EU Market Definition Notice - Commission proceeds from evaluation and fitness check to public consultation

In an earlier blog post we discussed the ‘evaluation and fitness check roadmap’ conducted by the European Commission (Commission) in relation to its 1997 Notice on the definition of relevant markets (Notice).

In light of the initial feedback received by the Commission, on 26 June 2020 it published a ‘public consultation for the 2020 Evaluation of the [Notice]’ (Consultation). The Commission will consult with stakeholders from the public and private sectors, including consumer associations, EU national competition authorities and government bodies, academia, as well as legal and economic practitioners.

The Consultation forms part of the overall evidence base the Commission will use in deciding whether revisions to the Notice are required. In describing the purpose of the Consultation, Executive Vice-President Margrethe Vestager stated “[i]t is important that the guidance the Commission gives is up to date and that it sets out a clear and consistent approach to market definition in a way that is easily accessible”.

The Commission acknowledges that changes such as the increase in global trade, including with major emerging markets, the progressive elimination of national barriers to commerce within the single market, digitisation, and the rise of major new players in some sectors, mean that many markets may work differently today than they did in the past.

As part of the consultation process, the Commission has published a questionnaire to be completed by interested parties. The Commission will also gather evidence through research, wide-ranging consultation activities and a potential conference or workshop with technical experts and stakeholders in Q4 2020.

The Consultation questionnaire includes queries regarding how the Notice has been used in practice by respondents, then seeks feedback by reference to five evaluative criteria:

• Relevance. Whether there is still in principle a need for published guidance on the approach to market definition.
• Effectiveness. The questionnaire invites views on whether the Notice provides correct, comprehensive and clear guidance. It seeks input on whether there are ‘major points of continuity’ (e.g. legal, economic, political, methodological or technological) that have either remained consistent since 1997 and should therefore should be used as guiding principles for any revisions to the Notice, or that have affected the practical use of the Notice but are not currently reflected in its content.
• Efficiency. Whether or not the net benefits from having the Notice in place outweigh the costs thereof.
• Coherence. Addressing both internal coherence (i.e. how the various components of the Notice interact) and external coherence (i.e. between the Notice on the one hand, and other EU competition law legislation and the case law of the European Courts on the other).
• EU added value. Whether the Notice adds value in market definition assessments, both at the EU and Member State level.

It is also possible for respondents to submit a positon paper setting out their views in greater detail (including on issues not explicitly raised in the Consultation), or provide further data or evidence to support their questionnaire responses.

The deadline for responses to the questionnaire is 9 October 2020. The Commission currently intends to publish the results of the evaluation in 2021.

The evaluation process so far has attracted significant public engagement, and the Commission’s dedicated webpage host 44 responses, including from a range of academics, industry bodies, practitioners and corporates. Respondents are consistent in expressing the need for some amendment to the Notice, and certain key themes can be observed across responses:

• Whether the Notice is sufficiently flexible to address market definition in digital or digitising markets;
• The need for further guidance on how to define product markets in industries where services are provided at zero monetary cost;
• The approach to assessing the relevant market for online platforms;
• The need to take account of economic globalisation in the Notice, including in the context of whether merger control should permit the creation of ‘European champions’ which can compete on the global stage; and
• Whether market definition analysis should seek to capture the intricacies of digitised and globalised markets, or whether certain nuances should be left to the substantive analysis stage.

With the Commission proposing a potential stakeholder workshop for Q4 2020, engagement with the Consultation presents an opportunity for participants to set out their views and demonstrate themselves to be interested parties with value to add to the process going forwards, maximising the scope for further engagement with the Commission.

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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