HP-2020-000016 - [2025] EWHC 1451 (Ch)

As set out above, there were some problems with each of the experts’ evidence on the market definition. Overall, however, I consider that Mr Colley’s approach is to be preferred. Unlike Mr Parker, Mr Colley started (correctly) with the focal product, narrowly defined as the product under assessment, i.e. LOL Surprise. To that he added products based on an assessment of relevant product characteristics, i.e. characteristics that were meaningful for consumer choice. Mr Parker’s alternative approach, based on looking at negative revenue correlations between entire NPD segments, adopted a starting point that was unreliable for the reasons set out above.

The evidence supports a market definition reflective of the characteristics identified by Mr Colley in respect of the target age range and the focus on surprise collectible toys. The main problem with Mr Colley’s market definition was that it sought to draw too bright a line between products with a “sophisticated” unwrapping experience and products with a less sophisticated unwrapping experience, such as products with a simple blind bag or other “single element of surprise”, as Ms Munt put it.

The correct approach, as Mr Colley acknowledged in his cross-examination, is to recognise that the boundaries of the market definition in a highly differentiated product market will be difficult to draw, and should therefore not be regarded as hard-edged. The competitive analysis should therefore consider the extent of competition from products falling outside the defined boundary, and should if necessary test the effect of extending the market definition to some of those products, at least by way of sensitivity analysis.

In the present case, given the difficulty in drawing a bright line between products with a single and a double element of surprise, it is appropriate to consider whether the extension of Mr Colley’s market to all collectible toys targeted at girls aged 6–9 years, with at least a single element of surprise (e.g. a blind bag), would make a material difference to the assessment of dominance, in particular by considering the impact on the market share calculations. I will refer to this market as the extended Colley market.

In addition, the dominance assessment should consider whether there are other specific products falling further outside the relevant market which also act as competitive constraints in relation to LOL Surprise. MGA’s main argument in that regard was that LOL Surprise competed not only with collectible toys but also with fashion dolls such as Barbie. The dominance assessment should therefore consider the extent to which there is evidence of fashion dolls exerting a competitive constraint on LOL Surprise.