Commission Notice on the definition of relevant market
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| Commission Notice on the definition of relevant market | |
|---|---|
| Title | Commission Notice on the definition of relevant market |
| Issued by | European Commission |
| Adopted | 1997 |
| Legal basis | Treaty on the Functioning of the European Union, Article 102 of the Treaty on the Functioning of the European Union, Article 101 of the Treaty on the Functioning of the European Union |
| Status | Guidance document |
Commission Notice on the definition of relevant market
The Commission Notice on the definition of relevant market is a 1997 guidance document issued by the European Commission that articulates principles for identifying product and geographic markets in competition law matters, especially under the Treaty on the Functioning of the European Union. It guides the application of Article 101 of the Treaty on the Functioning of the European Union and Article 102 of the Treaty on the Functioning of the European Union and informs merger review under the Council Regulation (EEC) No 4064/89 predecessor to Council Regulation (EC) No 139/2004. The Notice synthesizes economic concepts and legal practice from cases before the European Court of Justice, the General Court (European Union), and national competition authorities such as the Bundeskartellamt and the Office of Fair Trading.
Background and Purpose
The Notice was drafted in the aftermath of landmark disputes involving firms like Microsoft Corporation and British Airways, reflecting analytic needs highlighted by the European Court of Justice and the General Court (European Union). It aims to provide predictable criteria for determining market boundaries drawn from precedents including Continental Can Company, Inc. v Commission and United Brands Company and United Brands Continental BV v Commission. The text seeks to balance economic analysis employed by institutions such as the Organisation for Economic Co-operation and Development and jurisprudence from courts including the Court of Justice of the European Union.
Legal and Regulatory Context
The Notice operates within a framework of instruments and actors: it complements enforcement by the European Commission, interaction with national authorities under the European Competition Network, and case law from the Court of Justice of the European Union. It is informed by instruments like the Merger Regulation and interacts with procedural norms developed in decisions such as Van Gend en Loos v Nederlandse Administratie der Belastingen and Cassis de Dijon. The Notice has been cited in procedures involving regulatory bodies such as the Autorité de la concurrence and international institutions including the International Competition Network.
Definition and Methodology
The Notice defines the relevant market through the lens of demand substitution and supply-side substitution, invoking the next-best-price test known as the SSNIP (small but significant and non-transitory increase in price) developed in economic literature and used in cases like United States v. Philadelphia National Bank. It sets out steps: identify product market by assessing product differentiation among branded goods such as in Nestlé disputes, delineate geographic market by reference to trade patterns exemplified in decisions involving Philips and Siemens, and consider temporal effects acknowledged in rulings like Tetra Pak International SA v Commission. The methodology instructs use of evidence types including price data, shipping records, switching patterns, and market shares derived from firms like Procter & Gamble and Unilever.
Application in Merger Control
In merger review under the Merger Regulation (EC) No 139/2004, the Notice informs calculation of market shares, concentration metrics such as the Herfindahl–Hirschman Index discussed in United States Department of Justice analyses, and assessing potential unilateral or coordinated effects as in cases involving General Electric and Alstom. The Notice has been applied in Commission decisions on transactions like Bayer/Monsanto and Dow/DuPont where precise market delineation affected remedy design and conditions imposed pursuant to precedents including Tetra Laval v Commission.
Application in Antitrust Investigations
In antitrust enforcement, the Notice guides assessments of dominance and collective dominance under Article 102 of the Treaty on the Functioning of the European Union and agreements under Article 101 of the Treaty on the Functioning of the European Union. It has appeared in abuse of dominance cases like United Brands and cartel enforcement such as the European Commission cartel fines imposed in sectors from automotive components (involving ZF Friedrichshafen) to financial indices (involving Credit Suisse). Market definition affects finding of foreclosure, margin squeeze, and exploitative conduct as adjudicated by the General Court (European Union).
Criticisms and Interpretive Issues
Scholars and practitioners from institutions such as London School of Economics, Harvard Law School, and the Centre for European Policy Studies have critiqued the Notice for overreliance on the SSNIP test and limited guidance on multi-sided markets exemplified by platforms like Google LLC and Facebook. Courts including the Court of Justice of the European Union and commentators from the Max Planck Institute for Innovation and Competition have debated treatment of innovation markets, dynamic competition in sectors with entrants like Tesla, Inc., and the adequacy of market shares in digital contexts as discussed by regulators including the European Data Protection Board.
Impact and Case Law Examples
The Notice has influenced a body of case law: seminal references include United Brands Company and United Brands Continental BV v Commission, Continental Can Company, Inc. v Commission, Tetra Pak International SA v Commission, and more recent merger and antitrust decisions by the European Commission in matters such as Microsoft/LinkedIn and Google/Android. National decisions from authorities like the Autorité de la concurrence and the Bundeskartellamt also reflect its methodology, shaping remedies, fines, and market analyses across sectors from pharmaceuticals involving Pfizer to telecommunications featuring Deutsche Telekom.