§4.3 Market definition in the presence of significant R&D

90. Innovation is often a key parameter of competition. The Commission takes into account the specificities of highly innovative industries characterised by frequent and significant research and development (‘R&D’). These specificities, which may be present in any industry sector, are usually taken into account at the stage of the competitive assessment but may also be relevant for market definition. Given that the outcome of innovation efforts in terms of final products can be uncertain, the Commission may factor in various potential outcomes of R&D processes in its assessment. 91. A prominent example of cases where the Commission may take these specificities into consideration for market definition are so-called pipeline products. While these products are not yet be available to customers, there may be sufficient visibility on their R&D process to establish with which other product(s) the pipeline product is likely to be substitutable, if the development of the pipeline product is completed successfully and the product is brought to market. The Commission may conclude that such pipeline product belongs to an existing relevant product market (121) or to a new product market, which is limited to the pipeline product and its substitutes (122). The intended use of the pipeline product and its projected substitutability with other products play a particular role in defining the relevant market. The geographic dimension of a relevant market containing pipeline products may need to reflect the geographic dimension of the underlying R&D effort. It could hence be broader than the relevant geographic market of commercialised products (123). 92. By contrast, in some cases, an R&D process may not (yet) be closely related to any specific product (124) but related to early stages of research, which may serve multiple purposes and, in the longer term, feed into various products. Although the fact that such early innovation efforts do not immediately translate into tradeable products may render it difficult to identify a relevant product market in the strict sense, it may still be relevant to identify the boundaries within which undertakings compete in such earlier innovation efforts, in order to assess whether there could be a loss of innovation competition due to a concentration or behaviour (125). In this type of assessment, factors such as the nature and scope of the innovation efforts, the objectives of the different lines of research, the specialisation of the different teams involved or the results of the undertaking’s past innovation efforts may be relevant for the purposes of defining the boundaries within which innovation competition takes place. In defining these boundaries, it is appropriate to have regard to the geographic areas within which R&D takes place alongside any other geographic specificities (126). 93. The general factors for defining the relevant product and geographic market as set out in Section 3 can be relevant for defining markets in the presence of significant R&D, depending on the degree of visibility that exists with respect to these factors. Related to this, a continuum may exist between R&D processes that are closely related to a specific product or pipeline product and early innovation efforts which are not. This may be the case in particular at the stage when R&D processes become more targeted but are still capable of leading to multiple and alternative potential results, which are not yet sufficiently refined to be classified as specific pipeline products with a defined use and finalised characteristics. In that case, the Commission’s approach to market definition may be closer to the approach used for pipeline products or for early innovation efforts, depending on where the relevant R&D process stands on this continuum.

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