On 8 February 2024, the European Commission (EC) issued a revised Notice (the Notice) which modifies the principles for the definition of the relevant market in the field of competition (the original Notice on this issue was issued in 1997 and had not been updated).

The revised Notice takes into account the impact of digitisation and new ways of offering goods and services in relation to the definition of the relevant market, while summarising the EC’s approach to this issue to date and the case law of EU courts.

The definition of the relevant market plays a key role in the application of competition rules, and the revised principles of the EC’s approach to market definition are aimed at increasing transparency in the EC’s decision-making.

The EC’s basic approach to defining the relevant market remains unchanged. The EC stresses that the relevant market is defined on a case-by-case basis. This means that the relevant market may differ from sector to sector and at different levels of the supply chain. The EC also notes that the principles for defining the relevant market are the same in competition cases as in merger control.

In contrast, the revised Notice includes more discussion on the principles of market definition and its purpose, guidance on geographic market definition in the context of globalisation, updates with regard to digital markets and innovation-intensive industries, and guidance on evidence for relevant market definition.

At the same time, the EC has also retained a considerable degree of flexibility and does not provide a comprehensive list of principles applicable to all markets, and explicitly emphasises that the definition of the relevant market may vary from case to case or that different methods may be applied depending on the market or legal issue at stake.

Below, is a brief summary of the most important points of the revised Notice:

Defining product markets and potential competition. The Notice explains that firms are subject to three main sources of competitive constraints: demand substitution, supply substitution and potential competition. Potential competition is not relevant to the definition of the relevant product market, but requires an analysis of other factors such as the likelihood, timing and size of any entry, and how it affects or could affect the behaviour of competitors.

Non-price factors. The Notice now provides guidance on how the EC will take into account various non-price factors in defining the relevant market when the competition takes place on the basis of parameters other than the price of the product/service, e.g., the level of innovation that the product or service provides, as well as its degree of sustainability, durability and the value and variety of uses that the product offers, as well as its accessibility (e.g., transport costs) and also the purchasing behaviour of customers. However, the Notice does not provide guidance on the most relevant factors in specific circumstances or an assessment of the weighting of the different factors.


Prospective evaluation. In markets that are undergoing structural changes, such as regulatory or technological changes, or where it may be appropriate to capture market dynamics, the EC may take into account expected short or medium-term structural changes in the market if it is sufficiently likely that these changes will actually occur. The EC will take into account the internal documents of market participants in its forward-looking assessment.

The definition of the relevant market may remain open. It is common practice for the EC to leave the market definition open unless it affects the outcome of the case under investigation. The Notice explicitly reserves this possibility even in situations where competition concerns arise regardless of the relevant market definition used.

Geographical definition of the relevant market. The Notice explains the EC’s approach to defining the geographical market, i.e., when markets will be considered local, national, EEA-wide, or global/worldwide. The EC states that, where customers worldwide have access to the same suppliers on similar terms and conditions regardless of where the customers are located, the relevant geographic market is likely to be global.

The EC is not bound by the relevant market definitions of the previous cases. While previous EC decisions on a particular market can be a useful starting point for determining the relevant market, the EC is not bound by the definitions of previous cases and will always consider possible changes due to trends such as digitalisation, changes in customer supply, or the impact of globalisation.

Further guidance on the assessment of market power. The EC has reviewed its guidance on the use and meaning of market shares, noting that while it is an important tool in traditional markets (e.g., homogeneous product markets with limited dynamics), there are other factors that can be useful in both traditional and digital markets (e.g., barriers to entry or expansion, access to specific assets and inputs, product differentiation and degree of substitutability, number of contracts signed, number of visits to websites, number of downloads, etc.). Metrics that companies use internally in their day-to-day operations will be particularly relevant here.

Collecting and evaluating evidence. The EC uses different sources of evidence to define relevant markets and does not apply a fixed hierarchy of evidence. The Notice provides further guidance on possible sources of evidence and their probative value. In assessing the probative value of documents, the EC will take into account the wider context of the evidence to assess its relevance. According to the Notice, evidence will have greater probative value if it is clear that it has not been influenced by the EC’s investigation. This will be the case, for example, where the evidence pre-dates the merger or conduct and the EC investigation. Other factors that may be relevant include the identity of the authors and potential addressees and the purpose of the documents. The Notice emphasises the reliability of the evidence rather than the type of evidence.

Markets based on innovation. For example, the EC may take into account upcoming products and take into account basic research and development activity as a factor of the geographic scope of the market when defining the relevant market, which means that the market does not have to be defined solely by reference to existing products or services.

Multi-sided platforms. In the case of multi-sided platforms (e.g., ad-sponsored online intermediaries) that encourage interaction between different user groups, the EC may define a product-relevant market for the products offered by the platform as a whole or as separate product-relevant markets for the products offered on each side of the platform. According to the Notice, the EC will define separate markets where there are significant differences in substitution possibilities between the different sides of the platform. Multi-sided platforms often offer products or services free of charge to users on one side of the market (services are monetised in other ways, e.g., through advertising or collection of personal data), while on the other side of the market, the same services are monetised. In such cases, the SSNIP test would not work and the EC will instead focus on non-price factors such as product features, intended use, evidence of hypothetical substitution, barriers or costs to switching, interoperability with other products and data portability. It may also use the “SSNDQ test”, which assesses customer switching behaviour in response to a small but significant non-transitory reduction in quality.

Aftermarkets, bundles and digital ecosystems. The Notice includes a new subsection on “downstream markets, bundles and (digital) ecosystems” which provides guidance on how market definition will be approached in these circumstances. The Notice explains in which circumstances it is more likely that a single “system” market comprising both primary and secondary products will be defined. These circumstances include situations where customers consider lifetime costs when purchasing the primary product; the level of expenditure on the secondary product is high compared to the price of the primary product; there is a higher degree of substitutability between primary products; and where there are few suppliers specialising only in the secondary product(s). Similarly, the Notice provides a very general description of how market definition can be approached when consumers prefer to consume bundled products. Overall, therefore, the Notice provides only limited guidance on how the EC is likely to approach market definition in ecosystem markets.

In conclusion

Although the Notice summarises the EC’s practice in the area of enforcement of competition rules for agreements and mergers, including the tools that the EC is likely to use, it remains unclear how the EC will use these tools in any particular case.

However, the revised Notice will certainly make the EC’s implementation of EU competition law more predictable, bringing greater legal certainty to competitors and their advisers.