Notice on the definition of the relevant market
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| Notice on the definition of the relevant market | |
|---|---|
| Title | Notice on the definition of the relevant market |
| Jurisdiction | European Union |
| Issued by | European Commission |
| First issued | 1997 |
| Status | Guidance document |
Notice on the definition of the relevant market The Notice on the definition of the relevant market is a guidance instrument issued by the European Commission to assist in delineating product and geographic markets for the application of TFEU competition rules such as Article 101 and Article 102. The Notice interrelates economic concepts with legal standards applied by institutions including the Court of Justice of the European Union, the European Court of Human Rights, and national competition authorities like the Bundeskartellamt and the Competition and Markets Authority. It is frequently cited alongside decisions of the European Commission Directorate-General for Competition and rulings from the General Court.
Background and Purpose
The Notice was developed in the aftermath of competition policy consolidation during the 1990s, reflecting principles from landmark instruments such as the Maastricht Treaty, the Single European Act, and communications from the European Commission Directorate-General for Competition. It aims to provide consistent guidance for practitioners from institutions including the European Parliament, the Council of the European Union, national ministries, antitrust divisions of corporations like Siemens, General Electric, and counsels appearing before the Court of Justice of the European Union. Its purpose is to align analytical tools used by economists at firms such as McKinsey & Company and The Boston Consulting Group with legal thresholds applied by tribunals like the European Court of Justice.
Legal and Regulatory Framework
The Notice functions within the framework of the Treaty on European Union and the Treaty on the Functioning of the European Union, operating alongside regulations such as Regulation 1/2003 and directives adopted by the European Commission. It is cited in cases decided by the European Court of Justice, the General Court, and in enforcement actions led by the European Commission Directorate-General for Competition, national authorities including the Autorité de la concurrence and the Comisión Nacional de los Mercados y la Competencia. The Notice complements sectoral regimes overseen by agencies such as the European Medicines Agency and the European Banking Authority when market definition intersects with regulatory approvals or licensing regimes.
Methodology for Defining the Relevant Market
The Notice prescribes a stepwise methodology incorporating tools developed in economic literature by scholars like Eugene Fama, Michael Porter, and Jean Tirole, and applied in precedent decisions such as cases involving Microsoft Corporation, Intel Corporation, and Google LLC. Key techniques include the SSNIP test (often referenced in decisions by the European Commission and the World Trade Organization dispute panels), demand-side and supply-side substitution analyses, and consideration of product characteristics, distribution channels, and buyer behavior in markets addressed by entities like Amazon (company), Apple Inc., and Tesco plc. The methodology integrates econometric models, hypothetical monopolist frameworks used in decisions such as United States v. Microsoft Corp. (2001), and evidence submitted by consulting firms like NERA Economic Consulting and Charles River Associates.
Case Law and Precedents
The Notice is frequently applied in jurisprudence from the Court of Justice of the European Union and the General Court, including influential rulings involving United Brands Company (banana market), Continental Can Company (packaging), and later decisions in cases against corporations such as Microsoft Corporation and Google LLC. National case law from courts such as the Bundesverfassungsgericht and the Conseil d'État also references the Notice when aligning national enforcement with European Commission practice. International comparisons are made with jurisprudence from the United States Supreme Court, including antitrust opinions like Brown Shoe Co. v. United States, and with administrative precedents from agencies such as the Federal Trade Commission and the United States Department of Justice Antitrust Division.
Practical Applications and Enforcement
Enforcers apply the Notice when assessing mergers filed under EU Merger Regulation, cartels investigated under Article 101, and abuse of dominance probes under Article 102. The Notice informs market investigations by the European Commission, national authorities like the Autorità Garante della Concorrenza e del Mercato and private litigation in courts including the High Court of England and Wales. Corporations such as Coca-Cola Company, Pfizer Inc., and Volkswagen structure economic evidence and snapshot analyses of markets—product and geographic—based on the Notice’s guidance when filing notifications or defending transactions before bodies like the European Commission Directorate-General for Competition.
Criticisms and Economic Debates
Academic and practitioner critiques from scholars at institutions like London School of Economics, Harvard University, and INSEAD question the Notice’s reliance on fixed conceptual tools such as the SSNIP test, arguing for more dynamic approaches incorporating platform economics exemplified by Facebook, Google LLC, and digital marketplaces like eBay. Debates focus on whether the Notice adequately addresses two-sided markets, network effects, and multisided platforms as analyzed by economists including Jean Tirole and David S. Evans. Other commentators from think tanks like Bruegel and Centre for European Policy Studies suggest updates to reflect developments in cases against technology firms, pharmaceutical disputes involving Pfizer Inc., and energy sector consolidation featuring actors like Shell plc and BP plc.