Key Points

• Shimano, a manufacturer of bicycle components, controls around 70% of the market for mid-to-high end gearsets – bike components including gears, breaks, and shifters.
• Shimano may be engaging in anticompetitive conduct by restricting integration between its electronic groupsets and cycle computers owned by competitor SRAM, thereby weakening SRAM’s competitive position.
• Fideres estimates damages to SRAM in the form of lost profits to be in the region of $214 to $427 million between mid-2022 and 2027.
• Damages to US consumers who have been overcharged on Shimano groupsets are estimated to reach $64 to 127 million for the same period.

Background

In 1889, while climbing the steep col de la République near Saint-Étienne on a single-speed bike, Paul de Vivie was overtaken by a rider who was nonchalantly smoking a pipe. That experience made him realize that the fixed gearing left him powerless on steep climbs yet too sluggish on the flats. He began experimenting with multiple chain wheels, rigging two chain wheels on opposite sides of the rear hub so he could “flip” between gears, creating the first ever derailleur system.

Bikes have evolved significantly since the late 19th century and now feature hundreds of components. Shimano, a Japanese company founded in 1921, was central to this evolution, contributing with innovations like indexed gear shifting and dual control levers.² Shimano is now valued at $12 billion and are leading producers of ‘groupsets’, which comprise the machinery that facilitates braking, changing gears, and running the bicycle’s drivetrain.

After a first attempt by Mavic in 1992, Shimano started producing electronic groupsets, with the introduction of the Di2 shifting technology in 2009. Shimano’s primary competitor is SRAM, an American company founded in 1987, which produces rival bike components like the SRAM Rival 1.

In 2021, SRAM acquired Hammerhead – a producer of cycle computers which it markets under the name ‘Karoo’.³ Cycle computers are accessories that are typically mounted on handlebars, that allow cyclists to access information about speed, distance, and gear shifting. The computer also enables more advanced functionality, including changing the way electronic shifting works in the groupset, by using Bluetooth to pair to the groupset.

In May 2022, Shimano announced that it would no longer permit integration between its Di2 electronic groupset and Hammerhead cycle computers. Until then, Shimano had granted permission for Hammerhead devices to connect with its products through a license agreement. However, on June 2, 2022, Shimano introduced a software update, following which users lost wireless connection between their Hammerhead cycle computer and the Di2 system. This resulted in users losing access to several Di2 integration features, including the ability to see battery level, shifter mode, and front and rear derailleur indications.⁴ One article notes that while it is possible to avoid the firmware update, this “runs the risk of bugs and a loss of support for new features or maps.”⁵ There is also a software-based workaround⁶ to use a Hammerhead cycle computer on a Shimano electronic groupset however this is an unauthorized solution which requires technical skills to implement. Therefore, Shimano’s actions essentially removed the advanced functionality that the Karoo cycle computer was capable of.

Shimano and SRAM have a history of bad blood between them as competitors. In the late 1980s SRAM filed an antitrust suit against Shimano, alleging a tying scheme that required manufacturers of bicycles to buy both derailleurs and shifters together from Shimano instead of sourcing them from a competitor like SRAM. The lawsuit ended in 1991, with an out-of-court settlement that was allegedly favorable to SRAM.⁷ It therefore appears that new technology has reignited old battles.

Relevant Market

We consider there to be two relevant product markets: 1) electronic groupsets for bicycles; and 2) bicycle computers.

Electronic Groupset

Bicycles’ main components are the frame and groupset, and wheels. The groupset includes shifters, brake levers, cranksets, derailleurs, and cassettes. Electronic groupsets are the most advanced versions of these systems, and instead of mechanically shifting gears through wires, they wirelessly respond to the shift, making it much faster and precise.⁸ Cyclists can directly purchase groupsets, but they usually come integrated with a new bike. In the last decade, modern bicycles have undergone increasing electrification. In fact, the last Tour de France winner to use a mechanical groupset was Vincenzo Nibali in 2014; all Tour de France winners since have used an electronic groupset.⁹

Shimano and SRAM dominate the worldwide electronic groupset market, with Campagnolo, an Italian company, being a distant third. For example, Shimano reportedly holds around 70% of the mid-to-high end market for bike components.¹⁰

The market for electronic groupsets for bicycles should be considered distinct from the market for mechanical groupsets. Mechanical groupsets are intended more for casual cyclists, being much cheaper and easier to repair, at a bike shop or by the consumer directly. Electronic groupsets offer distinct advantages to more enthusiastic hobbyists such as easier, more consistent, and more customizable shifting.¹¹ Given these significant differences it is unlikely that there would be a significant shift from electronic groupsets to manual groupsets in the event of a small but significant non-transitory (SSNIP) increase in price from a hypothetical monopolist.

