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Relevant geographic market

Relevant geographic market is a geographical territory in which competition conditions in a relevant market of a product are sufficiently the same for all participants in such market and therefore this territory can be separated from other territories.

A relevant geographic market comprises the area in which the firms concerned are involved in the supply of products or services and in which the conditions of competition are sufficiently homogeneous.

The geographical boundaries of the relevant market can be similarly defined. Geographic dimension involves identification of the geographical area within which competition takes place. Relevant geographic markets could be local, national, international or occasionally even global, depending upon the facts in each case.

Some factors relevant to geographic dimension are consumption and shipment patterns, transportation costs, perishability and existence of barriers to the shipment of products between adjoining geographic areas. For example, in view of the high transportation costs in cement, the relevant geographical market may be the region close to the manufacturing facility.

The principle of geographic market is similar to that of relevant product market. The geographic market is defined by purchasers views of the substitutability or interchangeability of products made or sold at various locations. In particular, if purchasers of a product sold in one location would, in response to a small but significant and non-transitory increase in its price, switch to buying the product sold at another location, then those two locations are regarded to the in the same geographic market, with respect to that product. If not, the two

locations are regarded to be in different geographic markets.

Relevant geographic market determination

The relevant geographic market is determined by the Competition Authority having regard to all or any of the following factors:

*)regulatory trade barriers;

*)local specification requirements;

*)national procurement policies;

*)adequate distribution facilities;

*)transport costs;

*)language;

*)consumer preferences;

*)need for secure or regular supplies or rapid after-sales services.

Barriers to market entry include administrative decisions by State agencies, legal provisions relating to conditions of manufacturing and delivery, legal professional standards, trade policy (tariffs, quotas, antidumping measures etc), financial barriers laid down by the State and barriers in terms of techniques, technologies and intellectual property rights.

This page was last modified on 18 January 2018 at 05:53.

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