EU Commission Updates Definition of ‘Relevant Market’

Dec 9, 2022 Benn-Ibler Rechtsanwälte

The EU Commission is updating its publication on the definition of the ‘relevant market’ (i.e. market definition) in competition law and has now presented a comprehensive draft. Many of the proposals are evidently based on proceedings against US technology companies such as Google/Alphabet, Facebook and Microsoft, which have been filed with increasing frequency in recent years.

The scope of the new notice has increased significantly compared to the old one, which dates back to 1997. Some key changes are outlined here:

• The SSNIP test will remain an important starting point for assessing demand substitutability. This examines whether it is profitable for a hypothetical monopolist to increase the price by about 5-10%. If, subsequently, other products are substituted, they both belong to the same market. However, the Commission now emphasises more strongly that non-price elements such as quality and innovation of products can also be used as criteria (especially if products are offered at a monetary zero price).
• The Commission may also take into account foreseeable market structure changes, in particular where the market introduction of new products is imminent or where there are imminent technological changes and changes to the regulatory framework. 
• New benchmarks for market definition in digital markets (e.g. multi-sided markets and digital ecosystems). In the case of platforms, the Commission will take into account e.g. indirect network effects. In particular, it may define a relevant product market for all products offered by a platform, comprising all or several user groups, or separate markets.
• In innovation-intensive markets (markets with significant investments in research and development), the Commission can define the market for so-called pipeline products (products that are not yet on the market, but for which it is sufficiently foreseeable due to the development process to which market they will belong).

Comments on the draft can be submitted until 13 January 2023. The Commission aims for the new notice to enter into force in the third quarter of 2023.

Commission, Press Release (8 November 2022)