¹ We do not include state aid law in our analysis. While market definition is also relevant to applying state aid law, the concept has not yet been developed and applied in an equally rigorous way as in cartel, abuse and merger cases. See Ferro, M Sousa, Market Definition in EU Competition Law (Elgar, 2019), pp 91–96CrossRefGoogle Scholar.

² Article 101 Treaty on the Functioning of the European Union (‘TFEU’).

³ Article 102 TFEU.

⁴ Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation), [2004] OJ L 24/1.

⁵ On the objectives of market definition see Sousa Ferro, note 1 above, pp 29–36; Hahne, A, Das Erfordernis der Marktabgrenzung aus rechtlicher und ökonomischer Sicht (Nomos, 2016), pp 27–36CrossRefGoogle Scholar.

⁶ Commission Notice on the definition of relevant market for the purposes of Community competition law, [1997] OJ C 372/5 (in the following referred to as ‘Market Definition Notice’), para 2.

⁷ It is important to note, however, that, in particular in the context of competition practice with two-sided platforms, effects analyses must not be restricted to the defined market. See Section I.B below.

⁸ OECD, ‘Market Definition, Policy Roundtables, Background Note by the Secretariat’, DAF/COMP(2012)19, pp 28–29.

⁹ For an introduction to the economics of network effects, see eg P Belleflamme and M Peitz, ‘Platforms and Network Effects’ in L C Corchon and M A Marini (eds), Handbook of Game Theory and Industrial Organization, Vol. II (Edward Elgar, 2018), pp 286–317.

¹⁰ ‘Two-sidedness’ is not a necessary precondition for the creation and management of network effects: a social network facilitates interaction between users on one side. An online shop that gives buyers the option to review, recommend or rate products available for sale allows for the creation of direct network effects across its customers. For that reason alone, it is reasonable with regard to many policy questions that arise due to digitisation to focus on these scenarios and conceptualize such market players as (digital) ‘platforms’. See, for instance, Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services, [2019] OJ L 186/57. However, the main challenges with regard to the competition law concept of market definition are indeed based on the characteristic of ‘two-sidedness’.

¹¹ We speak of a positive cross-group network effect that side A exerts on side B if a user on side B benefits if more users on side A participate (or if users on side A increase their usage volume). If these cross-group network effects operate in both directions, then there are indirect network effects on each side. For example, a user on side A indirectly benefits from more users on its own side because these users make it more attractive for users on side B to join; additional users on side B then benefit the user on side A.

¹² Certainly, many platforms cater to more than two groups that are linked through cross-group network effects and should therefore be called ‘multi-sided’. Since the term ‘two-sided platform’ is widely used, we follow this convention with the understanding that at least two groups are involved.

¹³ The Notice does discuss primary and secondary markets as an instance of (connected) markets where constraints on substitution imposed by conditions in one market have to be considered for the definition of the connected market definition. See Market Definition Notice, note 6 above, para 56. Given the complementarity of the products offered on the respective markets, the relationship between primary and secondary markets may appear similar to that of the markets to which two-sided platforms cater. Thus, an analogy to aftermarket delineation has been put forward by VHSE Robertson, ‘Antitrust Market Definition for Digital Ecosystems’ 2-2021 Concurrences Review 3, 7–8 (paras 27–28, 31). It should be emphasised, however, that the complementarity is of a different kind in both scenarios, in particular as two-sided platforms offer their services to different user groups that are linked through cross-group network effects. Therefore, the role of network effects is the key to understanding the market realities in the case of two-sided platforms. In light of this, questions of market definition also present themselves differently than in the context of primary and secondary markets.

¹⁴ On 3 April 2020, the Commission published an evaluation roadmap. See https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12325-Evaluation-of-the-Commission-Notice-on-market-definition-in-EU-competition-law. On 12 July 2021, the Commission published a Staff Working Document (SWD(2021) 199 final) that summarised the findings of the evaluation of the Market Definition Notice. See https://ec.europa.eu/competition-policy/system/files/2021-07/evaluation_market-definition-notice_en.pdf. In addition, the Commission requested an external ‘Support study accompanying the evaluation of the Commission Notice on the definition of the relevant market for the purposes of Community competition law’. See https://ec.europa.eu/competition-policy/system/files/2021-06/kd0221712enn_market_definition_notice_2021_1.pdf. The Commission plans to adopt a reformed Market Definition Notice in 2022. See https://ec.europa.eu/competition/antitrust/legislation/timeline_table_M_AT_final.pdf.

¹⁵ C(2021) 1959 final, Commission Guidance on the application of the referral mechanism set out in Article 22 of the Merger Regulation to certain categories of cases. The Commission has clarified that it will accept and indeed encourage referral requests by Member States even in cases in which the merger in question does not ‘meet the respective jurisdictional criteria of the referring Member States’ (para 6). This is meant to close gaps in the scope of merger control that relate in particular to digital platforms: ‘In recent years, however, market developments have resulted in a gradual increase of concentrations involving firms that play or may develop into playing a significant competitive role on the market(s) at stake despite generating little or no turnover at the moment of the concentration. These developments appear particularly significant in the digital economy, where services regularly launch with the aim of building up a significant user base and/or commercially valuable data inventories, before seeking to monetise the business’ (para 9). This new policy is being put to the test as the Commission announced on 20 April 2020 to have accepted a referral request by France and other Member States to assess the proposed acquisition of Grail, a US-based health care company, by Illumina, a US-based global genomics company. The proposed acquisition was not notified in any Member State. See https://ec.europa.eu/commission/presscorner/detail/en/mex_21_1846. An appeal filed by Illumina against the Commission's decision is pending before the General Court (Case T-22721). The reactions of several Member States indicate that they do not support the Commission's new policy to expand the scope of EU merger control based on Article 22 of the Merger Regulation. See Volpe and Morey, The European Commission's new Article 22 Guidance on case referrals (3 June 2021), https://insights.ropesgray.com/post/102gzmm/the-european-commissions-new-article-22-guidance-on-case-referrals.

