Market Definition in German Competition Law

1. Introduction

Market definition (Marktabgrenzung) is a fundamental step in German competition law because the assessment of market power, dominance, mergers, and many forms of abuse depends upon identifying the relevant product/service market and geographic market.

The principal statutory framework is the Gesetz gegen Wettbewerbsbeschränkungen (GWB), particularly §§ 18, 19 and 19a GWB. Section 18 addresses market dominance and requires assessment of the undertaking's position on the relevant product and geographic market. German law also gives special importance to factors such as access to data, network effects, switching costs and multi-sided platform structures.

The modern German approach therefore combines the traditional concept of demand-side substitutability with a broader assessment of competitive constraints, particularly in digital and platform markets. The Bundeskartellamt has expressly recognized that digital markets can require consideration of factors beyond conventional turnover and price measures.

2. Statutory Framework Under the GWB

A. § 18 GWB — Market Dominance

Section 18 GWB provides the principal legal framework for determining whether an undertaking is dominant.

An undertaking may be dominant where it:

1. has no competitors;
2. is not exposed to substantial competition; or
3. possesses a paramount market position in relation to its competitors.

The assessment is not confined to market share. German law requires consideration of a range of structural and economic factors.

Relevant factors include:

• market share;
• financial strength;
• access to supply and sales markets;
• access to competitively relevant data;
• vertical integration;
• barriers to entry;
• network effects;
• switching costs;
• economies of scale;
• customer countervailing power;
• multi-sided platform characteristics.

The Federal Court of Justice has emphasized that dominance must be established through an overall assessment rather than mechanically through one numerical indicator. This is particularly important in digital markets.

3. Product-Market Definition

The relevant product market identifies products or services that customers regard as sufficiently substitutable.

The central question is:

Would customers switch to another product or service in response to a change in price, quality, conditions or other competitive parameters?

Traditional German competition law therefore considers:

Demand-side substitution

This asks whether customers regard competing products as alternatives.

Factors include:

• characteristics of the product;
• price;
• intended use;
• quality;
• convenience;
• brand;
• availability;
• switching costs.

Supply-side substitution

The authorities may also examine whether suppliers can rapidly change production or distribution to provide competing products.

4. Geographic Market Definition

The geographic market consists of the territory in which competitive conditions are sufficiently homogeneous.

The relevant geographic market can therefore be:

• local;
• regional;
• national;
• European;
• global.

The geographic dimension depends upon factors such as:

• transportation costs;
• customer purchasing patterns;
• distribution networks;
• regulatory barriers;
• language;
• consumer preferences;
• availability of suppliers;
• cross-border trade.

The EDEKA/Kaiser’s Tengelmann proceedings provide a particularly important illustration. The Bundeskartellamt focused on local and regional grocery markets rather than relying upon the parties' relatively small national market shares. It examined consumer purchasing behaviour and competition in particular metropolitan districts and regional areas.

5. Market Definition in Digital Markets

German competition law has become particularly significant in digital markets.

The traditional price-based approach can be problematic because many digital services are offered to consumers at zero monetary price.

Examples include:

• social networks;
• search engines;
• messaging services;
• online marketplaces;
• digital advertising platforms.

In these markets, competition may occur through:

• privacy;
• quality;
• attention;
• data collection;
• functionality;
• innovation;
• interoperability;
• advertising quality;
• network effects.

The German legislature therefore introduced specific provisions concerning multi-sided markets and networks, particularly through § 18(3a) GWB.

This permits consideration of factors such as:

• direct and indirect network effects;
• economies of scale;
• switching costs;
• access to competitively relevant data;
• the importance of the platform for market access;
• innovation pressure.

This is especially important because turnover-based market shares may be meaningless where one side of a platform pays nothing.

6. Six Important German Cases

Case 1 — Facebook / Bundeskartellamt (Facebook I)

BGH, 23 June 2020 — KVR 69/19

This is one of the most important German decisions concerning modern market definition.

The Bundeskartellamt treated Facebook's service to private users as a distinct national market for social networks, despite the absence of a monetary price for users.

The case demonstrated that:

• zero-price services can constitute economically relevant markets;
• market definition does not require a monetary transaction;
• network effects can substantially strengthen market power;
• data can be an important competitive parameter;
• user-side and advertising-side relationships must be analysed together.

The Federal Court of Justice ultimately confirmed the Bundeskartellamt's assessment concerning Facebook's dominant position and the relevance of the special characteristics of digital markets. The decision became a major foundation for German digital competition enforcement.

Principle

A zero-price digital service may constitute a relevant market even where users do not pay money.

