Brands & Dominant Market Shares

What Does "Dominant Market Position" Mean?

In the European Union, having a large market share is not illegal. Building a strong brand, winning customers and growing your category presence is exactly what good business looks like. But once a brand holds a dominant position in a given market, the rules around how it can trade with retailers change significantly.

Under EU competition law, dominance is generally presumed when a company holds a market share of 40% or above in a relevant market - though it can arise at lower thresholds depending on the competitive landscape. The European Commission and national competition authorities assess dominance by looking at market share alongside factors such as barriers to entry, buyer power and the strength of remaining competitors.

The key legislation is Article 102 of the Treaty on the Functioning of the European Union (TFEU) - formerly Article 82 of the EC Treaty. Article 102 does not punish success. What it prohibits is the abuse of a dominant position.

What Does Article 102 Actually Prohibit?

Article 102 targets conduct by dominant companies that harms competition or exploits trading partners. In the context of brand-retailer relationships, the most relevant prohibitions include:

Unfair Trading Conditions

A dominant brand cannot impose unfair purchase or selling prices, or other unfair trading conditions, on retailers. This includes excessive pricing, but also terms that are disproportionately one-sided - for example, forcing a retailer to accept unreasonable payment terms, return policies or promotional obligations as a condition of supply.

Tying and Bundling

A dominant brand cannot make the supply of one product conditional on the retailer also purchasing a different product - unless there is a genuine technical or commercial justification. For example, requiring a retailer to stock a full product range in order to access a single high-demand SKU could constitute an abuse.

Discriminatory Terms

Applying dissimilar conditions to equivalent transactions with different retailers - putting some at a competitive disadvantage - can be an abuse. If a dominant brand offers significantly better pricing, promotional support or supply terms to one retailer over another for the same products and volumes without objective justification, this may fall foul of Article 102.

Refusal to Supply

In certain circumstances, a dominant brand's refusal to supply a retailer can constitute an abuse - particularly where the product is essential for the retailer to compete in a downstream market and there is no objective justification for the refusal.

Loyalty Rebates and Exclusivity

Offering rebates that are conditional on a retailer purchasing all or most of its requirements from the dominant brand - rather than being based on volume or efficiency savings - can foreclose competitors from the market and constitute an abuse.

What Counts as a "Market"? It's Not Always Clear

Before dominance can be assessed, the relevant market must be defined - and this is one of the most debated and uncertain areas of competition law.

The European Commission defines the relevant market along two dimensions:

• Product market - which products are interchangeable or substitutable from the consumer's point of view? For example, is the market "gaming headsets" or "audio accessories"? Is it "premium lager" or "beer" or "alcoholic beverages"? The narrower the definition, the higher a brand's apparent market share.
• Geographic market - is the market national, regional or EU-wide? A brand might hold 50% of a category in Sweden but only 8% across the EU. Which market matters?

In practice, market definition is rarely straightforward. The Commission uses tools like the SSNIP test (Small but Significant Non-transitory Increase in Price) - asking whether a hypothetical 5–10% price increase would cause consumers to switch to an alternative product. But even this is open to interpretation, and the boundaries often depend on the specific facts of each case.

This uncertainty creates a real challenge for brands. A company may not consider itself dominant - but a competition authority, using a narrower market definition, might reach a different conclusion. Brands that hold strong positions in specific product categories, niche segments or individual national markets should be especially aware that dominance can apply even when their overall business is relatively small.

The lack of a clear, universal definition means that brands need to err on the side of caution. If there is any possibility that you hold a dominant position in a plausible market definition, the safest approach is to behave as though Article 102 applies.

How Eebz Approaches Market Definition

Because legal market definition is so uncertain, Eebz has built its own practical framework to help brands understand where they may hold a dominant position. We use two concepts: market and industry, assessed on a per-country basis.

• Market (Eebz definition) - the narrower product segment in which a brand competes directly. This is closer to how a competition authority might define the relevant market. For example, Apple has a dominant position in the market for iOS mobile phones.
• Industry (Eebz definition) - the broader product category that encompasses multiple markets. Continuing the example, iOS mobile phones and Android mobile phones both sit within the industry of Mobile Phones. At the industry level, Apple's share looks very different.