¹⁶ However, the merger policy package of 26 March 2021 is confined to procedural and jurisdictional aspects of EU merger control. See SWD(2021) 66 final, Commission Staff Working Document. Thus, for the moment the Commission seeks to address shortfalls of the existing merger thresholds through the encouragement of referral requests alone. As regards the substance of merger assessments, Commissioner Vestager remarked ‘So we're open to ideas, no matter where they come from. But we'll only take a decision when we've considered all the evidence. So we won't immediately be drafting new merger guidelines’. M Vestager, ‘The Future of EU Merger Control’, International Bar Association 24th Annual Competition Conference, 11 September 2020.

¹⁷ See https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1564.

¹⁸ COM(2020) 842 final, Proposal for a Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector (Digital Markets Act).

¹⁹ J Crémer, Y-A de Montjoye, and H Schweitzer, Competition Policy for the Digital Era (European Commission 2019), p 46 (emphasis added).

²⁰ See Part III below.

²¹ See Art 2(2) and (3) EC Merger Regulation.

²² See Article 102 TFEU, which applies to ‘undertakings of a dominant position within the internal market’.

²³ See European Commission, Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, [2011] OJ C 11/01, para 28. In contrast, competition authorities and plaintiff parties are spared from assessing market power if agreements can be regarded as having by their very nature the potential to restrict competition and, therefore, are categorised as restrictions of competition ‘by object’ pursuant to Article 101(1) TFEU. See eg Montecatini v Commission, C-235/92 P, EU:C:1999:362, para 132.

²⁴ See Section I.A below.

²⁵ Google Search (Shopping), AT.39740. An appeal is pending before the General Court (Google and Alphabet v Commission, T-612/17).

²⁶ Motta, M and Peitz, M, ‘Removal of Potential Competitors – A Blind Spot of Merger Policy?’ (2020) 6 Competition Law & Policy Debate 19CrossRefGoogle Scholar.

²⁷ An abandonment of the concept of market definition has been suggested, in particular, by Kaplow, L, ‘Why (Ever) Define Markets?’ (2010) 124 Harvard Law Review 437Google Scholar; Kaplow, L, ‘Market Definition: Impossible and Counterproductive’ (2013) 79 Antitrust Law Journal 361Google Scholar; Markovits, R S, ‘Why One Should Never Define Markets or Use Market-Oriented Approaches to Analyze the Legality of Business Conduct under U.S. Antitrust Law: My Arguments and a Critique of Professor Kaplow's’ (2012) 57 Antitrust Bulletin 747CrossRefGoogle Scholar. For a defence of the concept (though not necessarily as a mandatory element of competition analysis) see eg Cameron, D, Glick, M, and Mangum, D, ‘Good Riddance to Market Definition?’ (2012) 57 Antitrust Bulletin 719CrossRefGoogle Scholar; Keyte, J A and Schwartz, K B, ‘“Tally-Ho!”: UPP and the 2010 Horizontal Merger Guidelines’ (2011) 77 Antitrust Law Journal 587Google Scholar; Nevo, H, Definition of the Relevant Market: (Lack of) Harmony between Industrial Economics and Competition Law (Intersentia, 2015), p 262Google Scholar; Hahne, note 5 above, pp 268–83.

²⁸ For a detailed analysis, see Sousa Ferro, note 1 above, pp 56–91; Hahne, note 5 above, pp 61–66, 189–220.

²⁹ See European Commission, Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements. [2011] OJ C 11/01, para 28.

³⁰ See European Commission, Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the Treaty on the Functioning of the European Union (De Minimis Notice), [2014] OJ C 291/01, para 8.

³¹ See eg Atlantic Container Line and Others v Commission, T-395/94, EU:T:2002:49, para 300.

³² See eg Art 3 Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) TFEU to categories of vertical agreements and concerted practices, [2010] OJ L 102/1.

³³ Hoffmann-La Roche v Commission, C-85/76, EU:C:1979:36, para 21; Volkswagen v Commission, T-62/98, para 230; Adriatica di Navigazione v Commission, T-61/99, EU:T:2003:335, para 27; European Commission, Dec 2005, DG Competition discussion paper on the application of Article 82 of the Treaty to exclusionary practices, para 11.

³⁴ France and Société commerciale des potasses and de l'azote and Entreprise minière and chimique v Commission, C-68/94, EU:C:1998:148, para 143; Airtours v Commission, T-342/99, EU:T:2004:192, para 19; NVV and Others v Commission, T-151/05, EU:T:2009:144, para 51; CK Telecoms UK Investments v Commission, T-399/16, EU:T:2020:217, paras 144–45. See also European Commission, Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, [2004] OJ C 31/5, para 10.

³⁵ Certainly, an ultimate market definition must not be given where different (plausible) definitions lead to the same outcome. See eg Google/Doubleclick, M.4731, paras 44–56 (Commission left open whether search and non-search advertising have to be considered separate markets); Facebook/WhatsApp, M.7217, para 79 (Commission left open whether segments of the market for online advertising constituted relevant product markets in their own right).

