§2.2 General methodology for defining geographic markets

38. Geographic markets can range from local to global, depending on the facts of the case. As set out in paragraph 12(b), the approach the Commission uses to define the relevant geographic market is that of assessing conditions of competition. A common starting point is to identify the areas where the relevant conduct or concentration is likely to have effects, by identifying the location of the undertaking(s) involved and of their customers. The Commission then analyses whether the conditions of competition in a certain area are sufficiently homogeneous (63) for the effects of the conduct or concentration to be able to be assessed and whether that area can be distinguished from other areas because the conditions of competition are appreciably different in those areas. 39. The Commission carries out its assessment of the conditions of competition by examining a variety of evidence. Such evidence includes, depending on the requirements and particularities of each case: the presence of the same or different suppliers across geographic areas; similarities or differences in their market shares and prices; similarities or differences in customer preferences and purchasing behaviour; barriers and costs associated with supplying customers in a different area; distance-related factors affecting costs, quantities available or reliability of supply, and trade flows and patterns of shipments. Further details on the evidence the Commission relies on when assessing geographic markets are set out in Section 3.3. 40. The Commission usually also analyses demand substitution between suppliers located in different geographic locations or areas. This is particularly important in cases where the location of the customer as such does not matter for the conditions at which products are offered, that is to say where suppliers do not negotiate with individual customers or do not discriminate by customer location or by geographic area. In that case, the relevant geographic market is usually defined based on supplier location (64) and the Commission may put particular emphasis on establishing which suppliers in which areas are close substitutes to the undertaking(s) involved, in line with the methodology set out in Section 2.1.1. An example is the Commission’s definition of the relevant markets for passenger air transport services under the airport-by-airport approach in past cases in the air transport sector. The Commission’s analysis focused on establishing whether some of the relevant airports were substitutable with other airports from the point of view of passengers (65). 41. In cases where suppliers negotiate with individual customers or can discriminate by customer location or geographic area, the Commission will usually define the relevant geographic market based on customer location (66). Demand substitution between different geographic areas – such as switching to additional imports – can also be relevant in those cases. When customers in two areas consider mostly the same suppliers as alternatives and can readily switch purchase volumes between them, this may indicate, together with other factors, that conditions of competition between the two areas are sufficiently homogeneous and that the effects of the conduct or concentration would be sufficiently similar for the two areas to form part of the same relevant geographic market. Conversely, when customers in two areas regard different suppliers as alternatives, or when the volumes that can be and are switched is limited, for instance because of customer preferences or because of limits in the import volumes available, this indicates that conditions of competition in the two areas are not sufficiently homogeneous (67). 42. As a result, the mere existence of imports or the possibility of switching to imports in a given geographic area does not necessarily lead to a widening of the geographic market to include the area from which the goods were or could be exported. Customers located in the area from which the goods were or could be exported may face different conditions of competition compared to customers located in the area where imports are delivered. In those circumstances, if geographic markets were defined widely to include the areas of export and delivery of imported goods, this could erroneously include in the relevant market areas where customers are likely to be affected differently by the relevant conduct or concentration. This would hamper rather than facilitate the competitive assessment. 43. Therefore, in cases where there are significant imports, but trade between certain geographic areas or other supply and demand considerations are insufficient to lead to sufficiently homogeneous conditions of competition, the Commission does not extend the relevant geographic market to include the area from which the goods were exported. However, as part of the competitive assessment and when geographic markets are defined based on customer location, the Commission calculates market shares based on all sales to customers in the relevant geographic market, including sales from both local suppliers and importers. The Commission also fully takes into account the competitive constraint from imports in the relevant market in other ways in the competitive assessment, for instance by examining whether imports are likely to expand in the future when the case requires a forward-looking assessment (68). 44. An example of how the Commission considers trade flows when defining the relevant geographic market and carrying out its competitive assessment is the Commission’s assessment of the market for finished flat carbon steel products (69). The Commission concluded that the relevant geographic markets for several types of finished flat carbon steel products were not wider than the EEA because market structures differed between world regions; sourcing occurred to a very large extent at the regional level, and the pricing of the products differed significantly between world regions. Nevertheless, the competitive constraint from imports was assessed in detail as part of the competitive assessment.

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