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Barriers to entry meaning

What does Barriers to entry mean?
Barriers to entry are the practical and economic obstacles that make it difficult, slow or costly for new firms to enter a market and compete with incumbents. The term is not defined in statute; it is an economic concept used by the UK Competition and Markets Authority (CMA), the Irish Competition and Consumer Protection Commission (CCPC) and the European Commission when analysing market power. Barriers to entry are central to assessments of dominance and abuse: in the UK under the Chapter II prohibition in section 18 of the Competition Act 1998, and in the EU (including Ireland) under article 102 TFEU. They are also examined in merger control and market investigations. Typical barriers include high sunk costs or capital requirements; regulatory or licensing hurdles; intellectual property or exclusive rights; restricted access to essential inputs, data or infrastructure; economies of scale and scope; network effects; customer switching costs; and long-term exclusivity or vertical integration that forecloses access. Usage and legal relevance are broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland. Post‑Brexit, Article 102 no longer applies in UK cases but remains applicable in Ireland and to EU proceedings; EU case law is often persuasive.
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View the related Checklists about Barriers to entry

CHECKLISTS
Market power assessment checklist: market shares, HHI, entry and expansion barriers, switching and capacity constraints, and countervailing buyer power (mergers and dominance)

This checklist summarises the factors relevant to assessing an undertaking’s market power. Such analysis is pertinent not only to mergers but also, for example, to determining whether an undertaking is to be regarded as dominant. Does an undertaking have market power? When evaluating market power, the following should be considered. Not every factor needs to be applied in each instance; ultimately, a case-by-case assessment, grounded in the characteristics of the relevant market, is required. Market position of undertaking and its competitors Calculation of market shares is ordinarily the starting point of any assessment The larger the market share, and the longer it is sustained, the greater the likelihood that the undertaking holds a dominant position 50% market share or more: generally evidence of the existence of a dominant market position 40–50% market share: may indicate market power, but this depends on additional considerations Below 40% market share: dominance is unlikely... ...

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CHECKLISTS
UK franchising: legal and commercial due diligence checklist for prospective franchisors

This checklist sets out various considerations and questions for a potential franchisor when weighing up the adoption of a franchise business model. Initial considerations Is the business model franchisable? Certain models may not lend themselves to franchising; for example, a business with low margins, where customer custom is founded on allegiance to a particular individual, or where the model is restricted to a very specific locality indeed. Who are the main competitors in the market and what market share do they hold? A franchisor will need to assess the barriers to entry into the market, as well as the cost of acquiring a market share in that market. Who is the ideal customer for the product or service? As the franchise model lets businesses scale quickly, the franchisor must be sure that this ideal customer can be identified in many different and varied locations. Has a SWOT analysis been completed? SWOT is the acronym for a strategic planning method used to evaluate the...

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NEWS
UK competition law round-up: CMA provisional cloud findings favour DMCC SMS route; Growth & Investment Council Terms of Reference; Subsidy Advice Unit on film studio rates relief

Market studies CMA publishes provisional findings in cloud services market investigation; recommends new digital markets investigation The CMA has issued provisional conclusions from its market investigation into the provision of public cloud infrastructure services in the UK. The authority made a market investigation reference in October 2023, following a market study of the sector. In that study, the CMA judged there were reasonable grounds to suspect that a feature, or a combination of features, in the market for the UK supply of public cloud infrastructure services may prevent, restrict, or distort competition. It has provisionally determined that high levels of overall concentration, together with barriers to entry and expansion, have conferred significant unilateral market power on Amazon Web Services (AWS) and Microsoft across the UK cloud services market. The CMA also provisionally considers this market power to be further reinforced by various commercial barriers, notably egress fees, as well as by technical barriers, including the practical complications involved in effectively operating multi-cloud services. In addition, the authority has provisionally...

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NEWS
International trade update: UK-South Korea FTA finalised; government response on Windsor Framework; EU CBAM expansion; China’s WTO-alignment regime; TRA biodiesel duties maintained; HMRC customs guidance highlights

In this issue: Free trade agreements WTO Trade in goods Customs Daily and weekly news alerts New and updated content International Trade Highlights 2025/2026 International Trade Highlights 2025/2026 Free trade agreements Department for Business and Trade announces finalised UK-South Korea free trade agreement On 15 December 2025, the Department for Business and Trade confirmed the UK and South Korea had concluded a free trade deal, forecast to add £400m to UK services exports and safeguard £2bn of UK exports from tariff rises. The pact preserves duty-free access on 98% of tariff lines, aligning with the EU’s terms with South Korea, and widens prospects for UK companies in an import market predicted to expand by 26% by 2035. Updated rules of origin ease duty-free entry and back broader supply chain flexibility for automotive and pharmaceutical industries, while enhancing UK reach into South Korea’s growing financial market, building on £1.1bn in financial and insurance exports in 2024....

