Contents 1.Introduction 1.1. Purpose of the evaluation 1.2. Scope of the evaluation 2.Background to the intervention 2.1. The competition policy framework 2.2. The role of market definition in antitrust and merger enforcement 2.3. The Notice and its intervention logic 2.4. Market developments and evolutions in competition assessments since 1997 2.5. Evaluation baseline 3.Implementation / state of play 4.Methodology 4.1. Description and use of the sources of evidence 4.2. Processing and triangulation of the evidence collected 4.3. Limitations of the analysis 5.Analysis and answers to the evaluation questions 5.1. Relevance

5.2. Effectiveness 5.2.1. Role of market definition 5.2.2. Definitions and basic principles of assessing substitutability 5.2.3. Evidence to define markets 5.2.4. Market shares 5.2.5. Additional considerations 5.3. Efficiency 5.4. Coherence 5.5. EU added value 6.Conclusions Annex 1: Procedural information 1.1. Lead DG, Decide Planning/CWP references 1.2. Organisation and timing 1.3. External evaluation support study 1.4. Consultation of the Regulatory Scrutiny Board 1.5. Other evidence, sources and quality Annex 2: Stakeholder consultation 2.1. The stakeholder engagement strategy 2.2. Consultation activities 2.2.1. Consultation on the evaluation roadmap

2.2.2. Open public consultation 2.2.3. Summary of the targeted consultation of national competition authorities 2.2.4. Summary of targeted stakeholder workshops Annex 3: Methods and analytical models Annex 4: Summary of costs and benefits Glossary Term or acronym Meaning or definition CJEU Court of Justice of the European Union, also referred to as ‘the Court’ and, together with the General Court, ‘the EU Courts Commission European Commission Council Regulation 1/2003 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty on the Functioning of the European Union, OJ L 1, 4.3.2003, p. 1 DG Competition Directorate-General for Competition of the European Commission Digital Markets Act Proposal for a Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector, COM/2020/842 final ECN European Competition Network EEA European Economic Area EEA Agreement Agreement on the European Economic Area EFTA European Free Trade Association EU European Union EUR Euro GDP Gross domestic product Horizontal Block Exemption Regulations Commission Regulation No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the functioning of the European Union to categories of research and development agreements, OJ L 335, 18.12.2010, p. 36 (‘Commission Regulation No 2017/2010’); and Commission Regulation No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty to categories of specialisation agreements, OJ L 335, 18.12.2010, p. 43 (‘Commission Regulation No 1218/2010’). Horizontal Cooperation Guidelines Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ C11, 14.1.20111, p. 1 Horizontal Merger Guidelines Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ C31, 5.2.2004, p.5 ICN International Competition Network Merger Regulation Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (OJ L24, 28.1.2004, p. 1), also referred to as the ‘EU Merger Regulation’ NCA National competition authority in the EEA Non-Horizontal Merger Guidelines Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ C 265 of 18.10.2008, p. 6 Notice Commission Notice on the definition of relevant market for the purposes of Community competition law (OJ C 372, 9.12.1997, p. 5), also referred to as the ‘the Notice’ OECD Organisation for Economic Co-operation and Development R&D Research and development SSNDQ Small but significant non-transitory decrease in quality SSNIC Small but significant non-transitory increase in cost SSNIP Small but significant non-transitory increase in price Summary of the NCA consultation Summary of the replies received to the NCA consultation carried out during the evaluation Summary of the public consultation Summary of the replies received to the open public consultation carried out during the evaluation Support study External evaluation support study on the review of the Market Definition Notice by a consortium led by VVA Brussels, which includes Grimaldi Studio Legale, LE Europe, Österreichisches Institut für Wirtschaftsforschung and WIK-Consult Technology Transfer Guidelines Communication from the Commission — Guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union to technology transfer agreements, OJ C 89, 28.3.2014, p. 3 TFEU Treaty on the Functioning of the European Union UK United Kingdom US United States of America Vertical Block Exemption Regulation and its accompanying Guidelines Commission Regulation 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices .

OJ L 102, 23.4.2010, p.1 and Commission notice - Guidelines on Vertical Restraints, SEC/2010/0411 final 1.Introduction The European Union (‘EU’) antitrust and merger rules protect and foster competition in the internal market to the benefit of consumers by prohibiting anti-competitive agreements and the abuse of a dominant position. They also grant the European Commission (‘Commission’) the power to prohibit mergers that would lead to a significant impediment to effective competition. The rules are set out in Articles 101 and 102 of the Treaty on the Functioning of the European Union (‘TFEU’) and in the EU Merger Regulation, as well as in their accompanying regulations, guidelines and notices. Market definition is a tool the Commission uses in its enforcement of those rules to identify the boundaries of competition between companies. The Commission uses market definition in particular in cases where the assessment of market power is relevant for the competitive assessment. It enables the Commission to identify the competitive constraints that may limit the economic behaviour of investigated companies and to calculate market shares which provide a preliminary indication of companies’ market power. Market definition is a well-established concept in competition law and is used widely by competition authorities internationally. The common starting point for competition authorities in market definition is the customer; this means assessing which alternatives the customer has available to satisfy the same need. In that sense, market definition goes to the core of competition assessments by analysing the customers’ ability to switch from one product/area to another in order to preserve choice and by making it possible to identify and measure companies’ market power. In 1997, the Commission published its Notice on the relevant market for the purposes of Community competition law (‘the Notice’). The Notice has remained unchanged since then. Its purpose was to increase the transparency of Commission policy and decision-making in the area of competition law by rendering public the procedures the Commission follows when considering market definition and by indicating the criteria and evidence on which it relies to reach a decision on market definition. 1.1.Purpose of the evaluation The purpose of the evaluation is to assess the evidence gathered on the functioning of the Notice, which will serve as a basis for the Commission to decide whether it should repeal it, leave it unchanged or revise it. The evaluation of the Notice is part of a broader Commission effort to make sure that EU competition policy and rules are fit for the modern economy. The Notice has remained unchanged for more than 23 years, although the issues arising in market definition and the techniques used to address them have evolved. Since 1997, the Commission has gained significant experience in using market definition in its competition law assessments by adopting a large number of decisions containing a market definition analysis. Furthermore, the EU Courts have interpreted the competition rules with respect to market definition in their judgments. Similarly, there have been decisions and judgments adopted by the national competition authorities of the EU Member States (‘NCAs’) and courts in the Member States that could inform the Commission’s approach. Moreover, academic research since 1997 has analysed approaches to market definition and contributed to discussions about the market definition tool and its application in practice, as have international forums such as the Organisation for Economic Co-operation and Development (‘OECD’) and the International Competition Network (‘ICN’). In accordance with the principles underlying Commission’s Better Regulation Guidelines, the evaluation examines whether: -the objectives of the Notice continue to be appropriate (relevance); -the Notice has met its objectives during the period of its application (effectiveness);

-the net benefits associated with the guidance described in the Notice have been positive (efficiency); -the different components set out in the Notice operate well together and the Notice is consistent with other antitrust and merger guidance, the EU Courts’ case-law and other EU policies (coherence); and -the Notice, as soft law at EU level, has provided added value (EU added value). 1.2.Scope of the evaluation The substantive scope of the evaluation includes the Notice in its entirety. The geographic scope extends to all EU Member States because the EU competition rules under Articles 101 and 102 TFEU and of the Merger Regulation are directly applicable in all EU Member States. EU competition rules – including the Notice – are also applicable in the three European Free Trade Association (‘EFTA’) States (Iceland, Liechtenstein and Norway). The Notice is binding on the Commission. The Notice does not bind NCAs or national courts, but they may take it into account when defining the relevant market in national competition proceedings. Against this background, the evaluation of the Notice includes analysis not only of the Commission’s decisional practice but also of the NCAs, as well as relevant national court case law, including that of the three EFTA States. The temporal scope of the evaluation includes the 23 years since the publication of the Notice in December 1997 with a focus on the last 10 years of EU antitrust and merger enforcement as those are the most informative in assessing whether the Notice provides up-to-date guidance. 2.Background to the intervention The following sections provide an overview of the EU competition policy framework (Section 2.1) and of the role of market definition within it (Section 2.2), a description of the Notice and its intervention logic (Section 2.3), a short overview of the most important market developments and evolution in competition assessments since 1997 relevant for market definition (Section 2.4) and a presentation of the evaluation baseline (Section 2.5). 2.1.The competition policy framework The purpose of the EU antitrust and merger rules enshrined in the TFEU, secondary EU law and soft law is to prevent distortions of competition in the EU to the detriment of consumers, thereby contributing to an integrated internal market, balanced economic growth and a highly competitive social market economy for the sustainable development of Europe. a)Article 101(1) TFEU prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition. As an exception to this rule, Article 101(3) TFEU sets out that the prohibition contained in Article 101(1) TFEU may be declared inapplicable to agreements that are on balance efficiency-enhancing. The Commission has adopted various block exemption regulations defining categories of agreements that the Commission regards as normally satisfying the conditions laid down in Article 101(3) TFEU. b)Article 102 TFEU prohibits firms that hold a dominant position on a given market from abusing that position, for example by charging unfair prices, by limiting production, or by refusing to innovate to the prejudice of consumers. c)The EU Merger Regulation imposes a notification obligation on the merging parties for concentrations with an EU dimension and grants the Commission exclusive jurisdiction to review them. Under the EU Merger Regulation’s substantive test, the Commission assesses whether the concentration would significantly impede effective competition in the internal market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position. 2.2.The role of market definition in antitrust and merger enforcement Market definition is used both in the Commission’s antitrust enforcement pursuant to Articles 101 and 102 TFEU and in the Commission’s merger control enforcement under the EU Merger Regulation. The concept of relevant market is used to identify and define the boundaries of competition between firms. The main purpose is to identify the competitive constraints that the undertakings involved face by identifying their actual competitors that are capable of constraining their behaviour. Furthermore, market definition makes it possible to have a reference point for measuring market power. In particular, it makes it possible to calculate the market shares of the undertakings involved – as well as of other market participants – which provides a preliminary indication of their market power. There are a number of principles of market definition that are useful to underline to provide context to the evaluation of the Notice. First, market definition is based on evidence and relies on established economic principles. The Commission is bound by the facts of the case. Judicial review by the EU Courts ensures that the Commission follows these principles. Second, according to the EU Courts’ case law, the definition of the relevant market involves defining both the product market and the geographic market. The relevant product market comprises all products or services regarded as interchangeable or substitutable by the consumer, by reason of the products’ characteristics, prices and intended use. The relevant geographic market comprises the area in which the conditions of competition are sufficiently homogeneous and which can be distinguished from other areas because the conditions of competition are appreciably different in those areas. That definition of the geographic market is also codified, inter alia, in Article 9(7) of the EU Merger Regulation.

