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EUROPEAN COMMISSION DG Competition - page 16 / 113

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considered to be in a dominant position.35 However, undertakings with market shares of no more than 25 % are not likely to enjoy a (single) dominant position on the market concerned.36

Strength of indication depends on facts & market power 32. The strength of any indication based on market share depends on the facts of each individual case. Market share is only a proxy for market power, which is the decisive factor. It is therefore necessary to extend the dominance analysis beyond market shares, especially when taking into account the difficulty of defining relevant markets in Article 82 cases, cf. section 3 above.

Product Differentiation 33. The importance of market shares may be qualified by an analysis of the degree of product differentiation in the market. Products are differentiated when they differ in the eyes of consumers for instance due to brand image, product features, product quality, level of service or the location of the seller. The level of advertising in a market may be an indicator of the firms’ efforts to differentiate their products. When products are differentiated the competitive constraint that they impose on each other is likely to differ even where they form part of the same relevant market. Substitutability is a question of degree. In assessing the competitive constraint imposed by rivals, it must therefore be taken into account what is the degree of substitutability of their products with those offered by the allegedly dominant undertaking. It may be that a rival with 10% market share imposes a greater competitive constraint on an undertaking with 50% market share than another rival supplying 20% of the market. This may for instance be the case where the undertaking with the lower market share and the allegedly dominant undertaking both sell premium branded products whereas the rival with the larger market share sells a bargain brand.

4.2.2 BARRIERS TO EXPANSION AND ENTRY

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36

The calculation of market shares depends critically on market definition. It must be emphasised that the Commission does not necessarily accept the market definitions proposed by the allegedly dominant undertaking or by third parties. Recital 32 of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) , OJ L 24, 29.01.2004, pp. 1-22.

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