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EUROPEAN COMMISSION DG Competition - page 10 / 113

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increased, a fact which must be taken into account.16 Otherwise, the market could be defined too widely, as it might include products or geographic areas, which only impose a competitive constraint due to the fact that prices have already been elevated above competitive levels. The failure to take account of this reality is normally referred to as the cellophane fallacy.

SSNIP test useful but not exhaustive 16. The SSNIP-test at prevailing prices remains useful in the sense that it is indicative of substitution patterns at such prices. Products and areas that can be excluded from the relevant market at prevailing prices would also be excluded at any lower competitive price. However, additional tools are required to check whether the market has been defined too widely so as to include false substitutes. One method of checking for false substitution patterns would involve reconstructing the competitive price, i.e. to estimate the competitive price and use that price for the purposes of applying the SSNIP-test. However, in most cases it is not possible to reconstruct the competitive price with the requisite degree of accuracy. As a correct application of the SSNIP-test also involves some knowledge of the demand curve at the competitive price, this

method is rather difficult to apply in practice.

SSNIP test useful in markets with no Domco 17. Article 82 cases may also involve markets in which there is no dominant company. For instance, the problem being investigated could be claims that an allegedly dominant company “leverages” its market power from one market into another market. In this second market, the SSNIP test may be more readily applicable, as there may be no reason to suspect that the prices in that market are already above competitive levels.

“Characteristics and intended use of product concerned” 18. Another approach is to examine the characteristics and intended use of the products17 concerned and to assess whether they are capable of satisfying an inelastic consumer need.18 It is thus examined whether the characteristics of the products and their intended use are such that

16 17 18

See paragraph 19 of the Commission Notice on the definition of the relevant market cited in footnote 11. The term “product” as used in this paper encompasses both goods and services. See Case 6/72, Europemballage Corporation and Continental Can Company Inc. v Commission [1973] ECR 215, paragraph 32, and Case T-30/89 Hilti AG v Commission [1991] ECR II-1439, paragraph 64.

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