This distinction matters because dominance - and the legal obligations that come with it - depends entirely on how narrowly or broadly the market is drawn. A brand that holds 25% of an industry might hold 60% of a specific market within it.

Eebz bases its dominant market position reporting on share of shelf at the industry level, per country. We deliberately use the broader industry definition as our baseline because it provides a more conservative and defensible view of a brand's position. If a brand's share of shelf is significant at the industry level, it is almost certainly significant at the narrower market level too - meaning the brand and its sales team should be operating with Article 102 obligations firmly in mind.

By measuring share of shelf - the brand's visibility and presence on retailer digital shelves relative to the total industry - Eebz gives brands a real-time, practical indicator of where dominant position thresholds may apply. This is not a legal determination - only a competition authority or court can formally define a relevant market. But it gives brands and their sales teams an informed starting point for understanding their exposure and making better decisions about how they trade with retailers.

What About Pricing Discussions?

This is where things get particularly sensitive for brand sales teams.

Article 101 TFEU (formerly Article 81) prohibits anti-competitive agreements between undertakings. In the pricing context, this means:

• Resale Price Maintenance (RPM) - a brand cannot fix the price at which a retailer sells to consumers. Setting a minimum resale price is illegal. Maximum and recommended prices are permitted, but only where they do not amount to a fixed or minimum price in practice.
• Price coordination - any exchange of pricing information between competitors, or arrangements that align retail pricing across different retailers, is prohibited.
• Hub-and-spoke arrangements - where a brand acts as an intermediary to facilitate pricing alignment between competing retailers (even indirectly), this can constitute an infringement of Article 101.

For brand sales teams, the practical risk is real. A conversation with a retailer about recommended retail prices, promotional pricing or competitor pricing can quickly enter legally sensitive territory - particularly if the brand holds a dominant position.

How Does This Affect Day-to-Day Selling?

For Key Account Managers and sales teams at brands with significant market shares, these rules create a set of practical constraints:

• Be careful with pricing language. Recommend, don't dictate. Never imply that supply, promotional support or terms are conditional on the retailer maintaining a particular resale price.
• Treat retailers consistently. Differences in terms should be justifiable by objective factors - volume, logistics, service level - not by favouritism or leverage.
• Don't share competitor information. Never disclose what one retailer is paying or charging to another. Avoid any conversation that could be interpreted as coordinating pricing across retailers.
• Document everything. In the event of a competition authority investigation, clear records of what was discussed and agreed protect both the brand and the retailer.
• Know when to escalate. When a conversation moves into territory that touches on resale pricing, exclusivity or supply conditions, involve your legal team before making commitments.

The Consequences of Getting It Wrong

Competition law enforcement in the EU carries serious consequences:

• Fines of up to 10% of global annual turnover for the undertaking concerned.
• Director disqualification and personal liability in some member states.
• Private damages claims from retailers or competitors who have been harmed.
• Reputational damage that can permanently affect retailer relationships and brand trust.

The European Commission has historically been active in enforcing these rules, and national competition authorities across EU member states have their own enforcement powers and priorities.

Where Ada Fits In

This is exactly why Ada's core values include both Legal & Regulatory Compliance and Escalation & Human Handoff.

Ada is designed to operate within these legal boundaries. She does not engage in resale price maintenance, does not share one retailer's pricing with another, and does not impose discriminatory terms. But more importantly, when a conversation reaches a point where legal judgement is required - a pricing negotiation, an exclusivity discussion, a supply dispute - Ada escalates immediately to a human agent at the brand.

AI-powered selling must be built on a foundation of legal compliance. For brands with dominant market positions, the stakes are too high for anything less.

This article is for informational purposes and does not constitute legal advice. Brands should consult qualified legal counsel for guidance on competition law compliance in their specific markets.

Have thoughts on how AI sales agents should handle competition law compliance? We are actively inviting brands, retailers, sales professionals and policymakers to help shape Ada's values. Get in touch or read Ada's full core values.