Third, market definition is a tool that the Commission uses in most, but not all competition assessments. The necessity of defining markets is a pre-condition for assessing dominance under Article 102 TFEU as well as an essential part of the EU merger control regime. It can also be relevant for the assessment of certain infringements under Article 101 TFEU. According to the EU Courts, the definition of the relevant market is, as a general rule, a prerequisite for any assessment of whether the undertaking concerned holds a dominant position. This is because it defines the boundaries within which an assessment must be made as to whether that undertaking is able to behave to an appreciable extent independently of its competitors, customers and consumers. Similarly, as regards merger control, the EU Courts have found that ‘according to settled case-law, a proper definition of the relevant market is a necessary precondition for any assessment of the effect of a concentration on competition’. Furthermore, the EU Courts have held that there is an obligation on the Commission to define the market in a decision applying Article 101 TFEU where it is impossible, without such a definition, to determine whether the behaviour at issue is liable to affect trade between Member States and has as its object or effect the prevention, restriction or distortion of competition within the internal market. In practice, market definition plays less of a role in cases under Article 101 TFEU where the behaviour at issue has as its object the prevention, restriction or distortion of competition, such as in cartel cases, in respect of which the EU Courts have ruled that it is not necessary for the Commission to define the relevant market. Fourth, where the Commission uses market definition, it is only a first step in the assessment. Market definition is the starting point, but the Commission will only decide on whether or not competition concerns arise after having carried out the full competitive assessment. It is only in the competitive assessment that the Commission compares the capabilities of the different competitors in detail and, importantly, assesses the presence of anti-competitive conduct or the likely effects of a merger. Market definition therefore does not preclude the outcome of the competitive assessment. For instance, to assess whether a merger would lead to competition concerns in situations where the activities of the two merging parties overlap, the Commission will usually first define the relevant markets for those overlapping activities. Then, in a second step, the Commission will carry out the competitive assessment, including by establishing: -what the market structure will be after the merger in terms of number and strength of the available suppliers; -whether the merging parties have been competing closely before the merger; -whether customers have possibilities to switch supplier; -whether competitors are likely to increase supply if prices increase; -whether the merged undertaking could hinder expansion by competitors; -whether the merger would eliminate an important competitive force; -whether market entry is expected; and -whether customers have buyer power. Similarly, to assess whether an undertaking has abused its dominant market position, the Commission will usually first define the relevant market, then assess whether the company under investigation holds a dominant position on that market, whether there has been an abuse of that dominant position and whether there is an objective justification for the conduct. Fifth, market definition is primarily customer-centric by assessing which alternative products or services are available to the customer to satisfy the same need. This follows from the purpose of the competition rules, which is to protect competition to the benefit of customers and ultimately of EU consumers in general. As a consequence, the concept of the relevant market in antitrust and merger enforcement is different from the definitions of markets used in other contexts. For example, global companies may consider that they compete globally for revenues against companies from all continents. That does not mean, however, that all those global companies offer products or services to customers in the EEA, which is the relevant perspective for the Commission’s antitrust and merger enforcement. Sixth, the Commission carries out its competition assessments taking into account all competitive constraints. Market definition results in distinguishing between competitive constraints from within and from outside the market, depending on how immediate the constraints are in determining whether customers can switch to alternative products or services. However, the Commission also takes out-of-market constraints into account in the competitive assessment. For instance, two geographic areas A and B may be found to constitute different geographic markets for the sale of a certain product or service because the conditions of competition in those areas are appreciably different. When assessing whether a company holds market power in market A, the Commission will take into account all sales made in market A, including by imports such as from market B, and will also assess whether suppliers from other areas can expand their sales in market A by expanding total output or by reorienting sales from other areas, including from market B. In other words, while sales in market A constitute in-market constraints and sales in market B constitute out-of-market constraints, both are taken into account in the competitive assessment when assessing market power in market A. Seventh, market definition is driven by market realities. As a consequence, it differs from sector to sector and also often differs at the different levels of the supply chain. For instance, the Commission has defined the market for the supply of cocoa beans – the raw material for chocolate production – as EEA-wide or global. In contrast, the supply of industrial chocolate to producers of confectionery has been defined as regional within the EEA, while the sale of chocolate confectionery to retailers has been defined as national due to the importance of national brands among other factors. The different market realities in various sectors can be further illustrated by the fact that, historically, the Commission has defined a global market as one of the plausible markets in only 1 out of 10 merger cases with affected markets in consumer goods. By contrast, in the automobile sector, that share almost doubles, while in the IT sector it constitutes nearly 50%. Eighth, market definition is specific to the particular issue in dispute and the assessment carried out. A company may compete with other companies at different levels and/or based on different variables. For example, if the Commission analyses innovation effects in a merger case, the market definition may differ from a situation where the Commission analyses price effects in an antitrust case in the same industry or with respect to the same economic activity. Ninth, the Commission looks at the facts and the evidence in each case afresh and defines the relevant markets accordingly. This means that market definitions may evolve over time: if the market dynamics change, the market definitions will also change. If for instance, there are more consumers today who take purchasing decisions based on whether products are sustainable or not, the market definition may reflect a potential definition of markets for sustainable products on the one hand and conventional products on the other hand. Tenth, the tools used by the Commission to define markets may equally evolve over time in line with the availability of evidence, such as data or internal company documents, and in line with developments in techniques to analyse the substitution possibilities available to customers. 2.3.The Notice and its intervention logic The Notice provides guidance on how the Commission applies the concept of relevant product and geographic market in its enforcement of EU antitrust and merger law. It codifies the Commission’s past practice as well as guidance provided by the EU Courts, based on established economic and legal principles.

