MISUSE OF MARKET POWER Harperready Market Power Test Risk Scenarios How do you know if a company has market power? Take the survey below to see how much you know about market power, and explore practical risk mitigation options for common types of conduct. Is the company the largest in the market?YesNoMaybeA key factor when looking at market share is the size of the company relative to its competitors. The larger the company's size in the market, the higher the risk that it may have market power.Is the company’s next biggest competitor much smaller?YesNoMaybeIf the other competitors are much smaller, then the market leader is less likely to need to worry about them taking away its customers or winning new business. It is more likely to have market power.Is the industry in which the company operates concentrated?YesNoMaybeIndustries may be concentrated because there are only a few competitors (or only a few competitors that are large). If this is the case, the more likely it is that the companies in it will have market power.Does the market consider the company the uncontested market leader?YesNoMaybeLeadership may arise because of size, technology, quality, brand, or a combination of factors. Companies regarded as industry leaders are more likely to have market power. The stronger the leadership position, the higher the risk. Does the company consider itself the uncontested market leader?YesNoMaybeWhile all companies present themselves as “leaders” for marketing purposes, if the company also identifies itself as a leader in internal communications, there is a higher risk that those statements will be taken at face value.Does the company operate in a mature industry?YesNoMaybeThe more mature the industry, the more likely that larger players in the industry could have market power. On the other hand, if innovation/technology are likely to change the industry by encouraging new competitors or making existing competitors more successful, existing players are less likely to have market power (even if they are large). Could new entrants threaten the company's market position?YesNoMaybeIf new entry is difficult or unlikely, there is a higher risk that existing companies in the market will have (or will be capable of exercising) market power.Does the company face strong competition from imports?YesNoMaybeCompanies that face strong competition from imports are less likely to have market power (even if they are large in size). Would customers have access to good alternatives if prices were increased or service standards lowered?YesNoMaybeWhen customers do not have alternatives it is more likely that the company has market power.