³⁶ See, in the context of US antitrust law, JB Baker and TF Bresnahan ‘Economic Evidence in Antitrust: Defining Markets and Measuring Market Power’ in P Buccirossi (ed), Handbook of Antitrust Economics (MIT Press, 2008), sub 1.2.2 (p 7) (‘Regardless of how market definition is understood, it is often a useful component of the way antitrust doctrine is implemented in court. It requires the plaintiff in the antitrust suit to state, with reasonable specificity, what competition might be harmed by the challenged practices—by a merger, by allegedly exclusionary acts and practices, by an agreement on practices said to facilitate coordination, etc. Indeed, market definition may be useful in this procedural sense even when market shares are not strongly probative of the magnitude of likely competitive harm. The market definition requirement also permits the defendant to rebut the idea that competition is fragile enough to be harmed, by attempting to establish a wider market’.).

³⁷ See Hahne, note 5 above, pp 252–57.

³⁸ See Sousa Ferro, note 1 above, p 30.

³⁹ General Electric v Commission, T-210/01, EU:T:2005:456, para 516; Sousa Ferro, note 1 above, pp 51–52.

⁴⁰ Article 267 TFEU.

⁴¹ See Sousa Ferro, note 1 above, pp 52–55.

⁴² See Ferro, M Sousa, ‘Judicial Review: Do European Courts Care about Market Definition?’ (2015) 6 Journal of European Competition Law and Practice 400, p 410Google Scholar (‘[W]hile market definition theory may be highly complex, its practical application and the specific issues raised before Courts usually do not require complex assessments of an economic nature. The majority of market definitions are not based on complex economic data, but are instead build on facts, opinions, and logic’.).

⁴³ The ECJ traditionally exercises only a limited review with regard to complex economic appraisals. See eg Remia v Commission, C-42/84, EU:C:1985:327, para 34; BAT Reynolds v Commission, C-142/83, EU:C:1987:490, para 62.

⁴⁴ Sousa Ferro, note 42 above, at 407.

⁴⁵ The Commission's implementation of market definition, ie its fact-finding and interpretation of facts, has been challenged in various instances. See eg Ryanair v Commission, T-342/07, EU:T:2010:280, paras 95–117.

⁴⁶ But note the Grimaldi doctrine, according to which the Member States’ courts when adjudicating on EU law must consider recommendations issued by the EU institutions ‘in particular … where they are designed to supplement binding Community provisions’. Grimaldi v Fonds des maladies professionnelles, C-322/88, EU:C:1989:646, para 18. See on the development, scope and impact of the doctrine Korkea-aho, E, ‘National Courts and European Soft Law: Is Grimaldi Still Good Law?’ (2018) 37 Yearbook of European Law 470CrossRefGoogle Scholar.

⁴⁷ There seems to be no research with a focus on the Market Definition Notice's impact on the jurisprudence of Member States’ courts. The reception of five other competition-related soft law instruments issued by the Commission is analysed in Georgieva, Z, ‘The Judicial Reception of Competition Soft Law in the Netherlands and the UK’ (2016) 12 European Competition Journal 54CrossRefGoogle Scholar.

⁴⁸ A certain reluctance on part of a national competition authority to develop its own position on market definition in the digitised economy has been noted, for instance, in H Kováčiková, ‘A Definition of Digital Markets by the Slovak Antimonopoly Office – Has the Boat to Digitalisation Already Sailed?’ (2020) 13(21) Yearbook of Antitrust and Regulatory Studies 247, p 256, which, after analysing market definition in three decisions by the Slovak Antimonopoly Office, concluded that ‘courage to launch an expert discussion and apply new tests to explore and assess the digital market is still lacking’.

⁴⁹ Hence, one should only assume with caution that the use of EU soft law instruments would preserve Member States’ autonomy and guarantee flexibility and diversity of national regulatory approaches. See Korkea-aho, E, ‘EU Soft Law in Domestic Legal Systems: Flexibility and Diversity Guaranteed?’ (2009) 16 Maastricht Journal of European and Comparative Law 271CrossRefGoogle Scholar.

⁵⁰ See Ackermann, T, ‘European Competition Law’ in Riesenhuber, K (ed), European Legal Methodology (Intersentia, 2017), p 520Google Scholar (‘the Commission … has therefore grown into the role of an authentic interpreter of competition rules’).

⁵¹ Cited note 18 above.

⁵² See European Commission, ‘Digital Markets Act – Impact assessment support study’, executive summary and synthesis report (Dec 2020), p 17 (‘Meanwhile, competition law is not always an ideal solution due to challenges in applying the market definition concept in multi-sided markets’). See also, in view of potential advantages through remedies (including possibly market-wide rule making) by way of a (then) contemplated comprehensive market investigation instrument, H Schweitzer, ‘The New Competition Tool: Its Institutional Set-Up and Procedural Design’, expert report prepared for the European Commission (2020), pp 24–25.

⁵³ Section 58a German Payment Services Supervisory Act (‘PSSA’). See J-U Franck and D Linardatos, ‘Germany's “Lex Apple Pay”: Payment Services Regulation Overtakes Competition Enforcement’ (2021) 12 Journal of European Competition Law & Practice 68.

⁵⁴ Further, it is unclear whether and under which conditions a doctrine of abusive ‘self-preferencing’ provides a right of access beyond the conventional ‘refusal to supply’ doctrine, which is characterised by a high intervention threshold, requiring in particular that a facility (such as a platform) be indispensable for entering a neighbouring market so that a refusal to grant access would be likely to eliminate all competition in this market. See from the EU adjudication, Bronner, C-7/97, EU:C:1998:569, para 41; RTE and ITP v Commission (‘Magill’), C-241/91 P and C-242/91 P, EU:C:1995:98, para 56.

