Substitutability

Substitutability in the European Union Law

Concept of Substitutability provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Measure of the extent to which products may be seen as inter-changeable from the viewpoint of producers or consumers. A firm's pricing policy for a specific product is disciplined if consumers have the possibility to buy another product, which they judge as being equivalent by its nature, use and/or price (demand-side substitution). Additional competitive constraint on the firm may stem from produc-ers of other products capable of switching their production without delay towards the product in question at negligible cost and willing to enter into competition on the market segment concerned (supply-side substitution). Product substitutability is an important element in defining the relevant product market ( Relevant market).