On Thursday 8 February, European Competition Commissioner Margrethe Vestager presented the first update since 1997 of the European Commission’s Communication on the definition of the relevant market for the purposes of European Union competition law.
For Margrethe Vestager, it is a question of adapting the text to the markets, which have evolved, and to consumer behaviour. The new text reflects the way in which the Commission’s approach has evolved since 1997.
In this document, the EU institution sets out its general methodology for defining product markets and its method for examining supply substitution and demand substitution.
The Commission has also clarified its general methodology for defining geographic markets. However, it specifies that the definition of the relevant market is an intermediate stage in its overall assessment of competition cases, and that this assessment relates more broadly to all the constraints exercised on undertakings active on a given market.
The revised communication can function as a guidance document for companies when they are considering a merger, stressed Commissioner Vestager. It also aims to offer companies and stakeholders greater transparency on how the Commission will work and on the basis of what principles, in cooperation with the national competition authorities.
However, the evidence-based approach will not be changed, nor the fact that, for the Commission, “a market is where businesses go compete”, said Ms Vestager. In this respect, communication offers greater visibility of the different sources of this evidence.
In Ms Vestager’s view, markets and their structure can change very quickly, particularly with the advent of digital technologies that are revolutionising the way we do business.
The Commission has defined markets without monetary prices, particularly for digital services. Parameters going beyond price will be included to determine the relevant market, such as sustainability, reliability of supply and innovation.
What’s more, as international trade becomes increasingly globalised and interconnected, we can expect more structural changes in the future, particularly with the new generation of digital technologies, including artificial intelligence. Ms Vestager felt that the revised communication would provide a good basis for understanding these changing situations, in particular by including details of dynamic and forward-looking analyses.
The Commissioner also pointed out that the Commission also had to deal with cases where the products concerned were not yet on the market and where, as a result, competition was based on innovation. This is the case, for example, for certain pharmaceutical products. The new guidelines include specific guidelines for innovation-intensive businesses.
Finally, the EU institution is clarifying its method for calculating market share, which in the digital era now includes indicators such as the number of active users or website visits, in addition to the more traditional elements based on sales or capacity.
Finally, the Commission sheds light on some of the quantitative techniques it uses in the process of defining the relevant market (in particular the application of hypothetical monopoly tests, also known as ‘SSNIP tests’, for “small but significant and non-transitory increase in price”).
Link to the communication: https://aeur.eu/f/aru (Original version in French by Émilie Vanderhulst)