Quins were beaten 37-8 by the big-spending French outfit at the Stade Felix Mayol as the defence of their Challenge Cup crown came to a disappointing end.
Jonny Wilkinson kicked the hosts into a 15-3 lead with a faultless kicking display inside the opening quarter and Quins director of rugby O'Shea admitted his men faced an uphill struggle from there on in.
"When you give away three, six, nine, 12, 15 points in the first 20 minutes, it's the game done," said O'Shea.
"We talked about discipline and we talked about Jonny before the game.
"We spoke about getting an early score ourselves because that's what you need when you come to places like this but we gave penalties away when we had possession. We had two lineouts to try and build our own momentum but we coughed them up and we lost the battle around the contact area against a very physical team.
"Penalties come from pressure and we were under the pump. Discipline will always be an issue when you're under pressure...Jonny doesn't miss."
Quins were second best throughout a tough 80 minutes on the Cote D'Azur but O'Shea did find some positives in the performances of his young players.
The Aviva Premiership leaders headed to France without injured England skipper Chris Robshaw and star fly-half Nick Evans and O'Shea believes his team will learn a lot from their experience as they target domestic glory.
"We're disappointed to lose a trophy that we worked incredibly hard to win but we know what we're focussed on and we'll concentrate on Wasps next week," added O'Shea.
"This is not an easy place to come to. I think it was 39-9 in injury time before Munster scored a try to make it 39-16 when they were here last year and Munster went on to win what was then the Magners League!
"We just came up against a very good side. Toulon don't lose here very often and they were very much at full strength.
"I've got to credit some of our younger guys for keeping going until the bitter end. We had people like Will Collier at just 21 coming on at tight-head, Rob Buchanan at 20 had 50 minutes at hooker in that sort of atmosphere against Sebastien Bruno and it was also part of Rory Clegg's continued development.
"A lot of young fellas will have learnt a huge amount out there. They're the environments you have to live and learn in. We'll have learnt a lot of lessons and we'll just focus now on the Premiership."
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