Definition of Barriers to Entry
In the FCA's Merger Guidelines, a Barrier to Entry is defined as the probability and extent to which potential competition hinders the ability of the incumbent to compete with other market players to a greater or lesser extent. The FCA's statement in the Merger Guidelines - arguably influenced by its view that Barrier to Entry is those which reduce competition - also applies to abuse of dominant position situations. The Finnish competition law defines a Barrier to Entry as an impediment to entry that has an effect on the constraining effect of potential competition. Barriers to Entry There are three types of Barriers to Entry identified in the Merger Guidelines: technical, economic, and legal. Intellectual property rights, production quotas set by the government, licenses, and type approvals are some of the legal Barriers to Entry. The high costs of entering or exiting the market, particularly in comparison to the expected revenues, maybe an economic Barrier to Entry. It is as...