European Union: EU Emergency Response Update – Key Policy & Regulatory Developments No. 112

On 8 February 2024, the Commission adopted the revised Market Definition Notice (Communication from the Commission – Commission Notice on the definition of the relevant market for the purposes of Union competition law).

This is the first revision of the 1997 Market Definition Notice, which provides guidance on the principles and best practices on how the Commission applies the concept of relevant product and geographic market in enforcing EU competition law.

The revised Notice is also published, in part, in response to some stakeholders' views that mergers between European companies in certain sectors have been challenged as leading to allegedly too-high concentration levels within Europe, whereas the merging parties have argued that scale and size are necessary to compete globally.

The revision sought to take into account, in particular,:

• Significant market developments over the years (e.g., digitalization, globalization, and new ways of offering goods and services); and
• Competition policy's role in contributing to the EU's green and digital transitions and resilience of the single market by safeguarding wellfunctioning markets and addressing market failures, e.g., by:
  • Contributing to increasing the resilience of the EU economy and preventing excessive dependency by enabling strong and diversified supply chains, and
  • Complementing the EU's regulatory framework on environmental sustainability by taking into account sustainability factors to the extent relevant to the competition assessment, including as part of market definition.

The revised Notice seeks to boost guidance, transparency and legal certainty for businesses to facilitate compliance, including key features such as:

• More accessible guidance, providing detailed structure and concrete illustrations of practical applications of market definition concepts.
• Recognition of the importance of non-price parameters for market definition, including product innovation, quality, reliable supply and sustainability, e.g.:
  • Resource efficiency and durability;
  • Security and privacy protection;
  • Availability, including in terms of lead-time, resilience of supply chains, reliability of supply, and transport costs.
• Specific guidance on applying market definition concepts in particular circumstances, e.g.:
  • Digital markets, such as with respect to digital "ecosystems", for instance, concerning products built around a mobile operating system.
  • Innovation-intensive industries, where companies compete on innovation, including through developing new products.
• Clarifications on dynamic and forward-looking assessments especially in markets undergoing structural transitions, such as regulatory or technological changes.
• Expanded guidance on geographic market definition focusing on factors that can justify defining markets as global, EEA-wide, national, or local, and on the role of imports when defining the relevant geographic market.

The revised Notice states that the Commission will continue to develop the concept of relevant product and geographic market in light of its case practice, market developments and competition dynamics, evolutions in best practices in market definition, and case law of the EU courts.

The Commission's Q&A on the revised Notice provides further details (see here).