DEFINITION
The Small but Significant and Non-Transitory Decrease in Quality (SSNDQ) test is used to identify relevant markets where products or services are offered at a zero price. It is mainly a qualitative test, as it examines whether consumers would switch to other options if the quality of a product or service decreases slightly, rather than relying only on numerical price calculations. It examines whether a hypothetical monopolist could profitably impose a small but significant and non-transitory deterioration in quality (rather than an increase in price) without losing customers to substitutes, thereby identifying the boundaries of the relevant product market in digital and multi-sided markets.1
Let us elaborate through an example. Suppose a competition authority is assessing the soft drink market in India. If the price of a particular soft drink were to increase slightly but the quality or taste also improved, consumers might still prefer it and continue purchasing it rather than switching to alternatives such as juices or flavoured water.
In applying the SSNDQ test, the authority would examine whether a small reduction in quality would cause consumers to switch to other products. If many consumers shift to alternatives when quality falls, those alternatives may be considered part of the same relevant market. This helps competition authorities define market boundaries by analysing how consumers respond to changes in quality rather than to price alone.
ORIGIN OF THE TERM
The SSNDQ test emerged as a conceptual adaptation of the “Small but Significant and Non-transitory Increase in Price” (SSNIP) test developed in the 1982 and 1992 US Merger Guidelines. As digital and zero-price markets expanded, scholars and competition authorities recognised that price-based market definition was inadequate where users “pay” with attention, data, or reduced privacy.
COMMENTARY
The SSNDQ test mirrors the logic of the traditional SSNIP test by asking whether a hypothetical monopolist could worsen non-price parameters of competition, such as quality, privacy protection, data usage terms, advertising load, speed, reliability, or innovation, without losing a sufficient number of users to make such degradation unprofitable. When users do not switch in response to a non-transitory quality decrease, the firm likely possesses market power, and the degraded service and its closest substitutes belong to the same relevant market.
In EU competition law, market definition and competitive assessment in digital markets increasingly rely on non-price parameters. In Google Search (Shopping), the Commission examined quality and relevance of search results and user experience rather than price in defining the relevant market and assessing competitive harm.2 In Google Android, the Commission similarly focused on choice, functionality, and innovation constraints in ecosystems characterised by zero-price services to users.3
In Facebook/WhatsApp,4 the Commission recognised privacy and data protection as dimensions of competition between social networking and messaging services but cleared the transaction primarily due to dynamic entry, multi-homing potential, and the absence of entrenched dominance, without a full SSNDQ-based blockage. Subsequently, the German Federal Cartel Office, in its Facebook abuse decision, treated excessive data collection and reduced user control as a deterioration in quality, consistent with an SSNDQ-type approach to market power and consumer harm.5
The Court of Justice has neither formally articulated nor explicitly endorsed the SSNDQ test as a doctrinal standard; its market definition jurisprudence (e.g., United Brands) accommodates non-price substitutability through qualitative assessments of product characteristics and interchangeability, without adopting a structured hypothetical monopolist framework like SSNDQ. In United Brands v Commission, the Court held that products belong to the same market where they are interchangeable by consumers by reason of characteristics, price and intended use, thereby allowing quality and functionality to be decisive where price is not.6
In the United States, the term SSNDQ is absent from judicial decisions, with courts relying on qualitative evidence of non-price effects. The 2010 and 2023 Merger Guidelines7 (agency policy, not binding precedent) acknowledge competition on quality, variety, and innovation. In digital platform litigation such as United States v Google and FTC v Meta, market definition and competitive effects analysis focus on user attention, data, and quality degradation rather than monetary price alone.8
In India, the application of the SSNDQ test remains a theoretical concept, largely confined to academic discourse rather than practical enforcement by the CCI. However, the concept of the relevant market has substantially evolved with the dynamic digital environment, prompting CCI to increasingly consider non-price factors such as quality degradation, user data access, and platform interoperability alongside traditional SSNIP tests.
In digital markets, defining the relevant market requires consideration of factors beyond price, as competition often occurs through quality, user experience, and access to user data rather than monetary transactions. For example, In Matrimony.com Ltd. and Consumer Unity and Trust Society v. Google LLC (Cases Nos. 7 and 30 of 2012, 2018)9CCI delineated separate markets for "online general web search services to users in India" and "online search advertising services to advertisers in India," because they served different sets of consumers and were not substitutable. The CCI, agreeing with the DG’s assessment, held that the two services were not substitutable due to differences in result generation and user behaviour. Although complementary for content providers, each side served a distinct purpose, showing that the two sides of a platform should be considered as separate markets to capture their unique competitive constraints.
