The following is provided in the context of competition laws for educational purposes:
Some competitive practices are only prohibited if a company is dominant in the market in which the practice takes place (the “relevant market”).
An enterprise generally holds a dominant position when it can behave independently of competitors and consumers because of the economic features of a relevant market. Such features include geographical area, existing competitors and their strengths, market entry barriers (i.e. economies of scale, government regulations, state aid, import tariffs, intellectual property rights, ownership of natural resources, facilities, brand loyalty) and potential competitors, and products and services involved.
Example: An enterprise has a dominant position if it can adjust its prices without reference to market conditions.
Usually a company’s market share is determined by adding up the sales of all products that can be substituted for one another from a buyer’s perspective, in a particular geographical area, and then determining the sales percentage of each seller.
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