European legal watch - Newsletter n°94

September 14, 2020

Commission considers updating its 1997 Market Definition Notice

European Commission, press release, 26 June 2020

The starting point for any competition analysis is the definition of the relevant market. In the context of a "world that is changing fast and is increasingly digital", the Commission is considering whether its 1997 Market Definition Notice needs to be updated so as to be brought in line with developments that have arisen since then in the economic environment.

The purpose of the Commission’s Notice is to set out the principles and best practices used by the Commission to define the concepts of product market and geographic market, which are central to competition law in order to identify the boundaries of competition between undertakings. The Commission explains: “The objective of defining the relevant product and geographic market is to identify the actual competitors that constrain the commercial decisions of the undertakings concerned, such as their pricing decisions. It is from this perspective that the market definition makes it possible, among other things, to calculate market shares that convey meaningful information for the purposes of assessing market power.”

Market definitions should reflect market reality, which is why, in light of recent developments, the Commission considers that an update may now be needed, especially as market definitions differ across economic and geographic sectors and therefore need to be renewed with the emergence of new business sectors such as the digital sector. In particular, the Commission mentions a number of elements that could change the functioning of markets, namely "the increase in global trade, including with major emerging markets, the progressive elimination of national barriers to commerce within the single market, digitization, and the rise of major new players in some sectors".

The Commission’s communication of guidance on market definition enables companies and other stakeholders to anticipate Commission decisions and to analyze their projects from a competition law perspective according to the methodology adopted by the European Commission. It is therefore appropriate that the Commission consult the various economic actors from the public and private sectors to gather their views on the need to adapt the Market Notice.

Government bodies and competition authorities, companies and consumer associations, academics as well as legal and economic practitioners are thus invited to submit their views until 9 October 2020 on the Market Definition Notice in effect since 1997 and in particular on its usefulness and relevance.

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