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EUROPEAN COMMISSION DG Competition - page 17 / 113

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If barriers to expansion and entry low, market share is poor indicator

34. If the barriers to expansion faced by rivals and to entry faced by potential rivals are low, the fact that one undertaking has a high market share may not be indicative of dominance. Any attempt by an undertaking to increase prices above the competitive level would attract expansion or new entry by rivals thereby undermining the price increase.

Speed or likely entry or expansion 35. In assessing whether expansion or entry has been, would have been or is likely to be timely, the Commission will look at whether any such expansion or entry has been or would have been or will be sufficiently immediate and persistent to prevent the exercise of substantial market power. The appropriate time period depends on the characteristics and dynamics of the market. The period of time needed for undertakings already on the market to adjust their capacity can be used as a yardstick to determine this period. Expansion or entry which is not of sufficient scope and magnitude is not likely to constitute an effective constraint on the undertaking concerned. Small-scale entry, for instance into some market ‘niche’, may not be considered

sufficient.

History of Industry 36. The Commission will look carefully at the history of the industry when assessing barriers to expansion or entry. It is not likely that the Commission will find barriers to expansion and entry in an industry that has experienced frequent and successful examples of entry. On the other hand if previous attempts to expand in or enter into the market have been unsuccessful,

perhaps due to deterring behaviour by incumbents, then expansion and entry would seem less likely to have constituted an effective constraint.

Entry likely if others have production facilities needed 37. Entry may be particularly likely if suppliers in other markets already possess production facilities that could be used to enter the market in question, thus reducing the sunk costs of entry.

Expansion or entry profitable if…

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