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NEWS
A practitioner’s guide to the UK Innovator Founder route: innovation and viability tests, endorsement body scrutiny, legacy endorser risks, costs, timelines and realistic pathways to settlement

What constitutes ‘Innovative’? For the Innovator Founder visa, innovation means a business concept that is original, distinct from existing offerings, sustainable, and capable of scaling. Applicants need to evidence that their proposal is: innovative—a concept that does not duplicate UK businesses and addresses a defined problem or gap in the market viable—a venture that can operate sustainably, supported by a credible revenue model and realistic financial forecasts scalable—plans that indicate potential for job creation and growth across national or international markets Practitioners should note—and be able to reference—the core innovation principles set out in the Scale-up and Innovator Founder visa endorsing bodies caseworker guidance (v.04/2023, p.10). These require that: the business proposition demonstrates a clear, persuasive unique selling proposition the proposition is not easily copied and/or shows reasonable barriers to market entry against replication of the innovation the innovative element is fundamental to the proposed business’s success Where the innovative component, and its...

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PRACTICE NOTES
EU General Court dismisses ThyssenKrupp’s appeal against Commission’s prohibition of Tata Steel/ThyssenKrupp JV: EEA market scope, limited imports; arguments on substitutability, buyer power rejected; remedies lawfully assessed.

CASE HUB NOTE-appeal lodged before the Court of Justice in Case C- 581/22 ARCHIVED - this archived case hub records the position as at the judgment of 22 June 2022; it is no longer maintained. See further, timeline. Case facts Outline Appeal before the General Court seeking annulment of the Commission’s decision of 11 June 2019 prohibiting the planned joint venture between Tata Steel and ThyssenKrupp AG (Case M.8713). Latest development On 22 June 2022, the General Court delivered its ruling, dismissing the appeal in full. It held that: the Commission has a margin of discretion in conducting its economic assessments; in any event it clearly explained its reasoning and is not obliged to run every form of econometric test; technical feasibility is a necessary, but not sufficient, condition for supply-side substitutability, and it rejected pleas concerning geographic market definition, the role of imports, and the analysis of barriers to entry and expansion and buyer power; the proposed remedies...

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PRACTICE NOTES
Fintech in Debt Capital Markets: Tokenised/Digital Bonds, AI and Cryptoasset ETNs—Legal and Regulatory Developments, Sandboxes and Industry Standards

In recent years, most sectors have felt the effects of innovation and emerging technology. Much of this progress is driven by the aim to lower costs and enhance efficiency. So far, disruption within the debt capital markets has been limited, chiefly due to significant entry barriers such as capital requirements and regulatory scrutiny. This is changing, however, as these markets begin to adopt new technologies... What is fintech? There is no single agreed definition of ‘fintech’, but the term is commonly used to capture technology-enabled innovation within financial services. cryptocurrencies/cryptoassets (eg bitcoin) blockchain or distributed ledger technology (DLT) artificial intelligence (AI) and machine learning (ML) crowd funding platforms ‘telematics-based’ insurance (eg where data is collected to monitor driving) mobile banking Why is fintech being explored for the debt capital markets? Technological innovation is increasingly touching the debt capital markets for several key reasons. These include: a drive for cost efficiency regulatory reasons...

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PRACTICE NOTES
Practical Interactive Collections for Banking and Finance Lawyers: Loans, LMA, LIBOR Transition, Execution, Sanctions, ESG, EMIR, MAR, MiFID II and UK/EU Prospectus Regulation

Banking & Finance collections These collections are comprehensive, interactive resources that help users pinpoint and tackle concepts and frequent issues in defined topics. Each section within a collection provides practical, section-specific guidance. Our banking & finance collections comprise: The Loan transaction collection is a guide to loan transactions, offering a high-level view of each stage and the tasks lawyers must complete at every phase. It includes links to checklists, precedents (with drafting notes), forms, Practice Notes, and explains the key drafting and negotiating points to weigh in loan transactions The Loan Market Association (LMA) collection is an interactive guide to the LMA, the authoritative voice of the syndicated loan market across Europe, the Middle East and Africa (EMEA). It collaborates with lenders, law firms, borrowers and regulators to educate the market on the benefits of the syndicated loan product and to reduce barriers to entry for new participants...

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