Shimano and SRAM dominate the worldwide electronic groupset market, with Campagnolo, an Italian company, being a distant third. For example, Shimano reportedly holds around 70% of the mid-to-high end market for bike components.¹² Looking at revenues directly, Shimano’s reported revenue from all bicycle components was $2.2 billion in 2024,¹³ while SRAM’s revenue is reported to be $1 billion.¹⁴ These numbers imply Shimano is more than twice as large in electronic groupsets as SRAM.

To estimate the number of electronic groupsets sold in the US, we start from the global market size of $1.5 billion,¹⁵ and take 18% of that as the US market, based on Shimano’s geographic sales segments.¹⁶ This leads to approximately $270 million in sales in the electronic groupset market in the US. Assuming the average price of an electronic groupset is approximately $1000,¹⁷ we estimate that there are around 270,000 electronic groupsets sold in the US per year.

Cycle Computers

The market for cycle computers is less concentrated, with prominent producers including Garmin, Wahoo, Bryton, Hammerhead (by SRAM), and Cateye. Garmin is the market leader, and Wahoo a close second.¹⁸ Shimano is not considered a major player but does produce some cycle computers with less advanced functionality than its peers and at a price point that reflects that differentiation.¹⁹

The global sales of cycle computers were estimated at $607 million in 2023.²⁰ North American sales are estimated to be 32% of that figure, or $194m.²¹ Since the average price of a bike computer is estimated it at $200, this suggests approximately 1 million cycle computers sold in North America each year.²² Adjusting this value to the US, we estimate that around 900,000 cycle computers are sold in the US per year.²³ We expect that the 270,000 cyclists purchasing electronic groupsets will all require a computer,²⁴ therefore about 30% of all bike computers are likely sold to these users, while the remainder are sold to mechanical groupset cyclists.²⁵

Geographic Markets

The relevant geographic markets are likely to be national or perhaps worldwide, as cycling enthusiasts buy specialized products online or go to specialist bicycle shops. None of SRAM, Shimano, or Campagnolo sell products directly to consumers so they must sell through intermediary retailers. The same goes for bicycles with groupsets already installed on them.

Theory of Harm

We consider that electronic groupsets and cycle computers are complementary products. Consumers can still use either an electronic groupset or cycle computer alone, but the utility derived from using one is increased if they use the other. In this context, Shimano’s decision to remove compatibility with SRAM’s Hammerhead cycle computers has the potential to:

• restrict the sales of SRAM’s cycle computers, and
• reduce competitive pressure on Shimano and hence help to preserve its monopoly in the market for electronic groupsets.

For example, cyclists purchasing electronic groupsets like Di2 are unlikely to purchase a cycle computer that is incompatible with Shimano’s products. Given that 30% of cycle computers are purchased by electronic groupset users,²⁶ Shimano’s conduct has the potential to deny SRAM/Hammerhead access to a significant portion of the market for cycle computers.

Furthermore, by preventing SRAM from competing effectively in the cycle computer market, the conduct may also restrict SRAM’s ability to leverage its sales of cycle computers (and the relationships and data that come with that) as a means to compete in the complementary market for electronic groupsets. While the effect on competition in electronic groupsets might be insignificant if SRAM’s potential sales of cycle computers were tiny, the effect might be significant if the potential sales were large as a proportion of the electronic groupsets market (and purchasing that data from Garmin or others was expensive). In such circumstances this might help to maintain Shimano’s monopoly in the electronic groupsets market and hence protect its ability to overcharge cyclists in that market.²⁷

For example, Shimano appears to have shown itself to be willing to sacrifice profit by applying new restrictions on integration between its groupset and SRAM’s bike computers, and thereby losing sales to those groupset consumers who wanted an integrated product. However, the removal of interoperability appears to have led most consumers to stick with Shimano groupsets, and to pair those with a rival cycle computer. This denies SRAM additional sales of bike computers, and reduces the data it can gather. It therefore denies SRAM the opportunity to build the consumer relationships and data that would allow it to expand its groupset sales to consumers that use its cycle computer.

Damages

The conduct potentially reduces both SRAM’s profits and increases the prices that consumers pay for electronic groupsets.

Firstly, Shimano’s conduct is likely to reduce SRAM’s profits from Hammerhead cycle computers. For a preliminary calculation of potential damages to SRAM, we assume the conduct started in June 2022,²⁸ when the firmware update was rolled out.²⁹ The market for cycle computers was estimated at around $300 million in 2021,³⁰ with limited data available on market shares.

