COMPETITION • FRENCH LAW • ABUSE OF DOMINANT POSITION
The concept of relevant market implies that effective competition may exist between the products or services that form part of it, which presupposes a sufficient degree of interchangeability for the same use between all the products forming part of the same market. Three sets of criteria are generally used to identify a product or service market: the nature of the product or service, its conditions of use and its marketing method.
– Nature of product: The supervisory authorities consider that the definition of the market should entail a concrete and objective assessment of the choices made by purchasers or prescribers. In addition to the characteristics of a product, it is user behavior that defines the limits of a market. The Court of Cassation takes particular care to ensure that the competition authorities take into account the actual behavior of users, but tends to avoid the delimitation of micro-markets leading to the systematic characterization of a dominant position.
The attributes of a product are an essential factor when defining the market concerned. As well as technical characteristics, they can include differentiating factors such as olfactory attributes, the editorial line, educational features, the local and traditional character of the product, or the quality of services offered. When defining the product or services market, the Competition Authority is not restricted to purely objective characteristics. The prestigious image and the reputation of a product or a service may create an attachment rendering the product specific. Likewise taste factors can cause the competition authorities to distinguish products such as Cantal cheese, Roquefort cheese or cola flavored drinks from other products even though they have similar technical characteristics. Complementary products or services may belong to the same market or to different markets (see: Complementary products or services).
Price may be a characteristic of a product or service and can be used to measure substitutability. Criteria for a finding of non-substitutability upheld by the Competition Authority include the size of the budget, differences in price of services, the cost of the product or service or financing methods. Price is, however, sometimes revealed to be a notably inadequate indicator. Where one of the products at issue is a monopoly product, its price is bound to be higher than it would be in a situation of normal competition. Two products that are substitutable in principle can thus lose their substitutability due to the exercising of market power. The existence of such power should therefore be verified.
In defining the market, the Competition Authority may also use the production conditions for the product in question or the terms of the provision of the service, which can sometimes be dictated by certain regulatory constraints. It has thus found that the techniques used and standards set for the production and maturing of cheese excluded all possibility of substitutability between AOC Reblochon (AOC – registered designation of origin) and other cheeses. Similarly, the services provided by organizations that award quality labels to seasonal rentals are different from the promotion and marketing of such rentals insofar as a periodic control of the quality criteria is carried out and the holders of the label can be eligible for public aid.
– Conditions of use: When looking at the use of a product, the authorities take into account technical recommendations and effective use and select from the possible uses those corresponding to the main function of the product. The conditions of use of a product can be used to define the different levels within the same economic process or to group together different product families intended for the same use into the same market. Thus, although an individual tool meets a specific need and is not substitutable for another, hand tools must be considered as a single market, since the wholesaler offers the distributor a complete range of tools that meet the different needs of consumers. Goods or services which are distinct or complementary can be grouped together within the same market where it is more advantageous for the undertaking to offer them together at a lower price than separately in order to realize economies of scope.
– Marketing conditions: the existence of a distinct product market can be deduced solely from the specificity of the distribution channel used. While it sometimes entails distinguishing a specific market, consideration of the marketing method does not necessarily lead to segmentation.