⁵⁵ The term was coined by M Armstrong, ‘Competition in Two-Sided Markets’ (2006) 37 Rand Journal of Economics 668.

⁵⁶ See Section II.A.2 below.

⁵⁷ See Sousa Ferro, note 1 above, pp 252–55.

⁵⁸ MasterCard, T-111/08, EU:T:2012:260, paras 174–77. On appeal, market definition was not challenged and, therefore, not addressed by the ECJ. MasterCard, C-382/12 P, EU:C:2014:2201, para 178.

⁵⁹ RENV – CB v Commission, T-491/07, EU:T:2016:379, paras 79–80.

⁶⁰ Groupement des cartes bancaires, C-67/13 P, EU:C:2014:2204, paras 77–79.

⁶¹ See eg Microsoft/Yahoo! Search Business, M.5727, paras 61–81 (online advertising), paras 85–86 (internet search); Facebook/WhatsApp, M.7217, para 34 (consumer communications services), para 61 (social networking services), para 79 (online advertising); Microsoft/LinkedIn, M.8124, paras 74–83 (enterprise communications services), paras 87–117 (professional social networks), paras 126–47 (online recruitment services), paras 152–161 (online advertising services).

⁶² But cf Broos, S and Ramos, J M, ‘Competing Business Models and Two-Sidedness: An Application to the Google Shopping Case’ (2017) 62 Antitrust Bulletin 382CrossRefGoogle Scholar; the authors argue that, in the case of Google, search market and advertising market should not be separated since Google charges neither the consumers for searching nor the advertisers for advertising per se but only for transactions (‘per click’). This claim is, however, dubious since it would mean that market definition was dependent on the used price instruments. Based on this concept, in the case of a platform such as Airbnb, which charges only for completed bookings, the single-market approach would also need to be followed. In contrast, a multi-markets approach is required in the case of a platform such as HomeAway, a competitor of Airbnb in many regional markets, which used to charge listing fees for short-term rental accommodation. Both firms could then apparently not be attributed to the same market. However, as a property can be rented out via HomeAway or via Airbnb, the market definition would then not adequately reflect demand-side substitutability and the competitive restraints a platform faces and, thus, would not fulfil its designated function as an instrument of competition law.

⁶³ Ohio v American Express Co, 585 US __ (25 June 2018), slip opinion pp 13–15.

⁶⁴ Competition and Markets Authority, 16 Nov 2017, Just Eat and Hungryhouse, para 4.11.

⁶⁵ Visa International – Multilateral Interchange Fees, COMP/29.373, para 43; MasterCard, COMP/34.579; EuroCommerce, COMP/36.518; Commercial Cards, COMP/38.580, paras 283–329.

⁶⁶ Google Search (Shopping), AT.39740, paras 216–23.

⁶⁷ Bloemenveiling Aaslmeer – Flora Holland, 5901/184 (Nederlandse Mededingingsautoriteit).

⁶⁸ Bundeskartellamt, Market power of platforms and networks (2016), Working Paper B6-113/15, p 28.

⁶⁹ Ibid, pp 31–32.

⁷⁰ The Bundeskartellamt closed its abuse proceedings after Amazon amended its terms of business for sellers on its European online marketplaces. In its case summary, the authority stated that it was ‘inclined to assume a product market for online marketplace services’, stressing that ‘Amazon's significance as a “gate-keeper” for customer access is high due to its large customer base, some of which use the Amazon marketplace either primarily or exclusively for their purchases’. B2-88/18, Case Summary (17 July 2019), p 10.

⁷¹ See, by contrast, the Netherlands Authority for Consumers and Markets’ approach in a case that concerned the use of narrow price parity clauses imposed by the online food ordering platform ‘Thuisbezorgd.nl’ on the restaurants. Without taking an ultimate stand on market definition, the Dutch authority rejected ‘speak[ing] of “a possible market for online food ordering platforms”, because it is clear that online platforms compete with the direct sales channels of restaurants/restaurant chains’. Instead, the authority assumed that there ‘could be “a possible market for delivered meals” or “a possible market for delivered and takeaway meals”’. Case No 15.1073.53, ACM/DM/2016/207286 (18 November 2016), para 37 (references omitted). The authority thus suggested a symmetrical (relative) independence of both the restaurants and the consumers from the online food ordering platforms’ intermediation services.

⁷² Just Eat/La Nevera Roja, C/0730/16 (Comisión Nacional de los Mercados y la Competencia, 31 March 2016), paras 26–37.

⁷³ Parship/Elitepartner, B6-57/15 (Bundeskartellamt, 22 October 2015), paras 71, 75–78; case summary, p 2.

⁷⁴ Verivox/ProSiebenSat1, B8-76/15 (Bundeskartellamt, 24 July 2015), case summary, p 2.

⁷⁵ Immonet/Immowelt, B6-39/15 (Bundeskartellamt, 20 April 2015), case summary, p 2.

