Barriers to Entry

The presence or lack of presence of significant barriers to entry is a key criteria considered in competition and antitrust law, particularly in relation to merger review. If barriers to entry are low, competition and antitrust authorities regard it as unlikely that a party with a dominant position could abuse that position and in some systems this militates in favor of allowing a merger, even if the likely result would be to create a dominant position.

Similarly high barriers to entry militates against allowing mergers, even when the result would be simply concentration of the market, without necessarily creating a dominant position on the part of the merging businesses. A wide range of market facts may be considered to be barriers-to-entry, including for example, patents and copyrights, licenses and exclusive distribution arrangements.