Market dominance is the foundational analytical concept for the application of the framework prohibiting abuse of dominant position under the Competition and Anti-Monopoly Law No. 14 of 2010. A finding of dominance is a substantive precondition to the application of the abuse framework, with the substantive analytical approach engaging both legal and economic considerations. The framework adopts the substantive definition of dominance reflecting international competition principles, calibrated to the specific characteristics of the Iraqi market. The article addresses the analytical framework for dominance assessment, with the abuse framework itself addressed in the following article.
Relevant Market Definition
The substantive market definition is a fact-specific exercise engaging substantive analytical considerations, with implications for the assessment of market position. The relevant market is the substantive market within which the operator’s position is assessed. The relevant market engages two dimensions:
- Relevant product or service market, defined by reference to products or services that are substitutable for the relevant product or service
- Relevant geographic market, defined by reference to the geographic area within which the conditions of competition are sufficiently homogeneous
Product Market Analysis
The substantive product market definition supports the subsequent analysis of market position, with the breadth of the market materially affecting the substantive conclusions. Product market analysis engages substantive considerations:
- Demand-side substitutability, addressing whether consumers would substitute alternative products in response to a small but significant non-transitory increase in price (SSNIP test principles)
- Supply-side substitutability, addressing whether other producers could readily switch to producing the relevant product
- Specific characteristics of the products including functional purpose, technical specifications, and consumer perception
- Price relationships between candidate products supporting or refuting substitution
- Marketing and branding considerations affecting substitution
- Specific consumer segments potentially constituting distinct markets
Geographic Market Analysis
The geographic market may be local, regional, national, or broader, with the substantive determination depending on the substantive analysis of the specific market. Geographic market analysis engages:
- Substantive consideration of where consumers can obtain the relevant product or service
- Transport costs affecting the practical geographic reach
- Trade flows including imports and exports
- Regulatory barriers including customs duties, technical regulations, and licensing requirements
- Consumer preferences affecting geographic substitution
- Practical considerations including delivery times and service requirements
- Specific Iraqi considerations including the substantive economic distinction between the federal Iraqi market and the Kurdistan Region market for certain products
Market Share Assessment
Market share is the principal quantitative indicator of market position. The substantive assessment engages:
- Calculation of market share by reference to sales value, sales volume, capacity, or other appropriate measures
- Aggregation of market share across all sales by the operator within the relevant market
- Calculation over an appropriate time period reflecting market dynamics
- Consideration of trends in market share supporting or refuting substantive conclusions
- Comparison with the market shares of competitors
- Substantive consideration of market share differences
Market share thresholds engaged in the competition framework typically support substantive presumptions about market position:
- Very high market shares (substantially above 50%) typically support substantive presumptions of dominance
- High market shares (between 40% and 50%) support substantive consideration of dominance subject to broader analysis
- Moderate market shares may engage dominance findings depending on broader factors
- Low market shares typically defeat substantive findings of dominance
Indicators Beyond Market Share
Substantive indicators of market position beyond market share include:
- Position of competitors and the substantive degree of competitive constraint they impose
- Barriers to entry affecting the prospect of new competitive entry
- Barriers to expansion affecting existing competitors’ ability to expand
- Countervailing buyer power affecting the operator’s ability to act independently
- Substantive efficiency advantages of the operator
- Vertical integration affecting the operator’s competitive position
- Network effects and broader market characteristics
- Specific historical conduct supporting or refuting dominance
- Innovation considerations in dynamic markets
Barriers to Entry
Barriers to entry are substantive considerations in dominance analysis:
- Capital requirements including investment necessary to enter the market
- Regulatory barriers including licensing requirements, sectoral authorisation, and product registration
- Intellectual property barriers including patents and trademarks
- Economies of scale supporting incumbent advantages
- Network effects creating substantive incumbent advantages
- Access to essential inputs
- Brand reputation and consumer loyalty
- Switching costs affecting consumer change
- Specific Iraqi market entry considerations including commercial agency arrangements under Law No. 79 of 2017
Countervailing Buyer Power
Countervailing buyer power engages the substantive ability of customers to constrain the operator’s market power:
- Customer concentration affecting bargaining power
- Switching capability of substantial customers
- Vertical integration prospects by customers
- Strategic importance of customers to the operator
- Specific arrangements supporting substantive customer power
Collective Dominance
Collective dominance engages the substantive consideration of multiple operators jointly holding a dominant position:
- Substantive structural conditions supporting collective dominance, including market concentration and similar competitive positions
- Substantive sustainability of coordinated conduct without explicit agreement
- Substantive transparency of conduct supporting coordination
- Substantive deterrence mechanisms supporting the maintenance of coordinated conduct
- Substantive absence of constraints from non-coordinated competitors and customers
Dynamic Markets
Dynamic markets engage substantive analytical considerations:
- Innovation cycles affecting substantive market position over time
- Technology transitions potentially disrupting incumbent positions
- Network effects in digital markets supporting substantive market power
- Multi-sided market characteristics in digital platforms
- Specific considerations for emerging market segments
- Substantive analytical adaptations supporting effective application of the framework
Dominance and Compliance
Operators with substantive market positions should engage with the dominance framework substantively:
- Substantive self-assessment of market position in markets engaging the operator’s activities
- Identification of markets where the operator may hold a dominant position
- Substantive compliance arrangements addressing the heightened obligations of dominant operators
- Specific training of personnel on the substantive obligations engaging dominant positions
- Documentation supporting subsequent demonstration of compliance
- Engagement with qualified counsel on borderline cases
How We Can Help
Etihad Law Firm advises on market dominance under Iraqi competition law, including the substantive analysis of market position, relevant market definition, market share assessment, broader dominance indicators, collective dominance considerations, compliance considerations for dominant operators, and the conduct of disputes engaging dominance findings.