Case 2 — Amazon / § 19a GWB

BGH, 23 April 2024 — KVB 56/22

The Federal Court of Justice upheld the assessment that Amazon held a dominant position on the German market for online marketplace services for commercial sellers.

The Court accepted a Germany-wide relevant market and examined Amazon's position using the framework of § 18 GWB.

The case demonstrates that market definition in platform markets can focus on the particular service supplied to a particular user group—in this case commercial sellers—rather than treating the entire digital ecosystem as one undifferentiated market.

Principle

Multi-sided platforms may require identification of the particular service and user group constituting the relevant competitive market.

Case 3 — EDEKA / Kaiser’s Tengelmann

Bundeskartellamt, 1 April 2015; OLG Düsseldorf, 2017

This is an important case for geographic market definition.

The proposed acquisition involved approximately 450 Kaiser’s Tengelmann stores.

The Bundeskartellamt did not rely simply on national market shares. Instead, it examined:

• individual metropolitan areas;
• municipalities;
• city districts;
• consumer purchasing behaviour;
• proximity of competing supermarkets;
• differences between full-range retailers and discount stores.

The authority concluded that competition had to be assessed locally or regionally because consumers generally do not travel across Germany—or even across a major city—for ordinary grocery shopping.

The Düsseldorf Higher Regional Court subsequently confirmed the prohibition, finding that the transaction would at least create a dominant position in Berlin.

Principle

Geographic market definition must reflect actual consumer purchasing behaviour rather than artificial national boundaries.

Case 4 — CTS Eventim / FKP Scorpio

Bundeskartellamt, 3 January 2017 — B6-53/16

The Bundeskartellamt examined the acquisition of FKP Scorpio by CTS Eventim.

Relevant markets included:

• ticket-system services;
• tour concerts;
• music festivals.

The case demonstrates that a complex entertainment platform cannot necessarily be treated as one broad "entertainment market." Different commercial functions can constitute separate relevant markets.

The Bundeskartellamt identified ticketing-system services and other activities as distinct markets for competition-law purposes.

Principle

Market definition may separate different stages and functions of a digital or technology-enabled commercial ecosystem.

Case 5 — CTS Eventim Exclusive Agreements

Bundeskartellamt, 4 December 2017 — B6-132/14

The Bundeskartellamt prohibited certain exclusive agreements used by CTS Eventim with event organisers and advance ticket outlets.

The case involved the ticketing market and demonstrated the importance of defining the competitive environment in which contractual exclusivity operates.

CTS Eventim's position was particularly significant because its ticketing system connected event organisers, ticket outlets and consumers.

The case illustrates the relationship between:

market definition → market power → foreclosure → competitive effects.

Principle

Market definition must capture the actual competitive relationships through which exclusivity can foreclose rivals.

Case 6 — CTS Eventim / Data and Digital Market Power

CTS Eventim proceedings are also important for the treatment of data as a competitive parameter.

The Bundeskartellamt found that CTS Eventim possessed substantial competitively relevant data arising from its ticketing activities. The information included customer and transaction data that could be used for marketing and market analysis.

This illustrates the evolution of German market-definition methodology: market power may be strengthened by an undertaking's ability to accumulate and exploit data, even where conventional price measures provide an incomplete picture.

Principle

Access to and control over competitively relevant data can influence the assessment of market power and competitive constraints.

7. The Special Importance of § 18(3a) GWB

One of the most significant developments in German competition law is § 18(3a) GWB.

For multi-sided markets and networks, the authority may consider:

1. Direct network effects

The value of the service increases as more users join.

Example:

Social network → more users → greater value → more users.

2. Indirect network effects

Growth on one side benefits another side.

Example:

Users → more advertisers → greater advertising revenue → improved platform investment.

3. Economies of scale

Digital platforms can expand substantially without proportionate increases in marginal costs.

4. Switching costs

Users may remain with a platform because migration would involve:

• loss of contacts;
• loss of data;
• learning costs;
• compatibility problems;
• reduced functionality.

5. Data advantages

Large platforms may possess data that competitors cannot easily replicate.

6. Intermediation power

A platform may become an important gateway through which businesses reach customers.

The Bundeskartellamt expressly identifies these characteristics as relevant to the special competition framework for digital markets.

8. Market Shares Under German Law

Market shares remain important but are not conclusive.

A high market share can indicate market power, but the authority must consider the competitive environment.

Relevant questions include:

• How durable is the market share?
• Can customers switch?
• Can new competitors enter?
• Are there network effects?
• Are competitors dependent upon the undertaking?
• Does the undertaking control important data?
• Are there significant economies of scale?
• Does the undertaking operate across interconnected markets?

Consequently:

Market share is evidence of market power, not an automatic definition of market power.

