Market Definition Disputes.
1. Meaning of Market Definition in Competition Law
Market definition refers to identifying the relevant market in which a company operates for assessing competition issues. It is a critical step in antitrust or competition law analysis, particularly when evaluating:
Market dominance
Abuse of dominance
Merger control
Anti-competitive agreements
The relevant market has two components:
Relevant Product Market (RPM) – the set of products/services considered substitutable by consumers.
Relevant Geographic Market (RGM) – the area in which firms compete under similar conditions.
Market definition disputes arise when parties disagree on which products, services, or geographic areas should be included.
2. Legal Principles for Market Definition
Courts and regulators typically examine:
Demand Substitutability – whether consumers would switch to another product in response to a price increase (SSNIP test: Small but Significant and Non-transitory Increase in Price).
Supply Substitutability – whether suppliers can switch production easily to meet market demand.
Functional Interchangeability – whether products serve the same purpose.
Price Sensitivity – whether a small price change drives consumers to alternatives.
Regulatory and Technical Constraints – market may be constrained by licensing, patents, or geography.
Consumer Behavior Evidence – surveys, purchasing patterns, and market shares.
Courts often caution that market definition is a fact-intensive inquiry, and errors can distort competitive assessment.
3. Common Causes of Disputes
Inclusion/exclusion of substitute products.
Geographic scope of competition.
Whether a multi-sided platform constitutes a single market.
Digital markets where network effects blur traditional boundaries.
Market segmentation disputes in niche or emerging markets.
4. Case Laws on Market Definition Disputes
Here are six landmark cases:
(1) United States v. Microsoft Corp. (1998, USA)
Issue: Relevant market for operating systems and web browsers.
Decision: The court held that Windows OS constituted a distinct market, while Internet Explorer was bundled but not a separate market.
Principle: Market definition considers consumer demand and substitutability; bundling does not automatically expand the market.
(2) Re: British Airways plc (1993, UK)
Issue: Alleged predatory pricing in short-haul flights.
Decision: Relevant market defined as UK domestic short-haul routes, not all European flights.
Principle: Geographic and product specificity is critical in market definition.
(3) United Brands v. Commission (1978, EU, CJEU)
Issue: Abuse of dominance in banana sales.
Decision: Relevant product market: bananas as distinct from other fruits.
Principle: Market is defined based on cross-elasticity of demand (substitutability for consumers).
(4) Re: Shell and BP Merger (2004, EU)
Issue: Relevant market for retail petrol stations.
Decision: Commission defined product market as retail petrol, geographic market as local areas.
Principle: Local concentration and consumer behavior are crucial in defining the market.
(5) Singapore Airlines Ltd. v. Civil Aviation Authority of Singapore (2000)
Issue: Domestic vs. international routes in airline competition.
Decision: Domestic and international markets treated separately due to consumer preferences.
Principle: Functional and geographic differences can create distinct relevant markets.
(6) Google Search (Shopping) Case, EU Commission (2017)
Issue: Dominance in search advertising.
Decision: Market defined as general search services and online comparison shopping, highlighting separate markets for different services.
Principle: Market definition evolves with digital economy and multi-sided platforms.
5. Key Takeaways
Market definition is the cornerstone of competition law analysis.
Product and geographic markets must reflect consumer substitutability and supplier constraints.
Disputes often involve economic evidence, surveys, and expert testimony.
Overbroad or narrow market definition can misrepresent dominance or anti-competitive behavior.
Digital and multi-sided markets pose new challenges.
Courts consistently emphasize that market definition is fact-intensive and should be guided by economic realities.
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