In most cases, the existence of a specific competitive relationship in the sense of substitution competition will be decisive for the question of whether two entrepreneurs are competitors under the standards of competition law. Accordingly, there are many court decisions and special features to consider. Basically, substitution competition means that the products of the companies involved are interchangeable, i.e. substitutable, from the perspective of the end user (usually the consumer).
These products are interchangeable if they can be exchanged with each other in terms of product, geography and time. In other words, the companies involved must be active with their products on the same relevant product, geographic and temporal market.
The relevant product market in competition law
Substitutability in material terms is, like the following criteria, a question of the individual case, whereby the requirements for this substitutability must not be viewed too strictly. Otherwise, the law on fair trading would be in danger of coming to nothing. In general, the specific commercial act, current and seriously expected future market conditions as well as current and future consumer habits must be taken into account when weighing up the individual case.
When determining substitutability from a material point of view, it is important that the goods or services offered are so close together in terms of their intended use, their characteristics and their price that an average consumer who is reasonably well informed and reasonably observant and circumspect would seriously consider them to be interchangeable. This applies even if the customers only assume that they are interchangeable, although this does not actually exist.
The relevant geographic market in competition law
The relevant geographic market must also be assessed on a case-by-case basis. The areas in which the companies involved offer their goods or services must at least overlap. On the one hand, it is possible that the relevant geographic market of an undertaking is locally limited (e.g. smaller retail outlets). On the other hand, the relevant geographic market can also encompass the entire federal territory (e.g. mail order companies that deliver nationwide).
The market position of the companies (awareness, size, etc.), their type of distribution (branch sales, direct sales, e-commerce, etc.) and the type, content and geographical scope of any advertising are therefore particularly important for the assessment of the relevant geographic market.
The temporally relevant market in competition law
The question of whether the products of different entrepreneurs are also substitutable in terms of time is almost irrelevant in practice. This applies in particular to products that are only offered or demanded at a very specific time or for a limited period of time. Alternatively, this problem can also arise if certain events either cause demand to increase enormously or supply to (almost) come to a complete standstill.
Identical relevant market for entrepreneurs leads to competitor status
If an identical relevant product, geographic and temporal market is established between two companies, substitution competition can be assumed. This regularly means that both companies are also competitors within the meaning of competition law, which is important for many subsequent questions (e.g. standing to sue).