How is the relevant market established to assess market power?
Market definition seeks to identify the competitive constraints faced by a firm. It is a prerequisite for the assessment of dominance. Market definition has a product and geographic dimension. (Commission Notice on the definition of the relevant market for the purpose of Community Competition Law, OJ [1997] 372/5.) Essentially, a product market comprises all the products regarded as substitutable by consumers and which exercise effective competitive constraints on each other. The geographic market is the area in which the relevant firms operate and in which the conditions of competition are sufficiently homogeneous. The framework for delineating a relevant market is the so-called “SSNIP” test (small but significant and non transitory increase in price). It is used to determine the narrowest market on which a hypothetical monopolist could profitably increase prices above the competitive level (i.e. by 5 to 10%) or reduce output, choice, quality or innovation below the competitive level
