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Market Definition Notes

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This is an extract of our Market Definition document, which we sell as part of our Competition Law Notes collection written by the top tier of Oxford students.

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Market Analysis
MARKET DEFINITION
At the start of every analysis involving Article 101 TFEU or Article 102 TFEU, it is necessary to define the market.
It is also necessary to define the market when considering the substantive analysis under the EU
Merger Regulations (EUMR), after the jurisdictional requirements of 'concentration' and 'community dimension' have been fulfilled.
The definition of the market often has a decisive influence on the assessment of a case. Note though that market definition is most important in relation to Article 102 TFEU and EUMR; it is still important for Article 101 TFEU, but can be shorter.
The main purpose of market definition is to identify the competitive constraints faced by undertakings
(U) in the market; must identify the actual competitors of U that are capable of constraining U's behaviour and of preventing them behaving independently of effective competitive pressure.
There are two parts:

i. ii.

Product market;
Geographic market.

The relevant market within which to assess a competition issue is established by a combination of the two.
Held in Continental Can [1973] that product interchangeability is an important consideration in defining the relevant market.
Product market
Commission Notice on the definition of relevant market for the purposes of Community competition law OJ 1997 C 372/5 ("Market definition notice" = MDN):
'A relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products'
characteristics, their prices and their intended use'.
So, defining the product market considers whether product X and product Y are, and can be, used interchangeably by customers so that there is one single 'product market'.
There are two parts to this inquiry:

1. Demand substitutability;
o From economic standpoint, this has the most immediate and effective disciplinary force on suppliers of X.
 U cannot have significant impact on conditions of sale (e.g. price) if customers can easily switch to substitute products.

2. Supply substitutability.
Demand substitutability
Assessment of this entails determining the range of products viewed as substitutes by the customer.
The SSNIP test ('small but significant non-transitory increase in price' test) is the leading test in relation to demand substitutability.

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