In its 2021 WhatsApp privacy policy order (In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users, Case No. 01 of 2021)10,the CCI treated privacy as a non-price factor, viewing loss of privacy as a non-monetary harm comparable to a price increase, which reduces consumer welfare and reduces the quality of experience. Although the SSNDQ test has not been formally applied in India, these cases show that the CCI is increasingly considering non-price factors in digital markets, which aligns with the conceptual goals of the SSNDQ approach.
CRITICISM
However, despite its potential usefulness, SSNDQ poses certain methodological challenges. Quality is multi-dimensional and difficult to quantify; network effects and behavioural biases may limit user switching even in the presence of market power; and small degradations may not trigger immediate migration. Authorities, therefore, complement SSNDQ reasoning with evidence on switching costs, multi-homing, innovation rivalry, and data advantages.
In 2019, CUTS International conducted a primary study on the ride-sharing market in the Delhi-NCR region, applying the SSNIP and SSNDQ frameworks. The findings suggested that neither test is a substitute for the other.11 Hence, it is not appropriate for regulators to use SSNIP as a substitute test on digital platforms, as the two tests focus on different assessment criteria, resulting in different relevant markets. This distinction is particularly important for regulators in digital and AI-driven markets, which are highly dynamic and rapidly evolving. Assessing market power in such contexts may require combining SSNIP or SSNDQ tests with analyses of network effects, switching costs, data control, and multi-sided market dynamics. Nonetheless, the SSNDQ test has become a central conceptual tool for adapting market definition to digital and attention-based economies.
European Commission, Notice on the Definition of the Relevant Market [1997] OJ C372/5; European Commission, Draft Revised Market Definition Notice (2023)
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:31997Y1209(01)↩︎Google Search (Shopping) (Case AT.39740) Commission Decision (27 June 2017)
https://ec.europa.eu/competition/antitrust/cases/dec_docs/39740/39740_14996_3.pdf↩︎Google Android (Case AT.40099) Commission Decision (18 July 2018)
https://competition-cases.ec.europa.eu/cases/AT.40099↩︎
Facebook/WhatsApp (Case M.7217) Commission Decision (3 October 2014)
https://ec.europa.eu/competition/mergers/cases/decisions/m7217_20141003_20310_3962132_EN.pdf↩︎Bundeskartellamt, Facebook (B6-22/16, 6 February 2019)
https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Entscheidungen/Missbrauchsaufsicht/2019/B6-22-16.html↩︎United Brands Company and United Brands Continentaal BV v Commission (Case 27/76) EU:C:1978:22 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:61976CJ0027↩︎
U.S. Department of Justice and the Federal Trade Commission, ‘merger guidelines’ (2023) https://www.justice.gov/d9/2023-12/2023%20Merger%20Guidelines.pdf ; U.S. Department of Justice and the Federal Trade Commission, ‘Horizontal merger guidelines’ (2010)
https://www.justice.gov/atr/horizontal-merger-guidelines-08192010↩︎
United States v Google LLC (No 1:20-cv-03010, DDC) https://www.justice.gov/atr/us-and-plaintiff-states-v-google-llc-2023-trial-exhibits ; FTC v Meta Platforms Inc (No 1:20-cv-03590, DDC) https://www.ftc.gov/legal-library/browse/cases-proceedings/191-0134-facebook-inc-ftc-v-ftc-v-meta-platforms-inc.↩︎
Matrimony.com Ltd & Consumer Unity and Trust Society v Google LLC (Case Nos 07 & 30 of 2012) https://www.cci.gov.in/images/antitrustorder/en/07-and-3020121652434133.pdf↩︎
In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users (Suo Moto Case No 01 of 2021) https://www.cci.gov.in/images/antitrustorder/en/0120211652258503.pdf↩︎
An Evidence-Based Analysis of Relevant Market in Delhi-NCR Region, 2019
https://cuts-ccier.org/pdf/evidence-based-analysis-the-case-of-ride-sharing-in-delhi-national-capital-region.pdf↩︎
