Revised Market Definition Notice Adopted by the Commission – A new way of Defining Markets in Competition Law Cases?

Introduction and background

On 8 February 2024, the European Commission (the “Commission”) adopted a revised Market Definition Notice (the “Notice”).

Defining a relevant market is a necessary step when assessing the market power of an undertaking in merger control and antitrust cases. This provides competition authorities with an analytical framework for their competition analyses, enabling them to identify relevant competitors and customers as well as to assess undertakings’ market power. Defining the market is also an important exercise for the market players themselves, as it allows them to make informed decisions about different actions that they consider taking or to evaluate the actions of other market players. Only when you have defined the relevant market and know your own position on that market is it possible to determine whether your actions comply with the competition rules. However, defining markets is no exact science, and the relevant parameters of competition may differ widely between different markets.

The Commission adopted the original market definition notice in 1997. Since then, however, enormous changes have taken place to the way markets function – in particular with the rise of two-sided or multi-sided markets (such as digital platforms). In light of these changes, the Notice was adopted to provide certain updates and clarifications to bring it in line with new market realities and the developments of the past decades.

Summary of key differences

The Notice provides new or additional guidance on several key market definition issues. Key differences between the Notice and the old market definition notice include:

• greater emphasis on non-price parameters;
• clarifications on dynamic and forward-looking assessments;
• guidance in relation to market definition in digital markets;
• guidance in relation to market definition in innovation-intensive markets;
• additional guidance on the geographic market definition;
• overview of the various sources of evidence and their probative value for market definition analyses; and
• clarifications regarding quantitative techniques used by the Commission when defining a market.

Concluding remarks

While the Notice is much more extensive than the old market definition notice, it does not signal a change to the Commission’s approach to defining the relevant market in competition law cases. Neither does it signal greater intervention into certain types of markets, such as innovation-intensive markets or digital markets. Instead, it should be viewed as an explanation of the approach used by the Commission in light of the market developments and case law developments of the past two decades. The Notice aims to enhance legal certainty and predictability as well as to improve procedural efficiency for the Commission and the national competition authorities. However, there is a lot of uncertainty as to how digital platforms and innovation markets are defined in practice and some of these aspects are currently subject to judicial review (for example the Illumina/Grail and Booking/eTraveli cases).

Further reading

For a more in-depth analysis of the differences between the Notice and the old market definition notice, see here.