⁷⁶ SeLoger/Logic-Immo, Decision No 18-DCC-18 (Autorité de la concurrence, 1 February 2018), paras 20–29. Note, however, that the authority remarked (without further explanation) that ‘the delineation of separate markets for each of the sides of this market would not change the conclusions of the competitive analysis’. It is also noteworthy that in its recent merger guidelines, although the authority mentions the adoption of a single-market approach in this decision, the explanations appear remarkably cautious as the authority does not establish general rules as to whether and when it prefers to apply a single-market approach in the case of matching platforms. Lignes directrices de l'Autorité de la concurrence relatives au contrôle des concentrations (Autorité de la concurrence, 2020), para 599.

⁷⁷ This appears to be different with the judgment of the Court of Amsterdam in an abuse case involving a real-estate platform. See VBO Makelaar v Funda en NVM, NL:RBAMAS:2018:1654 (Rechtbank Amsterdam, 21 March 2018). While the court's rhetoric indicates that it assumed a single-market approach (‘The experts defined the relevant market as the market for housing websites in the Netherlands’, ibid, para 2.6), one of the economists who acted as a court expert in the case stressed that ‘[a]s funda was a “two-sided platform” … the experts considered potential substitutes and competitive constraints on both sides’. See G Niels, ‘Fundamentals of Article 102: A Dominant Platform, but Not Abuse’ (Oxera Agenda, September 2018), p 2. On appeal, the Gerechtshof Amsterdam did not further elaborate on market definition and confirmed the first instance decision in this respect. NL:GHAMS:2019:772 (26 May 2020), para 3.6.

⁷⁸ Parship/Elitepartner, B6-57/15 (Bundeskartellamt, 22 October 2015), para 78; Case Summary, p 2.

⁷⁹ To make this explicit for the case of dating sites, heterosexual men are simply not interested in the intermediation service offered to women; correspondingly, in the case of heterosexual women.

⁸⁰ Using the same web design and matching algorithm does not imply that substitution pattern is symmetric since, for example, the format chosen by the intermediary for how users of the two groups can exchange messages may be more attractive for members of one than for those of the other group.

⁸¹ See eg Crémer, de Montjoye, and Schweitzer, note 19 above, p 46.

⁸² In this respect, our view is in line with Katz, M and Sallet, J, ‘Multisided Platforms and Antitrust Enforcement’ (2018) 127 Yale Law Journal 2142, pp 2153–58Google Scholar; and G Niels and H Ralston, ‘Two-Sided Market Definition: Some Common Misunderstandings’ (2021) European Competition Journal, pp 10–11.

⁸³ The latter would need to be derived from the demand functions of each of the two sides.

⁸⁴ Business models may change over time. For instance, YouTube started as a ‘free’ ad-financed video streaming platform but recently added a subscription service.

⁸⁵ This is a basic insight of the economic analysis of platform pricing. See Rochet, J-C and Tirole, J, ‘Two-Sided Markets: A Progress Report’ (2006) 37 Rand Journal of Economics 645CrossRefGoogle Scholar; Armstrong, M, ‘Competition in Two-Sided Markets’ (2006) 37 Rand Journal of Economics 668CrossRefGoogle Scholar.

⁸⁶ Under EU law, the principle of net neutrality is embodied in Article 3 of Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union, [2015] OJ L 310/1.

⁸⁷ As a matter of principle, ISPs are allowed to offer ‘zero tariffs’ to end consumers pursuant to which the use of certain specific applications and services which are covered by the ‘zero tariff’ will not be deducted from the data volume to which the end consumer is entitled. However, as recently held by the ECJ, such ‘zero tariffs’ are incompatible with Article 3 of Regulation 2015/2120 if, once that data volume has been used up, end users may continue to use those specific applications and services without restriction, while other measures blocking or slowing down traffic are applied to the other applications and services available. Telenor Magyarország, C-807/18 and C-39/19, EU:C:2020:708. Yet, it appears that ISPs are otherwise indeed allowed to charge either the end consumers or the content providers to include specific applications and services in the ‘zero tariff’. Further clarification can be expected from the pending cases Vodafone, C-5/20 and Telekom Deutschland, C-34/20.

⁸⁸ RTL/Veronica/Endemol, IV/M.553, para 17.

⁸⁹ Kirch/Mediaset, IV/M.1574, para 11; Bertelsmann/CLT, IV/M.779, para 15.

⁹⁰ Given the open wording of the significant impediment to effective competition (‘SIEC’) test and the substantive criteria laid down in Article 2(1)(b) of the EC Merger Regulation, which state that the ‘interests of the intermediate and ultimate consumers’ have to be taken into account without specifying whether this relates only to the consumers in a given ‘market’ that can be assessed for the purposes of merger control, it appears at least conceivable that the Commission factors these concerns into its overall assessment of whether the merger will lead to a SIEC. Nevertheless, it seems logical to argue that if the ‘viewers’ market’ is not a ‘market’ for the purposes of merger control, then the viewers cannot be regarded as ‘consumers’ within the meaning of Article 2(1)(b) of the EC Merger Regulation. Therefore, to avoid such conclusion, it must be accepted from the outset that the ‘viewers’ market’ is a ‘market’ even if the viewers are not charged a fee.

⁹¹ Note that, eg, the German Bundeskartellamt still denied the existence of a viewers’ market for free (ad-financed) in 2006. Springer/Pro7Sat.1, B6-103/05, p 23.

⁹² Microsoft, COMP/C-3/37.792, paras 402–25.

⁹³ Microsoft, COMP/C-3/39.530, paras 17–22.

⁹⁴ Microsoft v Commission, T-201/44, EU:T:2007:289, paras 927–33.

⁹⁵ Microsoft/LinkedIn, COMP/M.8124, para 87.

⁹⁶ Microsoft/Skype, COMP/M.6281, paras 75, 101–09.

