Editing Monopoly (section)

=== Establishing dominance ===
First, it is necessary to determine whether a company is dominant, or whether it behaves “to an appreciable extent independently of its competitors, customers, and ultimately its consumers.” Establishing dominance is a two-stage test. The first thing to consider is market definition, which is one of the crucial factors of the test.<ref>Case 6/72 ''Europemballage Corpn and Continental Can Co Inc v Commission'' [1973] ECR 215</ref> This includes the relevant product market and the relevant geographic market.

==== Relevant product market ====
As the definition of the market is of a matter of interchangeability, if the goods or services are regarded as interchangeable then they are within the same product market.<ref>Case 6/72 ''Europemballage Corpn and Continental Can Co Inc v Commission [1973]'' ECR 215</ref> For example, in the case of ''United Brands v Commission'',<ref name=":0">{{citation|title=Case 27/76: United Brands Company and United Brands Continentaal BV v Commission of the European Communities (ECR 207)|date=14 February 1978|url=http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!CELEXnumdoc&lg=en&numdoc=61976J0027}}</ref> it was argued in this case that bananas and other fresh fruit were in the same product market and later on dominance was found because the special features of the banana made it could only be interchangeable with other fresh fruits in a limited extent and other and is only exposed to their competition in a way that is hardly perceptible. The demand substitutability of the goods and services will help in defining the product market and it can be access by the 'hypothetical monopolist' test or the 'SSNIP' test.<ref>The Unilateral Conduct Working Group, ''‘[http://www.internationalcompetitionnetwork.org/uploads/library/doc752.pdf ICN's Unilateral Conduct Workbook Chapter 3] {{Webarchive|url=https://web.archive.org/web/20180508121929/http://www.internationalcompetitionnetwork.org/uploads/library/doc752.pdf |date=8 May 2018 }}’ [2011] <'' <nowiki>http://www.internationalcompetitionnetwork.org/uploads/library/doc752.pdf</nowiki>> last accessed 4 May 2018</ref>

==== Relevant geographic market ====
It is necessary to define it because some goods can only be supplied within a narrow area due to technical, practical or legal reasons and this may help to indicate which undertakings impose a competitive constraint on the other undertakings in question. Since some goods are too expensive to transport where it might not be economic to sell them to distant markets in relation to their value, therefore the cost of transporting is a crucial factor here. Other factors might be legal controls which restricts an undertaking in a Member States from exporting goods or services to another.

Market definition may be difficult to measure but is important because if it is defined too narrowly, the undertaking may be more likely to be found dominant and if it is defined too broadly, the less likely that it will be found dominant.

==== Market shares ====
As with collusive conduct, market shares are determined with reference to the particular market in which the company and product in question is sold. It does not in itself determine whether an undertaking is dominant but work as an indicator of the states of the existing competition within the market. The [[Herfindahl–Hirschman index|Herfindahl–Hirschman Index]] (HHI) is sometimes used to assess how competitive an industry is. It sums up the squares of the individual market shares of all of the competitors within the market. The lower the total, the less concentrated the market and the higher the total, the more concentrated the market.<ref name=":1">Whish R and others, ''Competition Law'' (8th Edition, OUP 2015)</ref> In the US, the [[merger guidelines]] state that a post-merger HHI below 1000 is viewed as not concentrated while HHIs above that will provoke further review.

By European Union law, very large market shares raise a presumption that a company is dominant, which may be rebuttable. A market share of 100% may be very rare but it is still possible to be found and in fact it has been identified in some cases, for instance the ''AAMS v Commission'' case.<ref>AAMS v Commission [2001] ECR II-3413</ref> Undertakings possessing market share that is lower than 100% but over 90% had also been found dominant, for example, Microsoft v Commission case.<ref>''Microsoft Corporation v Commission'' [2004]</ref> In the ''AKZO v Commission'' case,<ref>Case C- 62/86 ''AKZO Chemie BV v Commission'' [1991] ECR I −3359</ref> the undertaking is presumed to be dominant if it has a market share of 50%. There are also findings of dominance that are below a market share of 50%, for instance, ''United Brands v Commission'',<ref name=":0" /> it only possessed a market share of 40% to 45% and still to be found dominant with other factors. The lowest yet market share of a company considered "dominant" in the EU was 39.7%. If a company has a dominant position, then there is a special responsibility not to allow its conduct to impair competition on the common market; however, these will all falls away if it is not dominant.<ref>Case T-203/01 ''Michelin v Commission'' [2003]</ref>

When considering whether an undertaking is dominant, it involves a combination of factors. Each of them cannot be taken separately as if they are, they will not be as determinative as they are when they are combined.<ref name=":2">Guidance on Article 102 Enforcement Priorities [2009]</ref> Also, in cases where an undertaking has previously been found dominant, it is still necessary to redefine the market and make a whole new analysis of the conditions of competition based on the available evidence at the appropriate time.<ref>''Coca-Cola Co v Commission'' [2000] ECR II- 1733</ref>

==== Other related factors ====
According to the Guidance, there are three more issues that must be examined. They are actual competitors that relates to the market position of the dominant undertaking and its competitors, potential competitors that concerns the expansion and entry and lastly the countervailing buyer power.<ref name=":2" />
* '''Actual Competitors'''

Market share may be a valuable source of information regarding the market structure and the market position when it comes to accessing it. The dynamics of the market and the extent to which the goods and services differentiated are relevant in this area.<ref name=":2" />
* '''Potential Competitors'''

It concerns with the competition that would come from other undertakings which are not yet operating in the market but will enter it in the future. So, market shares may not be useful in accessing the competitive pressure that is exerted on an undertaking in this area. The potential entry by new firms and expansions by an undertaking must be taken into account,<ref name=":2" /> therefore the barriers to entry and barriers to expansion is an important factor here.
* '''Countervailing buyer power'''

Competitive constraints may not always come from actual or potential competitors. Sometimes, it may also come from powerful customers who have sufficient bargaining strength which come from its size or its commercial significance for a dominant firm.<ref name=":2" />