On June 26, 2020, the Commission opened a public consultation on the 1997 Market Definition Notice (the “Notice”), which sets out the Commission’s formal guidance on the definition of the relevant product and geographic market in competition cases.[1] Until October 9, 2020, anyone interested may visit the Commission’s website (here) and submit comments and respond to the Commission’s questionnaire about the relevance, effectiveness, efficiency, coherence, and value of the Notice as a guidance instrument.

The Notice governs the definition of the relevant product and geographic market, a competition law concept that defines the extent of competition between companies and in practice is the denominator used for calculating market shares. Companies’ market shares serve as a proxy for their market power and are an important tool of the Commission’s analysis in merger cases and competition investigations.

• Merger cases. The scope of information that needs to be provided in an EU merger filing depends on the merging parties’ market shares in the relevant markets. Market shares also have a major impact on the substantive assessment of the deal. For example, when prohibiting the Siemens/Alstom merger,[2] the Commission excluded China, Japan, and South Korea from the relevant geographic market for high speed and very high-speed trains and therefore discounted the competitive threat of suppliers active in these countries.
• Abuse cases. The existence of the dominant position is analyzed on the basis of a defined relevant market and the company’s market share in said market. By way of example, according to the Commission’s guidelines, dominance is not likely to be established if the company’s market share is below 40% in the relevant market.[3]
• Cooperation among companies. Market shares are also critical to the application of safe harbors under the Commission’s block exemption regulations, including on vertical agreements between customers and suppliers,[4] and on cooperation arrangements between actual and potential competitors in relation to research and development,[5] specialization and joint production,[6] and technology [7]

The consultation on the Notice will be followed by a conference or workshop in the fourth quarter of 2020 involving technical experts and stakeholder representatives, and discussions with the national competition authorities of the EU Member States. This is set to result in the Commission’s staff working document, which will summarize the results of all consultation activities and will likely take a view on whether and how the Commission should change the Notice. If the Commission decides to revise the Notice, it will likely reflect “changes like globalization and digitization,” which Competition Commissioner Vestager addressed in her speech when announcing the need to review the Notice in November 2019.[8]

[1]      Commission Notice on the definition of relevant market for the purposes of Community competition law, available at: https://eur-lex.europa.eu/legal-content/ EN/ALL/?uri=CELEX%3A31997Y1209%2801%29. The public consultation follows the evaluation roadmap that was published on April 3, 2020, reported in the April 2020 edition of the newsletter.

[2]      Siemens/Alstom (Case COMP/M.8677), Commission decision of February 6, 2019.

[3]      Communication from the Commission — Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings, para.14.

[4]      Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices; Commission Regulation (EU) No 461/2010 of 27 May 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector.

[5]      Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements.

[6]      Commission Regulation (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements.

[7]      Commission Regulation (EU) No 316/2014 of 21 March 2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements.

[8]      See https://ec.europa.eu/commission/commissioners/2019-2024/vestager/announcements/defining-markets-new-age_en. As reported in the April 2020 edition of the newsletter, the review of the Notice follows open calls by a number of EU Member States to better reflect the reality of “global” markets in the aftermath of the Siemens/Alstom merger prohibition decision, and to tackle market definition challenges involving multi-sided online platforms.