⁹⁷ Facebook/WhatsApp, COMP/M.7217, paras 31, 34.

⁹⁸ Google Search (Shopping), COMP/AT.39740, paras 154–250.

⁹⁹ In the Microsoft case, the General Court held that ‘it does not follow from either Article [102d TFEU] or the case law on bundling that consumers must necessarily pay a certain price for the tied product’. Microsoft v Commission, T-201/04, EU:T:2007:289, para 969.

¹⁰⁰ The ECJ's broad interpretation of the scope of EU competition law adopted in Höfner, according to which even a public employment agency might be considered an ‘undertaking’ as it pursues an activity that is ‘economic in nature’, is not conclusive for the recognition of zero-price markets. It is based on the consideration that ‘[e]mployment procurement has not always been, and is not necessarily, carried out by public entities’. Höfner and Elser v Macrotron, C-41/90, EU:C:1991:161, para 22; see also Aéroports de Paris v Commission, C-82/01 P, EU:C:2002:617, para 82 (on Article 107 TFEU). Thus, the wide concept of an economic activity adopted in Höfner is based on the premise that the activity in question could also be (and in fact was) provided by private recruitment consultancy companies that, however, charge their clients. Since this is the core idea of the court's reasoning, the ECJ's statement that ‘the application of Article [106] of the Treaty cannot obstruct the performance of the particular task assigned to that [public employment] agency in so far as the latter is manifestly not in a position to satisfy demand in that area of the market’ (ibid, para 25 (emphasis added)) is not based on the recognition of zero-price markets.

¹⁰¹ This rationality is also embodied in the concept of ‘information society services’, which is essential to Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’), [2000] OJ L 178/1. While the concept only covers those services normally provided for remuneration, recital 18 of the Directive clarifies that ‘information society services are not solely restricted to services giving rise to on-line contracting but also, in so far as they represent an economic activity, extend to services which are not remunerated by those who receive them, such as those offering on-line information or commercial communications, or those providing tools allowing for search, access and retrieval of data’. See McFadden, C-484/14, EU:C:2016:689, paras 36–43.

¹⁰² Deliège, C-51/96, EU:C:2000:199, paras 56–57.

¹⁰³ But cf Sousa Ferro, note 1 above, pp 264–66.

¹⁰⁴ This may be different if ‘remuneration’ is explicitly required as, for example, in the case of Article 57(1) TFEU.

¹⁰⁵ But cf Newman, J M ‘Antitrust in Zero-Price Markets: Foundations’ (2015) 164 University of Pennsylvania Law Review 149, p 163Google Scholar.

¹⁰⁶ A reference to the concept of an ‘economic activity’ as it has been developed in particular by the ECJ as an element of the EU competition law concept of an ‘undertaking’ would not be helpful to clarify the point because this concept for its part presupposes an idea of what constitutes a ‘market’. See Pavlov, C-180/98, EU:C:2000:428, para 75 (‘It has … been consistently held that any activity consisting in offering goods and services on a given market is an economic activity’; emphasis added). See also Advocate General Maduro, FENIN v Commission, C-205/03 P, EU:C:2005:666, para 13.

¹⁰⁷ Given the primary law character of Articles 101 and 102 TFEU, a legislative intervention would in any case only be conceivable as an amendment of the EC Merger Regulation. The example of Germany, where the legislature inserted a provision that states that ‘[t]he assumption of a market shall not be invalidated by the fact that good or service is provides free of charge’ (Section 18(2a) of the Competition Act), teaches us that a legislative intervention does not end all legal uncertainty: While it has been clarified that a ‘market’ does not require an exchange that involves remuneration, the Bundeskartellamt considered that it has not yet been clarified whether or not a ‘market’ requires a contractual relationship or any other kind of (mutual) exchange between the platform and its users to be present. In Facebook, the authority left this question open, arguing that in any case there was a contract between Facebook and its private users. In addition, the authority stated that the transfer of data could also be regarded as part of an exchange between Facebook and its private users. Facebook, B6-22/16, para 244.

¹⁰⁸ In the economic literature, this distinction between single- and multi-homing has been elaborated in particular by M Armstrong, ‘Competition in Two-Sided Markets’ (2006) 37 Rand Journal of Economics 668.

¹⁰⁹ See note 151 below and accompanying text.

¹¹⁰ Therefore, despite the outstanding positive direct network effects among the users of its social networking services, it is not clear whether Facebook must be considered a separate market. This was considered but ultimately left open by the Bundeskartellamt in Facebook, B6-22/16, paras 272–76. See also S W Waller, ‘Antitrust and Social Networking’ (2011–12) 90 North Carolina Law Review 1771, p 1799 (‘If Facebook's market dominance remains durable, the question of market power becomes easier over time as network effects and data lock-in make it increasingly likely that Facebook is a market unto itself’.).

¹¹¹ Bundeskartellamt, note 68 above, refers to this kind of user behaviour as ‘sequential multi-homing’. Similarly, a user who constantly uses one platform as default option but has, nevertheless, subscribed with a second platform in order to hedge against the risk of a system failure or the like (see eg Travelport/Worldspan, M.4523, note 15 above) should be considered a single-homer.

¹¹² Further consequences of such a framework for market definition are discussed in Section II.C.2 below.

