On 8 February 2024, the European Commission adopted a Revised Commission Notice on the definition of the relevant market for the purposes of Union competition law. This is the first revision of the Market Definition Notice since its adoption in 1997.

Market definition is a tool that the Commission uses to identify and define the boundaries of competition between undertakings. The main purpose of market definition is to identify in a systematic way the effective and immediate competitive constraints faced by the undertakings involved when they offer particular products in a particular area and to identify the relevant competitors of the undertaking(s) involved when they offer those products, as well as the relevant customers (paragraph 6).

The updated guidance takes into account the significant developments of the past twenty years, namely the digitalisation and new ways of offering goods and services, as well as the increasingly interconnected and globalised nature of commercial exchanges (paragraph 3). The aim is to harmonise the Commission's guidelines with the new realities of the market, as well as with the evolution of the Commission's practices in these cases and with European Union case law.

Main novelties in the revised Notice:

• Parameters of competition: the Notice emphasises the importance of taking into account other parameters of competition in addition to the price of the product, such as degree of innovation and its quality in various aspects – namely its sustainability, resource efficiency, durability, the value and variety of uses offered by the product, the possibility to integrate the product with other products, the image conveyed or the security and privacy protection afforded, as well as its availability, including in terms of lead-time, resilience of supply chains, reliability of supply and transport costs (paragraph 15).
• Structural transitions: it is foreseen that expected transitions in the structure of a market will be taken into account when the process requires a forward-looking assessment (paragraph 21). Moreover, structural market transitions can affect the definition of the market, both in terms of the relevant product and the relevant geographic market. Therefore, the Commission may take them into account in the short or medium-term in cases where they would lead to effective changes in the general dynamics of supply and demand within the period that is relevant for the Commission's assessment (paragraph 21).
• Application of the SSNIP test (“small but significant and non-transitory increase in price”): market definition of the relevant product continues to be based on demand-side substitution and, to a lesser extent, supply-side substitution. On the demand side, although it remains relevant, the SSNIP test is less central to market definition. Indeed, the European Commission states that there is no obligation to apply it "empirically" and that other types of evidence are equally valid to inform the market definition (paragraph 31). Furthermore, when companies compete on parameters other than price, such as quality or the level of innovation, the application of the SSNIP test is difficult, in particular in the context of zero monetary price products and highly innovative industries (paragraph 30).
• Market definition in the presence of significant R&D: innovation is often a key parameter of competition, and the Commission has been taking into account the specificities of highly innovative industries characterised by frequent and significant research and development (“R&D”). In addition, the Commission may take these specificities into account for market definition regarding the so-called pipeline products (not yet available to customers), the process of which might have sufficient visibility to determine what other product(s) the development stage product may be substitutable for, if its development is successfully completed and the product is placed on the market (paragraph 91).
• Market definition in the presence of multi-sided platforms: the Commission may define a relevant product market for the products offered by a platform as a whole, in a way that encompasses all user groups or it may define separate (although interrelated) relevant product markets for the products offered on each side of the platform (paragraph 25). It may be more appropriate to define separate markets where there are significant differences in the substitution possibilities on the different sides of the platform, and the Commission may take into account factors such as whether the undertakings offering substitutable products for each user group differ, the degree of product differentiation on each side, behavioural factors such as the homing decisions of each user group and the nature of the platform (paragraph 95). In cases where multi-sided platforms (such as Google and Facebook) supply a product to a user group at a zero monetary price, non-price parameters are particularly relevant for the assessment of substitution (paragraphs 97 and 98).
• Market definition in the presence of after-markets, bundles and (digital) ecosystems: according to the Commission, in certain circumstances (digital) ecosystems can be thought of as consisting of a primary core product and several secondary (digital) products whose consumption is connected to the core product. So, the Commission may apply similar principles to those applied to after-markets to define the relevant product market(s) (paragraph 104). Nevertheless, the market definition of ecosystems is flexible, and secondary (digital) products can be offered as a bundle (which can constitute a relevant market on its own), or be considered separate and distinct markets (paragraph 104).
• Market shares: according to the Commission, market shares are not the sole indicator of an undertaking’s strength in the market. Other factors, such as barriers to entry or expansion, including those derived from scale or network effects, access to specific assets and inputs, as well as product differentiation and degree of substitutability, may also be relevant, depending on the specific facts of the case (paragraph 106). In addition, depending on the specific products or the specific industry in question, other metrics can provide complementary or more useful information to determine market shares, such as capacity or production, the number of suppliers, the number of contracts awarded, the number of (active) users, the number of website visits or streams, time spent or audience numbers, the number of downloads and updates, the number of interactions or the volume or value of transactions concluded over a platform (paragraph 108).