EU Competition Law and Policy - compal

T-427/08 CEAHR v Commission
Narrow Markets
22/78 Hugin v Commission
T-30/89 Hilti AG v Commission
Switching Costs/Technology Markets
COMP/35.587 etc PO Video Games (Nintendo)
Markets for Raw Materials
6/73 Commercial Solvents v Commission
Market Definition and Market Power
©Ariel Ezrachi, December 2012
P a g e | 2
The SSNIP test which is used to define the market is based on the assumption that prevailing
prices on the market are competitive. However, in the context of Article 102 cases, it is often the
case that the price on the market is likely to be above competitive levels. Failure to take this into
account may give rise to the ‘cellophane fallacy’ and lead to the market being defined too widely.
Consequently, in cases of dominance it is appropriate to rely on a wider range of methods to
assess the market and eliminate false substitutes. See the Commission Notice on the Definition
of the Relevant Market (para 25) and the Commission’s Discussion Paper on the Application of
[Article 102 TFEU] to Exclusionary Abuses (December 2005) (paras 11-19).
The ‘cellophane fallacy’ highlights a significant shortcoming in the process of market definition.
The risk of distortion in the analysis may arise even below the levels of dominance, when more
limited levels of market power are present. Subsequently, conclusions as to the elasticity of
demand should be treated with caution when used to delineate the market. It is prudent to treat
the defined market as a valuable analytical framework but refrain from attributing rigid
boundaries to it.
Barriers to Expansion or Entry, and Potential Competition
The methodology used to define the market primarily focuses on demand and supply
substitutability. As such, it does not provide the complete picture of the competitive pressures
faced by the undertakings. An analysis of the wider picture, including potential competition is
called for where the position of the undertakings involved in the relevant market raises concerns
from a competition point of view.
Judicial review
In so far as the definition of the product market involves complex economic assessments on the
part of the Commission, it is subject to limited review by the Court. The Court will assess
whether the Commission based its assessment on accurate, reliable and coherent evidence which
contains all relevant data and is capable of substantiating the conclusions drawn from it. See:
T-301/04 Clearstream v Commission 49