¹¹³ A comparable approach underlies the regulation of fixed and mobile termination rates: where consumers are subscribed to a network operator, only this operator may terminate calls made to these consumers. Hence, operators of a telecommunication networks are regarded as having a monopoly position in the market for the termination of calls on their own network. See Recital 3 of Commission Delegated Regulation (EU) …/… of 18.12.2020 supplementing Directive (EU) 2018/1972 of the European Parliament and of the Council by setting a single maximum Union-wide mobile voice termination rate and a single maximum Unions-wide fixed voice termination rate.

¹¹⁴ Google Android, AT.40099, para 306. An appeal is pending before the General Court (Google and Alphabet v Commission, T-604/18).

¹¹⁵ See Section III.A below.

¹¹⁶ The conventional wisdom about pricing in such a situation has been taken up, for example, by the Bundeskartellamt, note 68 above, p 58: ‘this led to a monopolistic price on the multi-homing side, while the price on the single-homing side would be fairly low as a result of platforms competing for users on this side. In this respect, this may result in an inefficient price structure despite potentially intensive platform competition (on the single-homing side)’. This suggests that if the side that multi-homes were instead to single-home (eg because of contractual restrictions), while the single-homing side continues to do so for technological reasons, prices would rebalance and lead to lower prices on the side that initially was multi-homing. As Belleflamme, P and Peitz, M, ‘Platform Competition: Who Benefits from Multi-homing?’ (2019) 64 International Journal of Industrial Organization 1CrossRefGoogle Scholar show in a formal analysis, prices on the two sides indeed move in opposite directions. However, it is a priori not clear in which direction. The reason is that monopoly prices may actually be rather low as platforms may have an incentive to attract many users on the multi-homing side.

¹¹⁷ Travelport/Worldspan, M.4523, para 15.

¹¹⁸ Ibid, paras 13–21.

¹¹⁹ Ibid, para 81.

¹²⁰ Ibid, para 72.

¹²¹ Topps Europe Ltd v Commission, T-699/14, EU:T:2017:2, para 82.

¹²² See Ryanair v Commission, T-342/07, EU:T:2010:280, para 136; Deutsche Börse v Commission, T-175/12, EU:T:2015:148, para 133.

¹²³ Market Definition Notice, note 6 above, paras 15–19, 40. In its merger decisions, the Commission does regularly refer to the SSNIP test. See eg AstraZeneca/Novartis, M.1806, paras 35, 59; CVC/Lenzing, M.2187, paras 25–26; Mitsui/CVRD/Caemi, M.2420, para 11; Procter & Gamble/Wella, M.3149, para 38.

¹²⁴ In its Market Definition Notice, note 6 above, paras 15–19, the European Commission refers to the SSNIP test only with regard to demand substitution. It is noteworthy that supply-side substitutability could be assessed correspondingly. See Mauro, L Di, ‘Refining the Retail Markets for Audiovisual Products’ (2003) 48 European Competition Law Review 384, p 385Google Scholar.

¹²⁵ Booking.com, Décision no 15-D-06 (Autorité de la concurrence, 21 April 2015), para 99.

¹²⁶ Ibid, para 100.

¹²⁷ Ibid, para 45.

¹²⁸ Ibid, para 100.

¹²⁹ Ibid.

¹³⁰ Ibid.

¹³¹ Note the further complication that, in this case, it is precisely this contractual setting whose competitive assessment is at issue. We submit that when defining markets in such a context, as market definition is one of several steps to analyze the competitive situation without legal intervention, it must be presumed that the agreement or other practice under review is effective.

¹³² Belleflamme, P and Peitz, M, Industrial Organization: Markets and Strategies, 2^nd ed (Cambridge University Press, 2015), p 676CrossRefGoogle Scholar.

¹³³ This stands in contrast to Crémer, de Montjoye, and Schweitzer, note 19 above, p 45. In line with our view, Katz and Sallet, note 82 above, at 2159, suggest ‘consider[ing] price changes on one side of the platform while holding prices on the other side constant and examining whether there are significant, plausible feedback effects. If there are no such effects, then focusing on a single side manifestly will give a clear overall picture. But if there are feedback effects, then they must be taken into account to avoid reaching misleading conclusions’.

¹³⁴ L Filistrucchi, ‘Market Definition in Multi-sided Markets’ in OECD, Rethinking Antitrust Tools for Multi-Sided Platforms (2018), p 46.

¹³⁵ CTS Eventim/Four Artists, B6-35/17 (Bundeskartellamt, 23 Nov. 2017).

¹³⁶ Ticketvertrieb, VI-Kart 3/18(V) (OLG Düsseldorf, 5 December 2018), juris, principle 2.

¹³⁷ See Market Definition Notice, note 6 above, para 15 (SSNIP test as a ‘speculative experiment’).

¹³⁸ C Pike, ‘Introduction and Key Findings’ in OECD, Rethinking Antitrust Tools for Multi-Sided Platforms (2018), p 15.

¹³⁹ Bundeskartellamt, note 68 above, p 41.

¹⁴⁰ Facebook/Whatsapp, COMP/M.7217, para 76. Ultimately, the Commission left open whether segments of the online advertising market constituted relevant product markets in their own right. Ibid, para 79.

¹⁴¹ Visa International – Multilateral Interchange Fees, COMP/29.373, para 46.

¹⁴² Ibid, para 48.

¹⁴³ A consumer who wants to purchase a certain product may ask herself (1) which payment system she prefers (eg cash or payment card) and (2) from which merchant she would like to purchase the product. If there is a whole range of merchants that offer a comparable quality of customer service and if among those there are only some who do not accept the preferred payment system (eg a certain payment card), there will be no problem for a consumer to avoid that merchant and still purchase the product (including with the desired service quality). In contrast, in the same scenario, a merchant that does not accept the use of the payment system preferred by a certain group of potential customers will inevitably lose the option to do business with them.

