Competition: Commission seeks feedback on draft revised Market Definition Notice

8 Nov 2022 03:44 PM

The European Commission yesterday launched a public consultation inviting all interested parties to comment on the draft revised Market Definition Notice. Market definition is an important first step in the assessment of mergers and of most antitrust cases. It serves to define the boundaries of competition between companies. The Market Definition Notice is being revised for the first time since its adoption in 1997, taking into account the significant developments of the intervening years, in particular digitalisation and new ways of offering goods and services, and to reflect the interconnected and globalised nature of commercial exchanges.

The draft revised Market Definition Notice follows a thorough review process launched in April 2020. In July 2021, the Commission published the results of its evaluation, which showed that while the current Notice remains highly relevant and is generally fit for purpose, certain updates and clarifications are necessary to bring it in line with developments in the Commission's practice, the EU courts' case law as well as new market realities. More than 100 stakeholders made their views known and those have been taken into account in the draft text presented for consultation yesterday.

The proposed changes

The main objective of the draft revised Market Definition Notice is to offer more guidance, transparency and legal certainty for businesses to facilitate compliance, including through concrete examples. It also aims at contributing to a more efficient enforcement by the Commission and National Competition Authorities.

The proposed changes provide new or additional guidance on various key market definition issues:

• Explanations on the principles of market definition and the way market definition is used for the purpose of application of competition rules.
• Greater emphasis on non-price elements such as innovation and quality of products and services.
• Clarifications regarding the forward-looking application of market definition, especially in markets that are expected to undergo structural transitions, such as technological or regulatory changes.
• New guidance in relation to market definition in digital markets, for example multi-sided markets and “digital eco-systems" (e.g. products built around a mobile operating system).
• New principles on innovation-intensive markets, clarifying how markets should be assessed where companies compete on innovation, including through pipeline products.
• More guidance on geographic market definition, including the conditions to define global markets, the approach to assessing imports as well as the Commission's approach to local markets defined by catchment areas (e.g. in the retail sale of consumer goods).
• Clarifications as regards the quantitative techniques, such as the small but significant and non-transitory increase in price/SSNIP test, that the Commission may use when defining a market.
• Expanded guidance on possible sources of evidence and their probative value, based on the Commission's material experience and fact-based approach to market definition.

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