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

For the reasons set out above, the markets which I consider most relevant for the assessment of market shares are (i) Mr Colley’s defined market, and (ii) the extended Colley market, which should be considered in order to address the concerns about the boundary between products with a single element of surprise and products with multiple surprise elements. A precise analysis of the extended Colley market cannot be undertaken without further toy industry expert evidence, but both parties have provided indicative figures based on the inclusion of products with names indicating a surprise element.

I consider that Cabo’s additional product set provides the closest proxy for the extended Colley market. MGA’s inclusion of all toys in brands identified as being “surprise collectible brands”, whether or not they had any surprise elements, is a significant departure from the characteristics identified by Mr Colley which I have found to be an appropriate starting point for the market definition. This materially influences the result: as Cabo pointed out, MGA’s calculation includes all products in very popular brands such as Shopkins whose bestselling product had no surprise element. There is also no compelling justification for including accessories, rather than limiting the additional products to toys in the playset dolls and collectibles class. While Mr Colley’s original sensitivity analysis (row (iii) of the table at §261 above) included for illustrative purposes all Shopkins toys in the playset dolls and collectibles class, and all Num Noms products including those in the playset doll accessories class, that does not mean that the alternative sensitivity analysis requested by the court, based on the extended Colley market defined in §253 above, should include products whose competitive influence on LOL is far more remote than the products falling at the boundary of or just outside of Mr Colley’s defined market.

As for the relevant period for the assessment of market share figures, the focus of the abuse alleged by Cabo was the period around the end of May 2017. Cabo also relied on MGA’s continuing contacts with toy retailers regarding the sale of Worldeez in the subsequent months of 2017, in particular the contacts with TRU in June and July 2017, and with The Entertainer in September 2017. The question is then whether market shares should be assessed on the basis of the figures relating to that period, appropriately adjusted for the wholesale to retail time lag, or whether (as MGA contended) the calculation of market shares should use rolling averages for the previous 12-month period.

That question must be answered by considering the features of the market in issue. The factual and expert evidence describes a market characterised by considerable volatility, in which there are rapid changes in trends and consumer preferences, leading to very short product lifecycles and continuous product innovation. Those characteristics manifest themselves in immediate shifts in patterns of demand at the retail and therefore also wholesale level. The very rapid and extraordinary success of LOL Surprise is a paradigm example of that.

In a market exhibiting those characteristics, and in the context of an inquiry into whether MGA had market power in relation to its supply of LOL Surprise during May 2017 onwards, it would not be meaningful to base the market share assessment on a period before LOL Surprise had entered the market. Indeed, when cross-examined on this point, Mr Parker was not able to offer any convincing explanation as to why MGA’s market share during a period prior to the market entry of LOL Surprise would provide useful evidence of MGA’s market power in May 2017 onwards when LOL Surprise had launched in the UK with phenomenal success.

I do not, therefore, consider that it is appropriate to use 12-month rolling average market share figures. Rather, the focus should be on the evidence of MGA’s market shares during the period from May 2017 to September 2017. In order to derive the wholesale market shares for that period from the retail market share figures, it is necessary to adjust for the time lag between placing orders and delivery of supplies (and as set out above, MGA ultimately did not dispute that as a matter of principle).

The toy experts agreed that the typical time lag was around two months for domestic orders (i.e. the orders delivered by domestic distributors from warehouses in the UK), and at least four months for FOB orders (delivered directly from the manufacturers, typically in the Far East, without passing through an intermediary domestic distributor). That does not mean that every order placed for LOL Surprise was delivered in that timescale: MGA have identified some orders which suggested a shorter time lag. There has not, however, been any granular analysis of the order periods for LOL Surprise, and the toy experts did not suggest that any such analysis might yield results materially different from their agreed conclusion.

I therefore accept the toy experts’ evidence as the best available evidence for what is inevitably a broad-brush adjustment to extrapolate from the retail to the wholesale market. The wholesale market share figures should therefore be assessed by applying a two to fourth-month time lag to the available retail market share figures. On that basis it is relevant to look at the retail market share figures from July 2017 to early 2018.

MGA’s market share during that period, on Mr Colley’s market definition as well as the two sensitivity analyses produced by Mr Colley/Cornerstone Research, was well above 40%, and therefore in a range indicative of dominance. Indeed for all but the post-trial market share figures for the extended Colley market, the market shares were well above 50%, in a range indicating a presumption of dominance:

I agree with Mr Parker’s comments that a “flash in the pan” spike in an undertaking’s market share should be regarded with some caution, and would not necessarily be a reliable indicator of market power. The case-law likewise cautions against placing reliance on large market shares which may turn out to be ephemeral (see e.g. Case T-79/12 Cisco v Commission EU:T:2013:635, §69). In the present case, particularly when considered in the context of the characteristics of the toy market, MGA’s market share during 2017 was not ephemeral, nor is there any evidence that it was perceived as such by retailers:

Finally, MGA’s market shares were very considerably higher than those of its closest competitors. Mr Colley provided the following diagram illustrating MGA’s and competitor market shares during 2017, based on his primary market definition. Again, as discussed above, the relevant period to consider is the period from July 2017 onwards.