After setting out the elements underlying the definition of the relevant product and geographic market as established by the EU Courts, the Notice explains that there are two types of competitive constraints to be considered at the market definition stage. First, the most immediate and effective disciplinary force on suppliers is demand-side substitution, where the customers are in a position to switch easily to available substitute products or services or to suppliers located elsewhere. Second, supply-side substitution may be taken into account if its effects are equivalent to those of demand substitution in terms of effectiveness and immediacy because most suppliers are able to switch their sales to the relevant products or areas and market them in the short term without incurring significant additional costs or risk. In contrast, less effective or less immediate supply-side constraints are taken into account at the assessment stage of the competition analysis, for example in the context of potential competition. The Notice goes on to describe the evidence the Commission relies on to define the relevant product and geographic market (Section III of the Notice), explain how the Commission calculates market shares (Section IV) and address certain selected constellations that raise specific market definition issues (Section V). Almost all elements of market definition set out in the Notice apply to both antitrust and merger assessments, with a few technical exceptions; this argues in favour of a common Notice for both instruments. The alternative of integrating market definition guidance in each of the antitrust and merger guidelines would instead result in repetition of guidance and could reduce its broader value in terms of applications beyond competition law, as explained in Section 3. In addition, it is worth recalling that there is not just one single set of guidelines within each of the instruments. For example, in mergers there are horizontal and non-horizontal guidelines, and in antitrust there are guidelines on Article 101(3) and on Article 102 TFEU, as well as guidelines accompanying the different rules applicable to vertical and horizontal agreements. This poses the question of whether to: (i) include market definition guidance in each of these (creating duplications and leading to potentially conflicting interpretations given the different timelines of review applicable to the different documents); or (ii) have a separate document for guidance on market definition for mergers and another one for antitrust (thus remaining separate from the guidelines on the substantive assessment). As set out in paragraphs 4 and 5 of the Notice, the Notice has the general objectives of increasing the transparency of the Commission’s policy and decision-making in EU antitrust and merger enforcement and of helping businesses to better anticipate the possibility that the Commission may raise competition concerns in an individual case. That is relevant, in particular, since the Commission uses market shares as a first screening tool in certain instances to assess whether competition concerns may arise and to decide on the review process to follow. For example, market share thresholds are one of the elements determining the scope of the block exemption regulations for Article 101 TFEU. Similarly, the Commission uses market share thresholds to identify merger cases deemed from the outset not to raise competition concerns that can therefore be assessed under a simpler review procedure unless there are specific circumstances. The transparency offered by the Notice was therefore expected to allow businesses to: (i) save internal and external resources in relation to competition assessments (see Sections 2.5 and 5.3) because in the absence of the Notice businesses would have to solely rely on previous practice in the form of individual cases, on court guidance and on economic principles, and (ii) minimise the risk of arriving at incorrect conclusions as to the lawfulness of an agreement or practice when self-assessing their market share. It follows that the Notice has the specific objective of providing correct, comprehensive and clear guidance on the Commission’s approach to market definition in EU antitrust and merger law. Correct guidance adequately reflects the case law of the EU Courts, the best practices applied by the Commission and other leading competition authorities as well as the mainstream findings of high-quality academic research. Comprehensive guidance is materially complete where it summarises all the broad principles applicable to market definition as well as the main specific criteria applicable in the most important case constellations. Clear guidance is easy to understand and follow. According to the Commission’s explanations in its annual report of 1998 following the publication of the Notice, ‘the Notice is intended to be as empirical as possible and is based on the Commission’s previous case law. It tries to set out in coherent, readable fashion the economic principles on which the Commission bases its approach to the definition of relevant markets’. According to the guidance provided by the EU Courts, the Commission enjoys a certain degree of discretion as to how it shapes the content of the Notice and as regards the level of detail that it includes in it in particular. In striving to meet its objectives of providing correct, comprehensive and clear guidance, the Commission aims to codify robust and tested best practices of market definition. In formulating such guidance, the Commission also faces certain trade-offs and risks. First, providing detailed guidance on specific case constellations means more information available to stakeholders on the specific topics, but also entails a higher risk that the Notice becomes obsolete more quickly and that it becomes lengthy and less user-friendly. Second, only codifying existing Commission practice has the advantage of ensuring that the Notice reflects tested approaches, but also entails the risk that it might not be suited for future developments. To best address those risks and trade-offs, as mentioned above the Commission aims to codify in the Notice the most important principles and most relevant case constellations based on the case-law of the EU Courts, the best practices applied by the Commission and other leading competition authorities, and the mainstream findings of high-quality academic research. Figure 1: Intervention logic for the Market Definition Notice

2.4.Market developments and evolutions in competition assessments since 1997 A number of market features and approaches to competition assessments have evolved since 1997. Five of these deserve particular highlighting by way of background to the evaluation. First, while it is very challenging to estimate the precise share of the digital economy in overall gross domestic product (‘GDP’), it is beyond doubt that the role of digital activities has been increasing. Depending on the definition, the digital economy’s share reached between 4.5% and 15.5% of global GDP in 2019. In particular, the role of online platforms is constantly increasing due to upward trends in e-commerce of goods and services. This has been strengthened further due to the wide-ranging introduction of lockdowns triggered by the COVID-19 pandemic in 2020, which incentivised consumers to increase further their use of search engines, social media and online entertainment media (e.g. video streaming, multi-player gaming, music and video streaming). Second, there is a high level of concentration of economic power in digital markets and beyond, which highlights the need for vigilance in competition enforcement. The top seven large platforms account for 69% of the total EUR 6 trillion valuation of the platform economy, as a result of vertical and horizontal integration. Moreover, 5 out of the world’s 10 largest companies by market capitalisation are digital conglomerates (i.e. Apple, Microsoft, Amazon, Google and Facebook). Market concentration is a trend not only in digital markets, as documented in particular for the US, but also for the EU, albeit to a more limited extent. For instance, empirical studies suggest that company mark-ups across all sectors increased by 4% to 6% over the period 2001–2014 on average across country, with increases of 20% for the top 10% of firms in the sample. Third, the last two decades have seen technological convergence, with the tendency for originally unrelated technologies, products and services to become more closely integrated and even unified as they develop and advance. For example, watches, telephones, television, computers and social media platforms began as separate and mostly unrelated technologies, products and services, but today form interrelated parts of a telecommunication and media industry, sharing common elements of digital electronics and software. Companies are also offering more integrated products (e.g. bundles of quadruple play in telecommunications or ‘ecosystems’ built around mobile operating systems which consist of a smartphone, operating system and apps). These developments change the nature of competition in relation to the individual products/services that integrate those clustered offers. Fourth, there is an increasing societal awareness of innovation-related effects. This may be at the origin of an increasing trend in competition authorities’ decisional practice and soft law. The trend consists in taking into account a spectrum of undertakings’ innovation efforts in order to define relevant markets and assess competitive effects more accurately where innovation plays a significant role. In addition, authorities may find that concerns about a negative impact on innovation are arising in a greater proportion of merger (as well as antitrust) cases as digitisation affects a widening range of markets. Fifth, economic integration of the countries of the world and within the EU has increased over the past decades. Trade data show that the proportion of external trade in the EU-27 economy has almost doubled over the past 15 years. Also, mergers notified to the Commission are increasingly of a cross-border nature. That said, these trends affect economic activities in different sectors and at different levels of the supply chain in different ways. Several types of markets and industries have not been significantly affected by globalisation and there is no clear evidence that they might be in the near future. The general development for more market integration can also be reversed through the introduction of trade barriers, for instance with the imposition of trade tariffs in specific sectors or the increase of trade barriers across sectors, as illustrated by the withdrawal of the UK from the EU and its internal market. 2.5.Evaluation baseline The baseline for comparison used in the evaluation depends on the evaluation criteria and related evaluation questions to be assessed. The main point of comparison for the evaluation is the hypothetical situation of not having the Notice in place. This is in particular to assess its relevance (to assess whether the objectives are still pertinent compared to a situation where the objectives are not being pursued), efficiency (to assess whether there would be lower costs without the Notice in place) and EU added value (to assess whether the objectives could have been achieved at national level). In these respects, the evaluation therefore looks at the functioning of the Notice as compared to a situation in which market definition would have to be carried out without a dedicated notice at EU level and instead only in light of other Commission guidance, relevant case-law at EU and national level, the enforcement practice of the Commission and the NCAs and academic research. In both merger and antitrust matters, this would imply that the companies involved would have to dedicate additional internal resources to researching a large number of Commission decisions and court judgments and possibly also literature on market definition to determine how the Commission would likely define the relevant market(s) and what elements it would take into account. This is not a simple exercise given the large number of decisions and judgments assessing many different relevant markets. This implies that companies would also likely have to spend more resources on consultancy from law firms and economic consultants to help them find the most relevant decisions and interpret them. Furthermore, in particular when companies need to determine whether they can benefit from an exemption to the antitrust rules, without the Notice they would face a higher risk of arriving at an incorrect conclusion when self-assessing their market share. This is because market shares can only be calculated based on a given definition of the relevant market. A second point of comparison is the situation the Commission expected to have achieved, namely to have a Notice that continues to provide correct, comprehensive and clear guidance on market definition that is consistent with other Commission guidance, case-law and other policies. This is used for the effectiveness and coherence analyses, which assess whether the objectives of the Notice are currently met by providing the level of transparency envisaged in 1997 and whether there is coherence today. 3.Implementation / state of play The Commission has applied the guidance set out in the Notice in a large number of antitrust and merger investigations and decisions since 1997. As an instrument of soft law published at EU level, the principles set out in the Notice are binding on the Commission and limit its discretion in the methods and elements to consider when carrying out market definitions. In contrast, the Notice does not bind the EU Courts, NCAs or national courts nor was it designed to be applicable outside of EU competition law. That said, the evaluation results highlight three specific findings in this context. First, the Notice has been quoted by the EU Courts as good practice to follow in the assessment of merger and antitrust cases. For instance in case T-446/05, Amann & Söhne and Cousin Filterie v Commission (2010), the General Court indicated that ‘It follows that the Market Definition Notice contributed to clarifying the limits, already implicit in the conferring provisions, of the exercise of the Commission’s discretion under Article 15(2) of Regulation No 17 and Article 23(2) of Council Regulation No 1/2003’. The General Court then follows by quoting paragraphs 4 and 5 of the Notice that ‘the Commission expects to increase the transparency of its policy and decision-making in the area of competition policy’ and that ‘[i]ncreased transparency will also result in companies and their advisers being able to better anticipate the possibility that the Commission may raise competition concerns in an individual case. Companies could, therefore, take such a possibility into account in their own internal decision-making when contemplating, for instance, … the establishment of certain agreements’. The EU Courts’ rare criticisms of the Commission’s market definition assessments since the Notice’s adoption concern an incorrect assessment of facts or an incorrect application of the Notice, not deficiencies in the Notice itself. For example, in case T-427/08, CEAHR v Commission (2010), the General Court considered that the Commission committed an error because ‘in the light of those elements and in the absence of alternative evidence in the contested decision that account was taken of the criteria established by the case law and the notice on the definition of the relevant market (cited in paragraphs 67 to 70 above), the Court considers that the Commission has failed to establish that a moderate price increase on the services market would cause a shift in demand on the luxury/prestige watch market which could render such an increase unprofitable, nor that, in general, the price of services affects competition between primary products. Second, as an instrument of soft law published at EU level, the Notice does not require implementation at Member State level. Nevertheless, according to exchanges between the Commission services and the NCAs through the European Competition Network (‘ECN’), most NCAs take into account the Notice in their enforcement of both national and EU antitrust and merger law even though it is not binding on them. Therefore, although this effect was not envisaged when the Notice was published, it is possible that the Notice has contributed to aligning the Commission’s and NCAs’ approach to market definition. This will be further assessed in Section 5.5 concerning the Notice’s EU added value. Third, there is evidence that the Notice is also used outside of EU antitrust and merger law. In particular, a number of respondents to the public consultation, mainly active in the telecommunications and energy sectors, indicated that they use the Notice when assessing the legal framework in sector-specific regulation, especially as regards the finding of significant market power. One respondent indicated using the Notice for civil proceedings to assess whether undertakings are competitors, e.g. in relation to the tort of unfair competition or breach of confidentiality. Any resulting questions of coherence will be further assessed in Section 5.4 as regards the consistency of the Notice with other EU policies. 4.Methodology The evaluation process was launched in March 2020 and has assessed the Notice against the five Better Regulation criteria by asking the following evaluation questions: Relevance: Does the Notice still pursue relevant objectives in aiming to provide guidance and transparency to stakeholders and in particular to provide correct, comprehensive and clear guidance on market definition in the Commission’s antitrust and merger assessments? How well do those objectives correspond to the needs?

