§2 GENERAL METHODOLOGY

22. As explained in Section 1.2, the main purpose of market definition is to provide, in an intermediate step, a framework to structure and facilitate the competitive assessment, by identifying in a systematic way the effective and immediate competitive constraints faced by the undertaking(s) involved when they offer particular products to customers in a particular area. 23. Undertakings are subject to three main sources of competitive constraints, namely demand substitution, supply substitution and potential competition: (a) Demand substitution constitutes the most effective and immediate disciplinary force on the suppliers of a given product (46). An undertaking’s influence over prevailing conditions of sale – such as prices, the level of innovation or the quality offered – depends on the extent to which its customers can easily switch to available products that the customers consider as substitutes (47). Demand substitution is therefore the main consideration when defining the relevant product market. (b) Supply substitution can also be relevant for the definition of the relevant market in some cases, namely when it is as effective and immediate as demand substitution and when it leads to similar competitive conditions across the products concerned. In the Commission’s experience, supply substitution is only relevant for market definition in specific cases. (c) Potential competition, by contrast, comprises more remote and contingent competitive constraints that do not meet the criteria of effectiveness and immediacy of substitution (48). Therefore, potential competition is not relevant for the definition of the relevant market and it is not appropriate to include in the relevant product market current sales by a potential competitor of products that are not substitutable with the product(s) of the undertaking(s) involved from the perspective of the customers (49), or to expand the geographic market to include the areas where the potential competitor is already active with its products (50). The existence of potential competition requires an analysis of additional factors, including the likelihood, timeframe and magnitude of any market entry. The assessment of the impact of potential competition requires analysing how this affects or could affect the behaviour of the undertaking(s) involved. This is analysed in the competitive assessment. 24. The assessment of demand and supply substitution helps identify the products in the relevant market, and hence the suppliers active in the market. Identifying the customers that are likely to face similar effects of the conduct or concentration in question can also be an important element for the definition of the relevant market, to provide a useful framework for the competitive assessment. To do that, the Commission focuses on the degree to which customers face similar or differing conditions of competition. Such assessment is often relevant for the definition of the relevant product and geographic market when suppliers negotiate with individual customers or when they can discriminate between customers or customer groups (51).

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Source: EUR-Lex (Cellar) · retrieved 2026-09-07