The definition of a relevant market is a tool to identify and define the boundaries of competition between firms. It establishes the frame- work within which the Commission applies competition policy princi- ples. The main purpose of market definition is to identify in a system- atic way the competitive constraints that the undertakings involved face. Market definition makes it possible, inter alia, to calculate the respective market shares of the undertakings active on the relevant market, which convey meaningful information regarding market power for the purposes of assessing dominance (See Dominant position). A relevant market is defined according to both product and geographic factors. In general terms, a relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable (See Substitutability) by reason of product characteristics, prices and intended use. Products and/or services that could readily be put on the market by other producers without significant switching cost or by potential competitors at reasonable cost and within a limited time span also need to be taken into account. The relevant geographic market comprises the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighbouring areas, because the conditions of competition are appreciably different in those areas.

(See: Commission notice on the definition of relevant market for the purposes of Community competition law (OJ C 372, 9.12.1997, p. 5).)

Source: Glossary of terms used in EU competition policy, Antitrust and control of concentrations, European Commission, 2002