Effectiveness: To what extent has the Notice proven effective in providing guidance and transparency to all stakeholders? In particular, does the Notice continue to provide correct, comprehensive and clear guidance on market definition today? Efficiency: Has the Notice led to increased benefits and reduced costs? Is there scope for further simplification and cost reduction? Coherence: How well have the different components of the Notice operated together? Is the Notice in line with the judgments of the EU Courts and changes in the legal competition framework, and with other instruments of EU competition policy and other EU policies? EU added value: To what extent has the Notice provided clear added value at EU level, for instance by contributing to a consistent approach to market definition by the Commission and the NCAs? The evaluation has been carried out on the basis of a broad body of evidence and a wide-ranging consultation of and discussion with interested stakeholders. Section 4.1 identifies the sources used in the evaluation. Section 4.2 describes how the evidence gathered from various sources has been processed. Section 4.3 explains the limitations of the analysis carried out on this basis and the extent to which they could be addressed in the evaluation. 4.1.Description and use of the sources of evidence Public consultations Between 3 April and 15 May 2020, the Commission services gathered feedback on the evaluation roadmap, including the evaluation questions and the evaluation process. Some 44 stakeholders replied, many of them commenting already on the substance of the evaluation. Between 26 June and 9 October 2020, the Commission services carried out an open public consultation on the basis of a dedicated online questionnaire to gather stakeholder views on the functioning of the Notice and to gather qualitative and quantitative evidence on all five evaluation criteria. The public consultation led to 86 contributions submitted through the online questionnaire and 10 position papers submitted outside the online tool. The contributions came from a variety of stakeholders, with a particularly strong participation from large companies located in the EU and from business associations. On 18 December 2020, the Commission services published the summary report of the contributions to the public consultation (‘summary of the public consultation’) on the Better Regulation portal and on a webpage on DG Competition’s website dedicated to the Notice’s evaluation. The summary report is also part of the synopsis report provided in Annex 2 to the staff working document. Targeted consultation of national competition authorities The Commission services also conducted a targeted consultation of NCAs, which was based on the same questionnaire as that used in the open public consultation. The Commission services received contributions from the NCAs of all 27 Member States, as well as from the NCAs of 2 EFTA States. The information provided by NCAs contributed to the assessment of all five evaluation criteria. As with the summary of the public consultation, on 18 December 2020 the Commission services published a summary report of the targeted NCA consultation (‘summary of the NCA consultation’) on the dedicated webpage on DG Competition’s website. It is also part of the synopsis report provided in Annex 2 to the staff working document. The Commission services further sent a smaller questionnaire to a number of NCAs from outside the EEA (Australia, Brazil, Canada, Japan, Korea, South Africa, the UK and the US) and received replies (written or oral) from all of them. Stakeholder meetings The Commission services organised a number of virtual meetings with stakeholders, including notably three workshops with the EEA NCAs as well as virtual meetings with a number of NCAs from outside the EEA (Australia, the UK and the US), with different businesses and their associations, with representatives of law firms, with a Pan-European consumer organisation and with the Association of European Competition Law Judges. Details on those meetings are listed in Annex 2 to the staff working document. Analysis of Commission decisions, EU Court judgments, EEA and non-EEA guidelines, national decisions and judgments as well as academic literature and other publications The Commission services carried out extensive research into best practices in market definition, consisting of the following: -review of the Commission’s own enforcement decisions, focusing on the issues of market definition that have proven to be most contentious or most complex, such as those relating to market definitions in the digital economy or those relating to innovation issues; -review of the case-law of the EU Courts with respect to market definition (the EU Courts have examined market definition issues in more than a hundred cases since the adoption of the Market Definition Notice ); -analysis of decisions by EEA NCAs and by EEA national courts, including through frequent exchanges with NCAs during the evaluation; -analysis of legal and economic literature in order to understand different proposals and theories on market definition discussed in academic research;

-consideration of non-EEA approaches to market definition based on exchanges with competition enforcers in Australia, Brazil, Canada, Japan, South Africa, South Korea, the UK and the US; and -review of relevant papers and roundtables on the topic of market definition held in the context of international forums such as the OECD and the ICN. External evaluation support study DG Competition commissioned an external evaluation support study (‘the support study’) to support it in its analysis. Specifically, the purpose of the support study was to gather qualitative information on the basis of three tasks: (i) review of decisions by NCAs, judgments by national courts and guidelines issued by national authorities in the EEA; (ii) review of selected decisions by NCAs, judgments by national courts and guidelines issued by national authorities outside the EEA (namely Australia, Brazil, Canada, Japan, South Africa, South Korea, the UK and the US); and (iii) review of the legal and economic literature. The support study covered four subject matters: (I)the impact of digitisation on market definition, namely approaches to market definition in relation to multi-sided platforms, ‘digital ecosystems’, data and online sales channels; (II)the impact of innovation on market definition, namely approaches to market definition where innovation plays an important role in competition between undertakings, even if technology is not sold, purchased or licensed and/or demand for the products or services resulting from such innovation does not exist at the time of the assessment; (III)approaches to geographic market definition, namely the standards applied in geographic market definition, the main factors and weight assigned to them, the types of evidence used and the role of supply-side substitutability; and (IV)the use of quantitative techniques in market definition, namely to identify relevant techniques (such as critical loss analysis, price tests, natural experiments or surveys) and the conditions under which the application of each technique is appropriate to inform the market definition analysis. Evidence gathered through other Commission initiatives In February 2016, at the request of DG Competition, Professors Bruce Lyons and Amelia Fletcher from the University of East Anglia prepared an independent economic report on the topic of Geographic Market Definition in European Commission Merger Control. DG Competition had asked Professors Lyons and Fletcher to evaluate its approach to geographic market definition on the basis of a sample of recent merger cases from the Commission where this topic played an important role in the assessment. They evaluated namely whether the Commission’s definition of geographic markets, taken together with its analysis of out-of-market competitive constraints, has set an appropriate framework for analysing mergers. The findings have informed the present evaluation in topics such as the evidence required to define geographic markets as discussed in Section 5.2.3 A number of pre-existing initiatives have also fed into the present evaluation of the Notice in topics pertaining to digitisation as presented in Section 5.2.5. In May 2017, the Commission published the final report of the e-commerce sector inquiry. The results of the sector inquiry confirmed the importance of other parameters of competition besides price, namely quality, brand image and innovation. They also highlighted the growing importance of online distribution channels as an alternative to offline channels. Finally, and in relation to online transmission, the sector inquiry results pointed to changes in the way digital content is accessed and consumed, providing new business opportunities both to established operators and new entrants. In 2017-2019, the Commission conducted a number of work streams on the effects and challenges for competition policy of the digitisation of the economy. These initiatives were designed to provide input to the Commission’s reflections about how EU competition policy can best serve European consumers in a fast-changing world and identify problems and solutions as markets go through rapid changes. First, Commissioner Vestager appointed a panel of three special advisers from outside the Commission, namely Jacques Crémer, Yves-Alexandre de Montjoye and Heike Schweitzer, to explore how competition policy should evolve to continue to promote pro-consumer innovation in the digital age. The special advisers delivered their report in April 2019, Competition Policy for the Digital Era, Report for the European Commission. Second, the Commission sought written contributions from stakeholders involved in or affected by the digitisation of the economy. Third, on 17 January 2019, the Commission held a High-Level Conference on ‘Shaping competition policy in the era of digitisation’. Evidence of ongoing policy initiatives has also informed the present evaluation. In October 2018 and September 2019 respectively, the Commission services launched reviews of the Vertical and Horizontal Block Exemption Regulations, which define certain categories of agreements that generally fulfil the conditions of exemption under Article 101(3) TFEU, in part by using market share