9. Market Definition and § 19a GWB

The introduction of § 19a GWB significantly changes the importance of market definition for large digital undertakings.

Section 19a addresses undertakings with paramount significance across markets for competition.

The Bundeskartellamt can intervene in certain conduct even where the undertaking is not traditionally dominant on every individual market.

Relevant considerations include:

• market position;
• financial strength;
• activity across several markets;
• interconnected markets;
• access to competitively relevant data;
• importance for third-party market access.

The Bundeskartellamt expressly explains that § 19a can permit intervention before traditional dominance has been established on every affected market.

This represents an important movement from:

single-market dominance

towards:

ecosystem and cross-market power.

10. Market Definition in Zero-Price Markets

German competition law is particularly sophisticated in this area.

Suppose:

Platform X charges consumers €0.

A conventional price-based SSNIP test becomes difficult because a price cannot easily be increased above zero without fundamentally changing the service.

Therefore, the authority can examine alternative competitive parameters:

• quality;
• privacy;
• advertising intensity;
• data collection;
• functionality;
• innovation;
• user attention.

In the Facebook proceedings, the absence of monetary payment did not prevent the identification of a relevant market. Research concerning the German Facebook decision notes that active users can be more appropriate than turnover for measuring market position in such markets.

11. Market Definition and Data

Data can affect market definition in two different ways.

First — Data can be a competitive input

A platform may require access to:

• consumer data;
• transaction data;
• behavioural data;
• location data;
• search data.

Second — Data can strengthen market power

A dominant platform may accumulate data because of its existing user base.

This creates a feedback loop:

Users → Data → Better service/targeting → More users → More data

This can make market entry increasingly difficult.

German law expressly permits consideration of access to competitively relevant data in the assessment of market position.

12. Market Definition and Ecosystems

Traditional competition analysis often assumes:

One product → one market.

Digital ecosystems challenge this assumption.

For example:

Operating system
↓
App store
↓
Payment system
↓
Advertising system
↓
Cloud services
↓
Consumer data

Each layer may potentially constitute:

• a separate relevant market;
• an adjacent market;
• an aftermarket;
• a complementary market;
• part of an integrated ecosystem.

German competition law therefore increasingly examines inter-market relationships, especially when applying § 19a.

13. Traditional SSNIP Test and Its Limitations

The traditional methodology asks whether a hypothetical monopolist could profitably impose a Small but Significant and Non-transitory Increase in Price (SSNIP).

However, German competition law does not mechanically depend upon SSNIP.

It may be problematic where:

• the price is zero;
• quality is the principal competitive parameter;
• data is exchanged instead of money;
• markets are rapidly changing;
• innovation is more important than current price;
• network effects create strong feedback mechanisms.

In such circumstances, the authority may examine quality substitution, switching behaviour, innovation and other competitive parameters.

14. Market Definition Versus Market Power

These concepts must be distinguished.

Market definition

Answers:

Where does competition take place?

Market power

Answers:

How much competitive constraint does the undertaking face within that market?

Dominance

Answers:

Does the undertaking possess sufficient market power to qualify as dominant under § 18 GWB?

Thus:

Relevant market → market shares/competitive constraints → market power → dominance → abuse/merger assessment

Market definition is therefore a tool, not the ultimate objective of German competition law.

15. Key Case-Law Principles at a Glance

16. Overall Legal Position

German competition law has moved from a relatively conventional price–product–geography model towards a more flexible economic assessment.

The central developments are:

1. Demand-side substitution remains fundamental.
2. Geographic markets depend on actual competitive conditions.
3. Market shares remain important but are not determinative.
4. Zero-price services can constitute relevant markets.
5. Multi-sided platforms require special treatment.
6. Network effects can substantially influence market boundaries and power.
7. Data can constitute an important competitive resource.
8. Switching costs can limit effective substitution.
9. Digital ecosystems may involve multiple interconnected markets.
10. § 19a GWB allows German competition law to address cross-market digital power even where conventional single-market dominance analysis is insufficient. 

Conclusion

Market definition in German competition law is a functional economic exercise designed to identify the competitive constraints actually faced by an undertaking. §§ 18 and 19 GWB provide the traditional framework, while § 18(3a) and § 19a GWB adapt that framework to networks, multi-sided platforms and digital ecosystems.

The jurisprudence demonstrates an important evolution. EDEKA/Kaiser’s Tengelmann illustrates the importance of highly local geographic markets; Facebook demonstrates that zero-price digital services can constitute markets; and Amazon shows how German law can identify a specific platform service for a particular group of users as the relevant market. The result is a market-definition methodology that increasingly focuses not merely on prices and turnover, but also on data, network effects, switching costs, innovation, intermediation and ecosystem dependence.