We then calculate different scenarios for the amount of lost profit in the cycle computer market, using Garmin’s reported gross margins on cycle computers of 57%.³¹ These give an estimate of damages to SRAM in the range of $214 to $427 million between 2022 and 2027.

Table 1: Global Damages to Foreclosed Cycle Computer Firm SRAM ($ million)

Secondly, if the conduct has foreclosed such a significant proportion of the cycle computer market that it has not only harmed competitors, but has also damaged competition in the cycle computer market, then it may also have helped Shimano to maintain its monopoly position and overcharge US consumers in the electronic groupset market.

In the event that the conduct allows Shimano to maintain prices at supracompetitive levels, two scenarios of overcharge at 5% and 10% would lead to damages to US electronic groupset buyers to be in in the region of $64 to 127 million between 2022 and 2027.³²

Table 2: Damages to US Consumers in the Electronic Bicycle Component Market ($ million)

Source: Fideres Analysis of Shimano’s Financial Statements

¹The drivetrain is the system that connects, through a chain, the pedals to the cassette (gears that are attached to the back wheel). See https://www.swinnertoncycles.co.uk/blog/what-is-a-drivetrain-on-a-bike-and-why-is-it-so-important/

²Indexed gear shifting allows you to shift gears through the handlebar, while dual control levers integrated great shifting and braking in the same unit. See https://mrbikersaigon.com/post/shimano-pioneering-cycling-innovation

³ https://www.sram.com/en/life/stories/hammerhead-acquisition

⁴https://support.hammerhead.io/hc/en-us/articles/360051706614-Hammerhead-Shimano-Di2

⁵ https://www.cyclingnews.com/news/shimano-cuts-hammerhead-integrations-after-sram-acquisition/

⁶ https://www.dcrainmaker.com/2022/12/hammerhead-karoo-2-shimano-di2-workaround.html

⁷ https://www.lewisrice.com/our-clients/sram-llc/

⁸ https://bikexchange.com/electronic-vs-mechanical-shifting-pros-and-cons/

⁹ https://rouvy.com/blog/mechanical-vs-electronic-groupsets-definitive-guide

¹⁰ Shimano is too scared of going too fast | Reuters, also see Seeking Alpha

¹¹ https://www.theproscloset.com/blogs/news/do-you-need-electronic-shifting

¹² Shimano is too scared of going too fast | Reuters, also see Seeking Alpha

¹³ 20241029154741018s.pdf

¹⁴ https://escapecollective.com/who-will-sram-acquire-next/ SRAM’s revenue is not broken down by product category and while their main line of business is components, their revenue from components is certainly smaller than $1 billion.

¹⁵ https://dataintelo.com/report/electronic-bike-shifter-market

¹⁶ Credit Suisse, Shimano Report. Page 12. Available at https://web.archive.org/web/20201020120745/https://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&sourceid=emblast&document_id=x731643&serialid=L3pmyaXKSiZY8hJpE91Bmjp2cjbcykoGTLEuL%2BHTUoU%3D

¹⁷ https://pedalforce.com/product/shimano-105-di2-r7170-2×12-speed-groupset/

¹⁸ The 6 Best Bike Computers of 2025 | Tested & Rated

¹⁹ https://bike.shimano.com/en-SG/products/components/pdp.P-SC-EN610.html

²⁰ https://www.marketresearchfuture.com/reports/cycle-computer-market-22196

²¹ Ibid.

²² Prices vary depending on capabilities. We take the price of an entry level Wahoo, https://uk.wahoofitness.com/devices/bike-computers

²³ We use 90% as the US share of North America, based approximately on population.

²⁴ https://bettershifting.com/di2-wireless-module-bluetoothle-ant-troubleshooting-guide/

²⁵ That is 270,000 groupsets divided by 900,000 cycle computers.

²⁶ See Section 3.2.

²⁷ Motta, M. (2023). Self-preferencing and foreclosure in digital markets: Theories of harm for abuse cases. International Journal of Industrial Organization, 90, 102974, p. 3

²⁸ For simplicity we assume a start date of June 2022 for our calculations.

²⁹ https://www.cyclingweekly.com/products/hammerhead-forced-to-remove-shimano-di2-support-on-karoo-2-head-units

³⁰ Given an estimate of $294 million in 2021 and a CAGR of 5.97% we arrive at market sizes for 2022 to 2025: https://www.businessresearchinsights.com/market-reports/cycle-computer-market-103216

³¹ SRAM and Hammerhead do not report margins. We use Garmin as a proxy: https://www8.garmin.com/aboutGarmin/invRelations/reports/2024_Q2_Earnings_Press_Release.pdf

³² We take half of 2022, as the software update was introduced in mid-2022. We also project damages to 2027, as it is an ongoing conduct.