criteria. The evaluations, which preceded the ongoing impact assessment phases, included open public consultations and were concluded with the publication of staff working documents in September 2020 and May 2021 respectively. These two reviews are relevant for the present evaluation in topics including the way in which markets shares are calculated for online intermediation platforms – a topic relevant for the Vertical Block Exemption Regulation and its accompanying Guidelines – or how to assess innovation in the presence of R&D activities – a topic addressed in the Horizontal Block Exemption Regulations and the Horizontal Cooperation Guidelines. In September 2020, the Commission launched a reflection on how EU competition policy can best support the Green Deal and DG Competition subsequently launched a call for contributions. DG Competition also organised a conference on the issue in February 2021. Several contributions in this context highlighted the importance of further taking into account consumer preferences for environmentally-friendly products, services and/or technologies in market definition, in particular as a factor of product differentiation. The findings on “Non-price elements, including innovation” under section 5.2.5 are relevant for the role that sustainability plays in market definition. In December 2020, the Commission services published the Impact Assessment assessing the possible policy options for the Digital Markets Act legislative proposal. The impact assessment describes the growing importance of digital services and their providers in today’s economy and assesses the obstacles that prevent effective competition from working in digital markets, including barriers to entry such as network effects, switching costs, data dependency, scale and scope economies, behavioural bias and others. Since the proposal for a Digital Markets Act is of a regulatory nature, its implementation – if adopted along the lines of the proposal – will not involve the definition of markets. That said, the public consultations leading to the Digital Markets Act, in particular the one concerning the need for a New Competition Tool, had an indirect informative value for the purposes of the present evaluation with the replies gathered having helped the Commission services’ understanding of digital markets. 4.2.Processing and triangulation of the evidence collected The Commission services analysed and triangulated the evidence collected from the various sources to arrive at the results of the evaluation. The main sources of evidence used to inform the assessment of each evaluation criterion are listed in the table below. A further breakdown of this table, which includes the evaluation questions for each criterion and a more detailed reference to the sources used, is provided in the evaluation matrix contained in Annex 3 to the staff working document. Public consultation Consultation of EEA NCAs Stakeholder meetings Research and support study Other Commission initiatives Relevance ✔ ✔ ✔ ✔ ✔ Effectiveness ✔ ✔ ✔ ✔ ✔ Efficiency ✔ ✔ ✔ ✔ Coherence ✔ ✔ ✔ ✔ ✔ EU added value ✔ ✔ ✔ ✔

For the assessment of each evaluation criterion, the Commission services proceeded as set out below. The assessment started with a review of the Commission’s enforcement practice and of the guidance provided by the EU Courts. That analysis resulted in a preliminary but comprehensive understanding of the main issues in market definition that have arisen over the last few years and of the methodologies used by the Commission and the EU Courts. That evidence was then compared against the results of the public consultation, the results of the NCA consultation (both inside and outside the EEA) and of the analysis of the academic literature and publications in international forums. That enabled the Commission services to gain an understanding of the main issues faced by stakeholders in market definition and establish the issues in which stakeholders held common positions, as well as the issues on which their positions diverged. The specific issues raised by stakeholders were assessed on the merits of the arguments invoked, the examples and the level of detail provided by stakeholders to support their positions with evidence, the variety of different positions and the extent to which different types or groups of stakeholders shared the same view. In line with the objectives of the Notice, the Commission services’ evidence gathering focused primarily on identifying best practices in market definition and on identifying any gaps where the Notice may not have fully succeeded in providing correct, comprehensive and clear guidance. 4.3.Limitations of the analysis The analysis of the different evaluation criteria, including the methodology applied and the evidence used, is subject to the following limitations: (i) the difficulty of gathering quantifiable evidence on the benefits related to the Notice; and (ii) a certain lack of representativeness of the public consultation. First, as regards the evaluation criterion of efficiency, it proved difficult to collect quantitative evidence of the benefits of having the Notice in place, compared to a situation without it. While all respondents to the public consultation questionnaire expressing a view and all NCAs expressing a view found that the net benefits associated with following the guidance in the Notice are positive, they considered that these benefits are hard to quantify. Accordingly, none of the respondents provided any estimates of the magnitude of the net benefits associated with the Notice. That said, none of the respondents listed any cost associated with the Notice’s existence. The conclusions drawn in Section 5.3 below therefore essentially rely on qualitative evidence, including that provided by stakeholders in response to the public and the NCA consultations. Second, evaluation activities subject to voluntary participation, by definition, do not necessarily lead to representative results. In this evaluation, this applies to the public consultation. While the Commission services received contributions from a variety of stakeholder groups, large businesses and their associations accounted for a particularly high share of responses, while representatives of small or medium-sized businesses or of consumers accounted for a much lower share. Furthermore, businesses from the telecommunications and media sectors were more represented than businesses from other sectors. Any limitations were mitigated, however, by the other evaluation activities conducted in the context of this evaluation. These activities – explained more in detail in Annex 2 – included a consultation on the evaluation roadmap, a series of meetings and a consultation with the NCAs in the context of the ECN, as well as meetings with third-country competition authorities. The findings were also compared against the best practices in market definition as applied by the Commission and by competition authorities within and outside the EEA, and against the best practices identified in the academic literature. Furthermore, the Commission services held additional meetings with stakeholders under-represented in the public consultation, including with academics, judges and a consumer organisation. Overall, therefore, the lack of representativeness of the public consultation did not result in a less complete overview of the main issues arising in market definition. In the assessment set out in Section 5, reference is made to specific stakeholder groups whenever the views reported were shared primarily by one or more different stakeholder groups. While indicative of a trend, the fact that a view was broadly shared by all or only some of the stakeholder groups does not mean that the evaluation disregards diverging views, either within the same or across different stakeholder groups/sectors. 5.Analysis and answers to the evaluation questions The following sections examine, in light of the various sources of evidence analysed, whether the Notice’s objectives remain relevant, whether the Notice pursues those objectives effectively and efficiently, whether they are pursued consistently with other Commission guidance, case-law and other initiatives, and whether the Notice provides EU added value. 5.1.Relevance Evaluation questions: Does the Notice still pursue relevant objectives in aiming to provide guidance and transparency to stakeholders and in particular to provide correct, comprehensive and clear guidance on market definition in the Commission’s antitrust and merger assessments? How well do those objectives correspond to the needs? The need to facilitate competition enforcement and compliance in the internal market to the benefit of consumers remains pertinent today as one of the goals of the Union which has been reflected in the EU treaties since the EU’s inception. The evaluation results indicate that the objective of providing transparency through correct, comprehensive and clear guidance on the Commission’s approach to market definition is still very relevant when it comes to meeting those needs. In some respects, it is even more important today than in 1997. This is due, among other reasons, to: (i) the sustained need for the Commission to carry out market definition assessments; (ii) the shared enforcement of Articles 101 and 102 TFEU by the Commission and NCAs, which since 2004 extends to the power to apply Article 101(3) TFEU, thereby increasing the need for common approaches; (iii) the antitrust self-assessment system in place since 2004; and (iv) the use of market share thresholds in the antitrust and merger systems. The Notice’s relevance is also illustrated by the frequent use of the Notice by the Commission, the EU Courts, NCAs and stakeholders in practice. In assessing the Notice’s relevance, the evaluation focused on whether its objectives have proven appropriate and whether they still correspond to current needs, taking into account developments since its adoption. As described in Section 2.3, the Notice aims to foster competition enforcement and compliance by providing correct, comprehensive and clear guidance on the Commission’s approach to market definition, thereby increasing the transparency of the Commission’s policy and decision-making and helping businesses to better anticipate the possibility that the Commission may raise competition concerns in an individual case.

