The new market definition notice misses the key to addressing transforming product markets

Abstract The European Commission’s renewal of the Market Definition Notice raised expectations of a more dynamic approach to market definition to better account for the complexities of modern competition. In that regard, the new Notice adopted in early 2024 misses the mark. The essence of dynamic competition theory is that competition during product market transformations is also between firms without a product overlap, but in the development of the next-generation product: the future product market. To that end, dynamic competition theory seeks to bring competitive constraints from outside the traditional product market into market definition. Regrettably, the new Notice imposes restrictive guidance on competitive constraints, supply substitution, and potential competition. As a result, the Notice exposes a fundamental disconnect between the primary objective of market definition—identifying competitors that exert competitive constraints on the firms involved—and the essence of dynamic competition. The key to an accurately defined transforming product market is to reflect who competes for the future products.