COMPETITION • FRENCH LAW • MERGERS
The relevant product market includes identical goods or services and substitutable goods or services. Substitutability is evaluated mainly from the perspective of the demand, with reference to the type of product, conditions of use, and marketing.
– Nature of product or service: The assessment of the technical characteristics of products is conducted from the point of view of the consumer, which means taking account of their taste, image and also price, manufacturing conditions and any regulatory constraints. Apart from the purely technical characteristics of a product, the quality of the service offered also represents an element of differentiation. In all, the examination of substitutability “involves not only technical considerations but equally a concrete observation of potential substitution behaviors”. Applying those principles to the distribution sector, the competition authorities thus distinguish within the market for retail sales of consumer goods, hypermarkets, supermarkets, specialist stores, small retail stores, “maxidiscounters”, and mail order sales, although such differentiation is not absolute. In some geographical settings, hypermarkets, supermarkets or hard-discount stores of more than 400 m² can commonly be used by some consumers as local stores, and substitutes for grocery stores, while the opposite is not true. According to the Competition Authority, all forms of specialist shops must be excluded from the food retail trade market when, even when shopping in all the specialty stores present in a catchment area, it is difficult, if not impossible, for a consumer to reproduce the full assortment of a basket of everyday consumer goods as in a grocery store or supermarket. Organic stores must also be excluded from the predominantly food retail market insofar as they offer a reduced range of products, prices are higher that generalist food stores, and purchases of organic products represent a minor part of the purchases made by consumers. Complementary products or services may, as the case may be, belong to the same or separate markets (see: Complementary products or services). The use of a product also constitutes a factor of differentiation. Consequently, activities that could objectively interest the same clients, for example collective catering and the distribution of employer-subsidized restaurant vouchers, are not seen as belonging to the same market if “these activities cannot, from a consumer point of view, be substituted for each other in order to satisfy the same need”. Publishing rights markets must thus be segmented according to the category of individual works concerned, namely general literature, books for young persons, comics and academic and professional works insofar as the authors are not the same, that the amounts of proportional remuneration and advances differ, and as publishing houses are generally specialized in one type of book.
– Conditions of use: The conditions of use of the product or service confirm or correct the initial conclusions taken from its characteristics or its function. Thus, in the pipelines sector, there is a market for PVC pipes and a market for polyethylene pipes that have low substitutability because of the use of contractors, who, in almost all of the markets, specify the material to be used. Similarly, consumption outside the home constitutes a separate market from the home consumption market when it stems from a different approach of the consumer who buys for immediate consumption beverages acquired outside the home while the beverages purchased from food retail channels are subject to deferred consumption. Products can however be grouped within the same market despite technical and price differences, as a result of the evolution in demand and in the preferences of consumers which shows that an increase in the use of one has led to a decline of the other and that the technical differences between them have diminished.
– Marketing conditions: The distribution strategies of undertakings can be the reason to distinguish markets for the same product or service.