The need to facilitate competition enforcement and compliance in the internal market to the benefit of consumers remains unchanged since 1997 and has been reflected in the EU treaties since the EU’s inception . The benefits of competition enforcement and policy have been studied and proven in different ways . They include faster productivity growth, an increase in innovation and employment growth. That said, it is inherently difficult to measure quantitatively the impact of an effective competition enforcement system in a given timeframe. That is because one of its effects is deterring anti-competitive behaviour and mergers – which are impossible to measure as they are precisely what does not occur where the policy is effective. This notwithstanding, the Commission services annually estimate the customer savings resulting from Commission interventions in mergers based on the methodology and guidance provided by the OECD . According to these estimates, the customer benefits resulting from merger interventions by the Commission in the period 2016–2020 were between EUR 55.2 and 91.9 billion . These calculations underestimate the benefits’ full amount as they do not include benefits associated with the deterrence of anti-competitive mergers. Therefore, the calculations can provide a rough indication of some, but by no means all, of the benefits of EU merger enforcement in particular. The evaluation results indicate that the objective of providing correct, comprehensive and clear guidance on the Commission’s approach to market definition is still very relevant when it comes to meeting those needs and in some respects is even more pertinent today than in 1997. First, there is still a need to define relevant markets. In fact, legal and economic developments have sustained the need for the Commission to carry out market definition assessments in its enforcement of EU antitrust and merger rules. This is illustrated for instance in the growing trend in the number of merger decisions adopted by the Commission since 1997. A small number of stakeholders (including businesses and business associations) have played down the importance of market definition assessments due to changes in market dynamics. In the Crémer et al. (2019) report commissioned by the Commission, the authors argue that ‘In the digital world, market boundaries might not be as clear as in the “old economy”. They may change very quickly. Furthermore, in the case of multisided platforms, the interdependence of the “sides” becomes a crucial part of the analysis whereas the traditional role of market definition has been to isolate problems. Therefore, […], in digital markets, we should put less emphasis on analysis of market definition, and more emphasis on theories of harm and identification of anti-competitive strategies’ . However, the need for defining a market in most antitrust and merger assessments has been confirmed by EU court judgments. As described in Section 2.2, the CJEU explicitly confirmed the need for a market definition already in early cases predating the Notice , and the EU Courts have continuously held that position also after the Notice’s adoption. In a recent judgment of January 2021 in T-691/18, KPN v Commission, for example, the General Court explained again that ‘[i]t must be recalled that, with regard to the application of the rules on the control of concentrations, a proper definition of the relevant market is a necessary precondition for the assessment of the effects of the concentration on competition’ (paragraph 63). Academic commentary and other commentary equally refer to market definition’s central role in EU competition law . In this context, Professors J-U Franck and M. Peitz indicated in a presentation to the Commission on 25 March 2021, ‘that the finding that market definition is more complex, error-prone and possibly less informative in the case of two-sided platforms may indeed lead to quite the opposite conclusion to the one stated above [statement in Cremer et al. (2019) report]: the (correct) application and interpretation of market definition on two-sided platforms requires special diligence and attention’. Second, there is still a need today for a notice providing guidance on market definition. In the first place, there was near consensus among the respondents to the public consultation that there is still a need for a notice on market definition. They explained that the Notice helps companies assess the compliance of their activities with competition rules and improves the predictability of competition authorities’ assessments, thereby contributing to legal certainty and to a reliable business environment . One business association explained that ‘A Notice is necessary and critical, as it provides an opportunity to understand the views of the enforcement authority as to what method is more acceptable, the comprehensiveness level of evidence. The relevant market definition is the foundation of any competitive assessment and it is fundamental especially for merger control analysis and for the assessment of a dominant position. How the relevant market is defined frequently decides the assessment result and the corresponding administrative decision of the enforcers on specific proceeding’ . One business organisation also indicated that ‘Market definition is an important step in competition cases. The determination of whether a potentially anticompetitive practice is permissible, or whether a merger can progress, often depends on the estimated effects on the relevant market […]. Market definition also provides insight that can allow businesses to carry out internal legal risk assessments, and competition authorities to close an investigation at an early stage (e.g. under the horizontal or vertical block exemptions). Market definition is commonly accepted by courts and competition authorities as a useful intermediary step in competition cases’ . In fact, as explained in Sections 2.3 and 2.5, companies often have to self-assess their market share, in particular as one of the elements determining the scope of the block exemption regulations for Article 101(3) TFEU. Similarly and as already mentioned, the Commission uses market share thresholds to identify merger cases suitable for simplified review. Furthermore, the Notice enables stakeholders to save on internal resources, and possibly on resources spent on consultancy from law firms and economic consultants. The absence of the Notice would trigger the need to research a large number of Commission decisions and court judgments and potentially also literature on market definition to determine how the Commission would likely define the relevant market(s) and what elements it would take into account in the context of an antitrust or merger investigation. In the second place, almost all NCAs indicated that they consider the objectives pursued by the Notice to be still relevant. The NCAs stated that the text is a useful tool for companies and their advisers as well as for competition authorities when considering how to define relevant markets in antitrust and merger assessments . This is also confirmed by the adoption of similar documents by the NCAs and by authorities outside the EEA. According to the consultation of the NCAs, around half of them have their own national guidelines on market definition and some others mentioned that they have plans to adopt such an instrument in the coming months . Authorities outside the EEA also have their own guidelines, including Australia, Brazil, Canada, Japan, South Korea, UK and the US . In the third place, the Notice’s relevance is confirmed by the customary references to it in Commission decisions. For instance, all decisions adopted between 2018 and 2020 concerning infringements of Article 102 TFEU contain references to the Notice . In the case of merger decisions, out of the 23 Phase II merger decisions adopted between 2018 and 2020, 19 contained a reference to the Notice. The Notice is also often referred to in judgments of the CJEU and the General Court. These references confirm the Notice’s relevance in the way in which it summarises and consolidates the general principles applicable to market definition that stem from case-law and case practice. Even when the Notice is not directly quoted by the Commission in its decisions, it is still applied and used by both the Commission and the undertakings interacting with the Commission. This was confirmed by more than 75% of respondents to the public consultation, which indicated that they had assessed relevant product and geographic markets over the past five years, with more than half indicating that they consult the Notice several times per year . Third, the notice today satisfies more needs than when adopted in 1997. Firstly, providing guidance on market definition in order to increase transparency has gained importance since 1997. This is because Council Regulation 1/2003 decentralised the application of Articles 101 and 102 TFEU by empowering NCAs and national courts to apply these two articles of the TFEU. This increased the need for harmonisation of approaches among the different NCAs and the Commission, which can be better achieved through more transparency on the Commission’s approach. Furthermore, the successive EU enlargements after 2003 have increased the number of NCAs applying the TFEU provisions, further enhancing the benefits of Commission guidance. Secondly, providing guidance on market definition has become more relevant since 1997 in helping businesses better anticipate the possibility that the Commission may raise competition concerns in an individual case. This is because of the following two changes in the EU antitrust and merger systems:

a)Council Regulation 1/2003 introduced a system of self-assessment following which companies can no longer notify their agreements to the Commission in order to benefit from the exemption under Article 101(3) TFEU; and b)the Commission introduced in 2000 a simplified merger review which relies in part on the absence or limited nature of horizontal and vertical relationships between the merging companies’ activities as measured by market share thresholds, which requires businesses to self-assess their market share before choosing between the “normal” and the “simplified” merger control procedure. Finally, it is important to mention that several respondents to the public and NCA consultations indicated that the Notice needs to be updated to reflect developments in case-law, as well as technological and economic developments that have changed the way certain markets function . These submissions concern less the relevance of the Notice’s objectives but rather its current effectiveness, which will be discussed in Section 5.2. In this context, one needs to consider that the Notice aims to set out broad principles that apply to market definition across the board, including to evolving products and technologies, and at the same time to provide guidance on some specific issues. These broad principles include among others (i) defining product and geographic markets on the basis of demand, but also supply substitutability; (ii) relying on short-term and effective constraints in that assessment; (iii) taking into account price and non-price parameters; and (iv) carrying out the review using a broad evidence base. Had the Notice been drafted to focus on a series of particular topics instead, it could have quickly become outdated and lost most of its relevance, given the evolving nature of the economy and technology. 5.2.Effectiveness Evaluation questions: To what extent has the Notice proven effective in providing guidance and transparency to all stakeholders? In particular, does the Notice continue to provide correct, comprehensive and clear guidance on market definition today? The evaluation results indicate that the Notice is effective in providing guidance and transparency to stakeholders in many, but not all, respects. On key issues, the Notice continues to provide correct, comprehensive and clear guidance on market definition and the Commission’s approach to it today, and continues to adequately reflect EU case-law. This is because the Notice goes beyond providing a repertory of case-law and practice, but also provides guidance on principles that are sufficiently general and apply to different market contexts. This has been essential to guarantee that the Notice has remained future-proof in most of its content for more than 20 years. However, the evaluation results also suggest that there are areas where the Notice does not reflect current best practices as derived from: (i) EU case-law – which is binding on the Commission as the EU Courts are the ultimate authority for interpreting EU competition law; (ii) the Commission’s current practice; (iii) the practice of other leading competition authorities; and (iv) high-quality academic research . These areas concern in particular evolutions since the Notice’s adoption in 1997 concerning different issues of market definition, as summarised in this section. These include the use and purpose of the SSNIP test in different market constellations, the assessment of market definitions in rapidly evolving markets (including those characterised by high levels of innovation), the use of quantitative techniques and refinement of market share calculations and, most notably, the application of the principles of market definition to phenomena linked to digital markets. While the principles of market definition remain unchanged, the evaluation results suggest that their application in digital contexts can lead to additional complexities. These are linked, among others, to defining markets for multi-sided platforms (in particular where services are supplied at zero monetary price), to defining markets for ‘digital ecosystems’ and to assessing online vs offline competition. Other issues linked to digitisation and market definition concern new barriers to entry and switching costs (for instance data (portability), interoperability, privacy, network effects or single/multi-homing) and non-price considerations in substitution assessments (including the sustainability of products). Stakeholders shared a near-unanimous view during the evaluation that the Notice, published in 1997 and therefore preceding important advances in information technology, lacks appropriate guidance on the effects of digitisation on market definition. Nevertheless, the evaluation results also show that not all of the market definition issues arising have been settled, but rather that practices may evolve further in the future. This may make it challenging to provide exhaustive and future-proof guidance in a potential updated Notice on all of the issues mentioned during the evaluation. The individual points raised on digitisation concern a wide range of issues, which will be discussed in the following sections where relevant, and – as regards multi-sided or platform markets – in particular in Section 5.2.5. The following discusses the Notice’s effectiveness in five subsections that largely follow the structure of the Notice itself: ·Subsection 5.2.1 discusses the role of market definition ; ·Subsection 5.2.2 definitions and basic principles of assessing substitutability ; ·Subsection 5.2.3 looks at the evidence used to define markets ; ·Subsection 5.2.4 examines market shares ; and ·Subsection 5.2.5 focuses on additional considerations . The question assessed in each of the subsections is the same; that is whether the Notice continues to provide correct, comprehensive and clear guidance on market definition today with respect to that particular topic. 