COMPETITION • FRENCH LAW • ABUSE OF DOMINANT POSITION
A finding of abuse of a dominant position entails identifying the market in which that position is held. The assessment of the market may differ for the same sector depending on whether it is carried out in the context of anticompetitive practices or mergers: in the first case, the analysis concerns an existing market, whereas in the second, it is prospective.
The concept of relevant market implies that effective competition can exist between the products that are part of it and this in turn presupposes a sufficient degree of interchangeability in terms of use for all the products included in the same market. Two products belong to the same market from the demand-side when they are sufficiently substitutable. The degree of interchangeability or substitutability is assessed with regard to the characteristics of the products concerned (performance, price, etc.) as perceived by users. The market is defined by reference to a defined geographical area, either because the analysis of the behavior of the demand is valid only in that area, or because it is the geographical area within which the applicants can obtain the product or service in question. When the examination of the substitutability of products with respect to their physical, technical or functional characteristics does not allow the definition of the relevant market, it is necessary to determine whether other products exert a competitive pressure in view of the possible reaction of consumers to changes in their prices. The descriptive approach is thus sometimes supplemented by econometric analysis. Among the available methods, the cross-elasticity of demand test is most often used (See Elasticity of demand).
When not being examined as a factor of dominance, supply-side elasticity is an indicator of the market definition itself. As a subsidiary criterion to elasticity of demand, elasticity of supply aims to assess the ability of other suppliers to satisfy the demand addressed to the allegedly dominant undertaking. The low degree of supply-side elasticity may lead to the selection of a small market. Supply substitutability exists when suppliers can redirect the products or services in question without incurring unacceptable costs or risks in order to replace the previous supplier. When substitution requires heavy investments or strategic revisions, it is not taken into account.
Finally, self-consumption, which consists in an undertaking producing a good or rendering a service necessary to its own business activity, is not part of the supply on a market.
Competition authorities may decide not to choose between different possible market definitions where, regardless of the definition chosen, the competitive analysis remains unchanged.