¹⁴⁴ Google Android, AT.40099,para 267.

¹⁴⁵ See for a suggestion of how the SSNDQ test could be applied to Facebook's offering of social networking services Gebicka, A and Heinemann, A, ‘Social Media & Competition Law’ (2014) 37 World Competition 149, pp 158–59Google Scholar. See also the proposal by Hartman, R, Teece, D, Mitchell, W, and Jorde, T, ‘Assessing in Regimes of Rapid Technological Change’ (1993) 2 Industrial and Corporate Change 317, pp 339–41Google Scholar.

¹⁴⁶ Newman, J M, ‘Antitrust in Zero-Price Markets: Applications’ (2016) 94 Washington University Law Review 49, p 66Google Scholar.

¹⁴⁷ Google Search (Shopping), COMP/AT.39740, para 245.

¹⁴⁸ Topps Europe Ltd v Commission, T-699/14, EU:T:2017:2, para 82.

¹⁴⁹ The positive association between market share, price-cost margin, and profits within an industry that holds in many traditional economic models of oligopolistic competition is fragile in the context of two-sided platforms, as formally shown by P Belleflamme, M Peitz, and E Toulemonde, ‘The Tension between Market Shares and Profit under Platform Competition’ (2021), International Journal of Industrial Organization, 102807.

¹⁵⁰ Shapiro, C and Varian, H, Information Rules: A Strategic Guide to the Network Economy (Harvard Business School Press, 1999), p 185Google Scholar.

¹⁵¹ The miscoordination problem is mitigated if user multi-homing is facilitated. G Biglaiser, E Calvano, and J Crémer, ‘Incumbency Advantage and Its Value’ (2019) 28 Journal of Economics and Management Strategy 41, review economic mechanisms that lead to network effects-induced barriers to entry.

¹⁵² See eg Wismer, S, Bongard, C, and Rasek, A, ‘Multi-sided Market Economics in Competition Law Enforcement’ (2017) 8 Journal of European Competition Law & Practice 257, p 261Google Scholar (‘Nevertheless, in some cases, network effects can also stimulate competition when possibly disruptive entrants or smaller merging firms benefit from network effects to catch up with large established firms’.).

¹⁵³ Consumer switching costs can also be important source of barriers to entry. While the concepts of network effects and switching costs are different, there are situations in which network effects impact the level of switching costs a user is subjected to. Such an interaction of network effects and switching costs occurs when the level of switching costs also depends on the past decisions of other users. On two-sided platforms, switching cost may depend on the number of past users on the other side of the market. An example is a successful e-commerce seller that considers migrating from an incumbent to an entrant platform, but cannot carry the reviews posted by customers from the past. The more reviews there are for the particular seller on the incumbent platform the higher the opportunity cost of migrating from one platform to another, as a good track record affords a premium.

¹⁵⁴ Cisco Systems Inc and Messagenet Spa v Commission, T-79/12, EU:T:2013:635, para 69.

¹⁵⁵ Barriers to entry are lower in markets in which new generations of products have to arrive at given dates. See K Collyer, H Mullan, and N Timan, ‘Measuring Market Power in Multi-sided Markets’ in OECD, Rethinking Antitrust Tools for Multi-Sided Platforms (2018), p 73.

¹⁵⁶ Hoffmann-La Roche v Commission, C-85/76, EU:C:1979:36, para 41.

¹⁵⁷ AKZO v Commission, C-62/86, EU:C:1991:286, para 60.

¹⁵⁸ See eg European Commission, Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings, [2009] OJ C 45/7, pt 15.

¹⁵⁹ See eg Article 3 of the Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) TFEU to categories of vertical agreements and concerted practices, [2010] OJ L102/1.

¹⁶⁰ As was done, eg, in Parship/Elitepartner, B6-57/15 (Bundeskartellamt, 22 October 2015), paras 184–193.

¹⁶¹ Lianos, I, ‘Some Reflections on the Question of Goals of EU Competition Law’ in Lianos, I and Geradin, D (eds), Handbook on European Competition Law. Substantive Aspects (Edward Elgar, 2013), p 57Google Scholar.

¹⁶² VBBB/VBVB, IV/428, para 54.

¹⁶³ Ibid, para 56.

¹⁶⁴ See eg Delimitis v Henninger Bräu, C-234/89, EU:C:1991:91, paras 14–16.

¹⁶⁵ See note 60 above.

¹⁶⁶ Compagnie générale maritime and Others v Commission, T-86/95, EU:T:2002:50, para 343.

¹⁶⁷ EDP - Energias de Portugal v Commission, T-87/05, EU:T:2005:333, paras 147, 236. But note that the court at the same time emphasised that the ‘Commission must prohibit a transaction provided that the criteria of Article 2(3) of the Merger Regulation are satisfied, even in respect of only one of the relevant markets’. Ibid, para 145.

¹⁶⁸ In its guidelines on Article 101(3) TFEU, the Commission put forward a more restrictive position, stating that it would only engage in a cross-markets efficiency-analysis under Article 101(3) TFEU ‘where two markets are related’ and ‘provided that the group of consumers affected by the restriction and benefiting from the efficiency gains are substantially the same’. Guidelines on the application of Article 81(3) [now 101(3)] of the Treaty, [2004] OJ C 101/97, para 43; see also ibid, para 87; Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, [2004] OJ C 31/5, para 79.