5.2.1.Role of market definition The evaluation results indicate that the Notice generally provides correct, comprehensive and clear guidance as to the role of market definition in competition law proceedings. However, the evaluation results also indicate that the Notice does not reflect all refinements to the Commission’s practice in this respect since 1997. These include: (i) the difference between (backward-looking) antitrust and (forward-looking) merger assessments and the possibility to define different markets for the same economic activity more in general (because of, for example, time difference between the decisions or the differences in facts of the cases); (ii) the role of market definition in differentiated markets; (iii) the practice of leaving market definitions open; and (iv) the precedent value of market definitions. The Notice provides guidance on the role and need for market definition in competition law proceedings in EU law. In line with the principles set out in Section 2.2, the Notice provides that market definition is a tool to identify and define the boundaries of competition between firms and that its main purpose is to identify in a systematic way the competitive constraints that the undertakings involved face. Market definition also makes it possible to calculate meaningful market shares . The Notice also explains that the concept of relevant market is closely related to the objectives pursued under EU competition policy and describes the role of market definition in Article 101, Article 102 TFEU and merger control assessments .

The evaluation results indicate that the Notice provides correct, comprehensive and clear guidance as to the role of market definition. The evaluation results did not identify divergences between the description in the Notice and the role of market definition in practice. This is supported by the results of the public and NCA consultations. Several respondents, including NCAs and those from the business community, mentioned the role of market definition as one of the main points of continuity that have not changed since 1997 and that should continue guiding the principles of the Notice . One business respondent commented, for example: ‘Market definition is a tool to identify the immediate competitive constraints exercised on firms … it plays, and should continue to play, an integral role in EU competition policy’ . However, the evaluation results suggest that the Notice does not reflect all refinements to the Commission’s practice on the following issues: (i) the difference between (backward-looking) antitrust and (forward-looking) merger assessments and the possibility to define different markets for the same economic activity more in general (because of, for example ,time difference between the decisions or differences in the facts of the cases); (ii) the role of market definition in differentiated markets; (iii) the practice of leaving market definitions open; and (iv) the precedent value of market definitions. Differences in merger and antitrust assessments and defining different markets for the same economic activity Merger and antitrust assessments differ in that merger assessments concern the impact of the notified concentration and hence has a forward-looking aspect to it. In contrast, antitrust assessment mainly aims at establishing whether an infringement has happened in the past (or is currently on-going), but may also include forward-looking assessments when companies need to self-assess whether a future agreement or business practice may constitute an infringement of Article 101 or 102 TFEU. Certain respondents to the consultations, including NCAs and those from the business community, argued that the Notice is not entirely clear on the differences in the approach between (backward-looking) antitrust and (forward-looking) merger cases and, more generally, on the possibility to define different markets for the same economic activity . The Commission practice shows that, where justified by the specificities of the case and markets at hand, the Commission has defined different relevant markets for the same economic activity, namely when there is a time lag between decisions or when the time horizon considered in the decisions differ (in particular in rapidly evolving markets) and depending also on the theory of harm under consideration, . That market dynamics may evolve and thus the boundaries of relevant markets may change over time is at least partially covered by paragraph 12 of the Notice, which suggests that there may be differences between concentration (merger) or cooperative joint venture and past behaviour (antitrust) assessments. Differentiated markets Differentiation describes a situation where products or services are not perfect substitutes for customers. Differentiation can occur at both product and geographic level . Some NCAs observed that, while market differentiation is mentioned briefly, the Notice does not explicitly discuss the role of market definition in differentiated markets even if differentiated markets are considered in case practice. One NCA in particular submitted that it could be interesting for the Notice to mention situations where market definition may not be as useful or necessary as is usually assumed, for instance if diversion ratios are available in a horizontal merger to assess the closeness of competition in differentiated markets. In the Commission’s case practice, the extent to which market shares calculated on the basis of the market definition are informative may indeed vary depending on the degree of differentiation of the products and geographies assessed and the competitive assessment may include an assessment of closeness of competition in appropriate cases . Leaving market definitions open The Notice explains in paragraph 27 that the Commission may leave market definitions open in cases where no competition concerns arise. This practice has the effect of limiting the burden on companies to supply information, a benefit also observed by respondents to the public and NCA consultations . Nonetheless, the Commission has developed a practice of leaving the market definition open not only when competition concerns do not arise but in all situations where concluding on the exact scope of the relevant market would not affect the outcome of the competitive assessment. The practice has been confirmed and accepted in the case-law of the EU Courts . Precedent value The Notice does not explain whether market definitions in earlier cases are binding on the Commission. One business association responding to the public consultation argued in this respect that ‘the Notice should take a position on the precedent value of market definitions from merger to antitrust cases and vice-versa’, but also claimed that the Notice should clarify that ‘a market definition by the Commission in an earlier case is not binding on the Commission in a subsequent case’ . Such position has been confirmed in the EU Courts’ case-law . The Commission’s decisional practice also indicates that while it may take existing market definition precedents as a starting point for the analysis in a given case , the analysis is always case-specific and takes into account the specificities of the case and markets at hand. 5.2.2.Definitions and basic principles of assessing substitutability The evaluation results suggest that the Notice generally provides correct, comprehensive and clear guidance as to the definitions of the product and geographic market and the basic principles of assessing substitutability, namely to rely on demand substitution as the main competitive constraint, complemented by supply substitution if it is as immediate and effective as demand substitution. Furthermore, the evaluation results show that the current approach of assessing potential competition in the competitive assessment is sound and in line with EU case-law and international consensus. Nonetheless, the evaluation results indicate that refinements of best practices in market definition have taken place since the adoption of the Notice. These include: (i) the temporal dimension of market definition; (ii) the use of the SSNIP (‘small but significant non-transitory increase in price’) test to assess substitutability (including issues with its application to multi-sided platforms and bidding markets); (iii) issues concerning supply substitutability; (iv) market definitions in rapidly evolving markets; (v) asymmetric constraints; and (vi) the assessment of geographic markets in conditions of globalisation and import competition. The Notice provides guidance on the basic principles of market definition. In particular, as explained in Section 2.2, markets are defined by a combination of product and geographic dimension, in line with EU case-law. Furthermore, substitutability concerns the alternatives a customer and a supplier have, from a technical and economic perspective, in serving a specific customer demand by switching to the consumption or supply of alternative products or services (or to and from alternative areas). In defining markets, the Notice puts particular emphasis on demand substitution as the most immediate competitive constraint, while supply substitution can be considered where its effects are equivalent to those of demand substitution in terms of effectiveness and immediacy. Potential competition, on the other hand, is solely considered at the competitive assessment stage as it deals with the out-of-market constraints from more distant or future competitors that have yet to enter the market. This approach has been confirmed by EU Courts, which have affirmed the difference in timeliness between supply substitution and potential competition. The identification of product and geographic market as well as the basic principles of market definition have been explicitly confirmed in EU case-law. In the consultations, the majority of NCAs and respondents to the public consultation also indicated that those elements and basic principles of market definition have not changed and should continue guiding the Notice. For example, a clear majority of NCAs explained that neither the identification of the sources of competitive constraints, nor the focus on demand substitutability as the main criterion have changed since the adoption of the Notice. This view was overall supported by the public consultation. Further, among the vast majority of respondents to the public consultation that considered that there are many points of continuity that have not changed since 1997, the three sources of competitive constraints, as basic principles of market definition, were mentioned most often as points that should continue guiding the principles of the Notice. Nonetheless, the evaluation results indicate that refinements of best practices in market definition have taken place since the adoption of the Notice. These include: (i) the temporal dimension of market definition; (ii) the use of the SSNIP test to assess substitutability (including issues with its application to multi-sided platforms and bidding markets); (iii) issues concerning supply-side substitutability; (iv) market definitions in rapidly evolving markets; (v) asymmetric constraints; and (vi) the assessment of geographic markets in conditions of globalisation and import competition. By contrast, the Commission services consider on the basis of the evaluation results that the Notice continues to provide correct, comprehensive and clear guidance with respect to (vii) the practice of assessing potential competition at the competitive assessment and not the market definition stage. Temporal dimension Some NCA and business community respondents pointed out that the Notice does not describe the potential temporal dimension of market definition that has been considered in certain recent Commission cases Commission practice shows that the temporal dimension may be relevant in some cases where it can affect, for example, consumer preferences or the structure of supply due to factors such as seasonality or peak vs off-peak time considerations related to capacity. The Commission has considered the temporal dimension of market definition in certain recent cases.

