EU Market Definition Notice - Commission launches evaluation and fitness check

The European Commission (the "Commission") has launched an "evaluation and fitness check roadmap" of its 1997 Notice on the definition of relevant market for the purposes of Community competition law (the "Notice").

The Notice provides guidance on how the Commission uses the concepts of relevant product and geographic markets in its enforcement of EU competition law. Market definition enables the Commission to identify an undertaking's actual competitors, critical to the application of Articles 101 and 102 of the Treaty on the Functioning of the European Union and the Merger Regulation.

Executive Vice-President Margrethe Vestager flagged last year that the Commission would review the Notice. In that speech she outlined some of the pressures on the current Notice. These included first of all the changing scope of geographic markets due to the growing ease of global trade: in particular there was political pressure to take more forcefully into account worldwide markets to enable bigger European companies – European champions – to compete on the international arena in the wake of the Commission’s prohibition of the proposed Siemens/Alstom merger which sparked a debate.  Second, market definition should reflect better the new world of digital markets. Digitisation can make it easier for customers to benefit from truly global markets. Also digitisation creates specific new challenges for defining product markets.

The purpose of the evaluation launched last week is to determine whether the Notice remains fit for purpose in light of the many economic and market changes (notably including globalisation and digitalisation) that have occurred in the past 23 years. The Commission requests wide and general feedback, aiming to assess:

• The effectiveness of the Notice for all stakeholders, especially given market developments post 1997, the evolution of different approaches to market definition and the varying techniques now used to define markets
• The efficiency of the Notice in providing clear, transparent guidance on market definition and whether this analysis is cost efficient
• Whether the Notice has retained relevance and pertinence in light of market developments post 1997 and the progression of market definition techniques, such as for assessing competitive effects
• Whether the Notice remains in line with judgments of the EU courts, changes in the legal competition framework and EU competition policy and practice since 1997
• The extent to which the Notice has led to a consistent approach to market definition by the Commission and the EU national competition authorities

Roadmaps/evaluations such as these are a relatively new tool of the Commission, which it uses to define the scope of a major new law/policy or, as in this instance, the evaluation or fitness check of an existing law/policy. Practically speaking, they seek to generate broad feedback from citizens and stakeholders in order to inform the Commission's interpretation of problems caused by a policy or law, possible solutions to these, or any other relevant information of which the Commission should be aware.

The deadline for comments on this evaluation is 15 May 2020. Assuming the Commission concludes that some changes are required to the Notice (which appears very likely), it will then conduct consultation (on a revised policy proposal) in Q2 2020, which is likely to run for 12 weeks. The Commission aims to conclude the entire process by Q2 2021.

Stakeholder participation early in the review process, i.e. at the present evaluation stage, puts stakeholders in a good position to influence the direction of the changes, to be invited to engage in round-tables and other discussions the Commission may have as it shapes its proposals, and has the potential to strengthen the stakeholder's credibility and relationship with the Commission generally.

If you would like further information on any of the above, please do get in touch with your usual contact in the HSF competition team.

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