sustainability.
    Specific guidance on the application of market definition concepts in specific circumstances, including:
  • digital markets, for instance with respect to multi-sided markets and digital “ecosystems” (e.g., products built around a mobile operating system).
    innovation-intensive industries, where companies compete on innovation, including through the development of new products.
  • Clarifications on dynamic and forward-looking assessments especially in markets undergoing structural transitions, such as regulatory or technological changes.
  • Expanded guidance on geographic market definition focusing on the factors that can justify defining markets as global, EEA-wide, national, or local, and on the role of imports when defining the relevant geographic market.
  • Clarifications on various quantitative techniques used when defining markets, such as the small but significant and non-transitory increase in price (‘SSNIP’) test.
  • Guidance on alternative metrics relevant for the calculation of market shares, such as shares based on sales or capacity, or shares based on usage metrics like the number of (active) users or website visits.
  • Extensive overview of the various sources of evidence and their probative value for market definition analyses.

Margrethe Vestager, executive vice-president in charge of competition policy, said: “With this thorough review of our guidance, we reinforce important principles of competition enforcement and address new market realities, such as digitalisation and increasingly interconnected and globalised commercial activity.

“Markets are changing fast, and we need to ensure our guidance remains fit-for-purpose and effective in response to technological advances. The revised Notice will enhance transparency and legal certainty to the benefit of all stakeholders.”

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