In December 1997, more than seven years after the European Merger Regulation came into force, the European Commission published a formal Notice on market definition. Market definition and the market shares that can be calculated once the market has been defined play a central role in European competition policy. The notification form for mergers states that post-merger shares that fall below 25 percent of a properly defined market will not generally give rise to fears of market dominance. In addition, under Article 86, the European Court of Justice (ECJ) has stated that market shares in excess of 50 percent would create a presumption of dominance, and the Commission is seriously considering the use of market share thresholds when assessing vertical agreements under Article 85.

The Notice claims to clarify the approach that the Commission has historically taken when defining markets, but in reality the rigorous approach set out in the Notice signals a substantial improvement on the methods that have often been used in the past. Notably, the Commission explicitly accepts the logic of using supply-side substitution to define a market, which is something it has been quite wary of in the past. In addition, the range of evidence that the Commission cites as having value in the market definition process goes well beyond the simplistic analysis of product attributes, price differences, and perceived customer views, which is how many observers would characterize the Commission's previous attempts at market definition.

This article was published in European Competition Law Review, Vol. 19, No. 5, June 1998, pp. 273–280.