Assessing substitution – SSNIP test The SSNIP test is a possible tool for assessing demand substitution. It consists of assessing whether a hypothetical monopolist – which owns all companies producing the product(s) which is/are the candidate(s) to constitute a relevant market – would find it profitable to increase price by a small but significant amount (in the range of 5% to 10%). If such a price increase is profitable, the candidate products constitute the relevant market. If such price increase is unprofitable, it indicates that the candidate market should be enlarged to include those alternative products to which the customers would switch. Commission practice, and the findings of the support study, show that the SSNIP test (and other forms of the hypothetical monopolist test) are relied on by the Commission and many other competition authorities around the world in their guidance and market definition assessments in practice. Many respondents of both consultations underlined that the conceptual framework is useful in guiding the assessment of demand-side substitution, and remains an important and useful thought experiment when defining a relevant market. They also highlighted, however, that the SSNIP test often cannot be carried out in practice and that there is currently no guidance in the Notice on how to apply it to markets where price is not the only parameter of competition. The support study corroborated some of the points made and showed that the SSNIP test has some recognised limitations: for instance, it is inadequate for concentrated markets where existing prices may be above the competitive level (known as the ‘cellophane fallacy’); and it may produce multiple market definitions depending on the starting point, the price level, price differentiation and direction of widening out the candidate products . Several NCAs and respondents to the public consultation considered that while these limitations are not spelt out in the Notice, they are particularly true as regards digital and, in particular, zero monetary price services. Some respondents took the view that to accommodate dynamics in digital markets, the authorities should rely on other elements besides a price test, such as the SSNDQ (‘small but significant non-transitory decrease in quality’) or the SSNIC (‘small but significant non-transitory increase in cost’) tests . The Commission applied the SSNDQ concept in a recent case without quantifying the quality deterioration or demand response . In the context of market definition in multi-sided platforms, some respondents to the public consultation also considered that the profitability of a hypothetical SSNIP should take into account any network effects in multi-sided markets that result from the reaction of users on the other side of the market . As highlighted by the support study, these indirect network effects can give rise to feedback loops between the different sides of a platform, where the higher the number of users is on one side, the higher is the value that users on the other side attribute to the platform . Commission practice shows that the SSNIP test has guided the analytical approach in many market definition assessments and that the Commission has often collected evidence to investigate the extent of demand and supply substitution between products in response to a SSNIP . That said, the Commission has rarely applied the SSNIP test empirically. Moreover, a number of EU Court judgments have confirmed that there is no obligation on the Commission to do so, particularly because other types of evidence are equally valid ways to elucidate the market definition. In this respect, several NCAs expressed the view that the Notice is not clear in that it does not set out the EU Courts’ findings that there is no obligation to carry out the test empirically . Finally, some respondents from the business community to the public consultation and NCAs also mentioned the difficulties associated with the application of the SSNIP test in bidding markets, in particular in what concerns the identification of the relevant starting price for the application of the test, given that each tender results in a different price. In this type of cases, the Commission often uses qualitative evidence to assess substitutability. Supply substitution The evaluation results suggest that the Notice adequately describes the role of supply-side substitution in market definition assessments, although there are some elements that lack clarity. The Notice explains that supply-side substitution may be taken into account when defining markets, where its effects are equivalent to demand substitution in terms of immediacy and effectiveness . The EU Courts have explicitly confirmed this principle by finding that ‘[a]lthough, from an economic point of view, demand substitutability constitutes the most immediate and effective assessment criterion in relation to the suppliers of a given product […], supply-side substitutability may also be taken into account in defining the relevant market with regard to operations in which that substitutability has effects equivalent to demand substitutability in terms of immediacy and effectiveness’ and that ‘[s]ubstitutability must therefore be looked at not only from the supply side but also from the demand side, which remains, in principle, the most effective assessment criterion’ . This appears to reflect broader international consensus among competition authorities to put emphasis on demand-side substitution. In particular, the NCAs shared the general view in the consultation that demand-side substitutability is the primary concept in market definition . This was further supported by the findings of the support study, which reported that EEA jurisdictions tend to use demand substitution as the primary factor in delimiting the geographic market, but also consider supply substitution where supply-side effects can be demonstrated as imposing an effective competitive constraint on the behaviour of suppliers in the focal area . In the US, supply-side substitutability is even explicitly excluded from market definition: According to the US Horizontal Merger Guidelines ‘[m]arket definition focuses solely on demand substitution factors, i.e. on customers’ ability and willingness to substitute away from one product to another in response to a price increase or a corresponding non-price change such as a reduction in product quality or service.’ The US Horizontal Merger Guidelines acknowledge the importance of supply-side factors for the competitive assessment, but they are not addressed at the market definition stage . In the public consultation, views were not equally unified. The majority of respondents either did not explicitly comment on the point or agreed that the importance assigned in the current Notice to supply-side substitution is correct and should be maintained. Nevertheless, some representatives of the business community, including in particular those active in digital products, suggested changes to the framework and considered that the Commission should start to consider supply substitution to the same extent as demand substitution. In their view, this would better take into account significant innovation and technological developments . On the basis of the evaluation results, however, such view appears to conflict with best practices derived from the Commission’s practice, from case-law of the EU Courts, which sets out binding principles derived from economic theory, and from international consensus among competition authorities. Furthermore, stakeholders belonging to most groups of respondents argued that the Notice’s explanations of supply-side substitutability lacked some clarity. Several NCAs submitted that the situations where supply-side substitutability is applicable to market definition are not clarified in the Notice, for example, in connection with the concepts of ‘significant additional costs’, ‘short term’, ‘effectiveness and immediacy’, and ‘most suppliers’ . Similarly, a business association submitted in the public consultation that more examples and references to case-law would be helpful to clarify those terms . Rapidly evolving markets The evaluation results suggest that the Notice lacks explanations on the process of defining markets in industries characterised by rapid technological progress, where newly developed products, services or processes change existing competitive dynamics. This issue was raised by several respondents to the public consultation, as well as by NCAs. In particular, several NCAs and respondents to the public consultation argued for the need to carry out dynamic assessments. Respondents to the public consultation also submitted that substitution evidence from past shocks and switching patterns is less relevant for market definition in rapidly evolving industries . The support study and the Commission practice further suggest that defining markets in such industries may indeed raise conceptual particularities. When markets are changing in the short term and substitution possibilities are evolving rapidly, the Commission does not rely only on past substitution patterns but takes the expected changes into account when distinguishing in and out-of-market constraints . Nonetheless, the Commission services consider on the basis of the evaluation results that the general principles of market definition apply to such markets as well. First, according to EU case-law, it is also important in rapidly evolving markets to have effective substitution possibilities that translate into effective choices for customers – primarily on the demand side, but also on the sup