“Nettbil”

It is primarily the risk of the customer seeking a substitutable product – so-called demand substitution – that constitutes the most immediate and effective disciplinary force on the suppliers of a given product, in particular in relation to their pricing decisions. Therefore, the assessment of the demand substitution remains, in principle, the most effective assessment criterion.

It is necessary to identify the effective alternative sources of supply for the customers of the undertakings involved, both in terms of products/services and geographic location of suppliers. In other words, whether the parties’ customers would switch to readily available substitutes or to suppliers located elsewhere in response to a hypothetical, small but permanent relative price increase in the products and areas being considered.

Differences in price are a factor relevant to assessing whether two products are substitutable depending on the consumers’ likely responses to a relative price increase. Hence, to diverge from the principle that large differences in price are relevant to determine substitutability, it must be likely that the customer will switch to the more expensive product following a moderate increase in the price of the cheaper product. In other words, substitutability depends on how much more the customer is willing to pay, regardless of the quality of the product he gets in return. In the absence of other evidence, it is unlikely that a quality product at a much higher price may function as a substitute to a low-price product if the price increase of the latter is moderate. If the price differences between the products are smaller, the situation may be another.

Market definition is based on a test whose purpose is to determine the competitiveness of a product. The most common procedure is to carry out an empirical or theoretical test of whether the customers, following a moderate price increase, would switch to a different product, taking into account the products’ characteristics, area of use and price differences. In that case, the products are in the same product market. However, the product market may also be defined by other methods and sources of information, for instance market analyses or analyses of the view of consumers and competitors with regard to substitutability.

If the products are differentiated, large price differences will not necessarily make them non-substitutable. It is, however, unlikely that the products then belong to the same product market.

In a competitive assessment, one must compare the competition situation with and without the concentration between undertakings. It is a criterion for intervention that the merger will significantly impede competition, compared to what would be the case without the transaction. The requirement of “significantly” means that the effect must be sufficiently harmful and thus exceed a certain threshold. This threshold cannot be identified in either general or exact terms, but must be assessed individually.

When it comes to the issue of competition restrictions in the form of harm to innovation, market definition will not necessarily serve as an analytical tool for a competitive assessment in the current relevant product market. Innovation is in the future. The competitive assessment must then be linked to whether it can be established with a sufficient degree of probability that, in a situation without the concentration, innovation would have occurred that the concentration will now prevent.