Market Definition for Multi-Sided Platforms: A Legal Reappraisal

Abstract

It is frequently assumed that the outcome of today’s most discussed competition law cases hinges on market definition. In the context of multi-sided platforms, delimiting the relevant product market is a particularly delicate and complex task. Thus, this article seeks to analyse, from both an economic and a legal perspective, how relevant product markets for multi-sided platforms are properly defined under European competition law. Multi-sided platforms act as intermediaries which enable distinct groups of customers (also called platform-sides) to interact with each other. Multi-sided platforms have the possibility to set different prices for each group of customers, therefore econometric tools such as the small-but-significant-non-transitory increase-in-price test (SSNIP-test) must be applied with caution. It is argued that multi-sidedness can be considered a question of degree, therefore, for the purpose of market definition, it is necessary to distinguish different types of multi-sided platforms. The stronger the indirect network effects involved, the more the market definition deviates from traditional approaches. Indeed, the established legal framework allows a sound categorization of various forms of multi-sided platforms. In the context of multi-sided platforms, markets are regularly closely interrelated, therefore, the competitive assessment would be incomplete without an intermarket-analysis.