# Official Journal C 159/2018

| | ISSN 1977-091X |
| --- | --- |
| Official Journal
  of the European Union | C 159 |
| | |
| English edition | Information and Notices | Volume 617 May 2018 |

ISSN 1977-091X

Official Journal

of the European Union

C 159

English edition

Information and Notices

Volume 617 May 2018

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| Notice No | Contents | page |
| --- | --- | --- |
| | II   Information |
| | INFORMATION FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
| | European Commission |
| 2018/C 159/01 | Communication from the Commission — Guidelines on market analysis and the assessment of significant market power under the EU regulatory framework for electronic communications networks and services (
  1
  ) | 1 |
| 2018/C 159/02 | Non-opposition to a notified concentration (Case M.8824 — Mitsui Rail Capital Europe/Siemens Nederland/JV) (
  1
  ) | 16 |
| 2018/C 159/03 | Non-opposition to a notified concentration (Case M.8805 — Panalpina/DFG/PA NL Perishables) (
  1
  ) | 16 |

Notice No

Contents

page

II   Information

INFORMATION FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

2018/C 159/01

Communication from the Commission — Guidelines on market analysis and the assessment of significant market power under the EU regulatory framework for electronic communications networks and services (
  1
  )

1

1

2018/C 159/02

Non-opposition to a notified concentration (Case M.8824 — Mitsui Rail Capital Europe/Siemens Nederland/JV) (
  1
  )

1

16

2018/C 159/03

Non-opposition to a notified concentration (Case M.8805 — Panalpina/DFG/PA NL Perishables) (
  1
  )

1

16

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| | IV   Notices |
| --- | --- |
| | NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
| | European Commission |
| 2018/C 159/04 | Euro exchange rates | 17 |

IV   Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

2018/C 159/04

Euro exchange rates

17

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| | V   Announcements |
| --- | --- |
| | PROCEDURES RELATING TO THE IMPLEMENTATION OF THE COMMON COMMERCIAL POLICY |
| | European Commission |
| 2018/C 159/05 | Notice of initiation of a partial interim review of the anti-dumping measures applicable to imports of certain seamless tubes and pipes originating, inter alia, in Ukraine | 18 |
| | OTHER ACTS |
| | European Commission |
| 2018/C 159/06 | Application for approval of a minor amendment in accordance with the second subparagraph of Article 53(2) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council on quality schemes for agricultural products and foodstuffs | 22 |
| 2018/C 159/07 | Publication of an application pursuant to Article 50(2)(a) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council on quality schemes for agricultural products and foodstuffs | 32 |

V   Announcements

PROCEDURES RELATING TO THE IMPLEMENTATION OF THE COMMON COMMERCIAL POLICY

European Commission

2018/C 159/05

Notice of initiation of a partial interim review of the anti-dumping measures applicable to imports of certain seamless tubes and pipes originating, inter alia, in Ukraine

18

OTHER ACTS

European Commission

2018/C 159/06

Application for approval of a minor amendment in accordance with the second subparagraph of Article 53(2) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council on quality schemes for agricultural products and foodstuffs

22

2018/C 159/07

Publication of an application pursuant to Article 50(2)(a) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council on quality schemes for agricultural products and foodstuffs

32

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| | (1)   Text with EEA relevance. |

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(1)   Text with EEA relevance.

1

| EN | |
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EN

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II Information

INFORMATION FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

| 7.5.2018 | EN | Official Journal of the European Union | C 159/1 |
| --- | --- | --- | --- |

7.5.2018

EN

Official Journal of the European Union

C 159/1

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COMMUNICATION FROM THE COMMISSION

Guidelines on market analysis and the assessment of significant market power under the EU regulatory framework for electronic communications networks and services

(Text with EEA relevance)

(2018/C 159/01)

1.   INTRODUCTION

1.1.   Scope and purpose

| 1. | The Commission adopted the guidelines on market analysis and the assessment of significant market power (SMP Guidelines) in accordance with Article 15(2) of Directive 2002/21/EC of the European Parliament and of the Council (1), following a public consultation, the results of which have been duly taken into account. The SMP Guidelines are accompanied by an Explanatory Note (2), and shall be read in light of the additional information contained therein. |
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1.

The Commission adopted the guidelines on market analysis and the assessment of significant market power (SMP Guidelines) in accordance with Article 15(2) of Directive 2002/21/EC of the European Parliament and of the Council (1), following a public consultation, the results of which have been duly taken into account. The SMP Guidelines are accompanied by an Explanatory Note (2), and shall be read in light of the additional information contained therein.

| 2. | The SMP Guidelines are addressed to national regulatory authorities (NRAs) to carry out their duties related to the analysis of markets susceptible to ex ante regulation and the assessment of significant market power under the EU Regulatory Framework for electronic communications and services which consists of Directive 2002/21/EC, three specific Directives 2002/19/EC (3), 2002/20/EC (4),2002/22/EC (5) and Regulation (EU) No 531/2012 (6) (the Framework). In line with Article 15 of Directive 2002/21/EC NRAs shall take utmost account of both the Commission Recommendation 2014/710/EU (7) and these SMP Guidelines in order to define relevant markets for ex ante regulation. |
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2.

The SMP Guidelines are addressed to national regulatory authorities (NRAs) to carry out their duties related to the analysis of markets susceptible to ex ante regulation and the assessment of significant market power under the EU Regulatory Framework for electronic communications and services which consists of Directive 2002/21/EC, three specific Directives 2002/19/EC (3), 2002/20/EC (4),2002/22/EC (5) and Regulation (EU) No 531/2012 (6) (the Framework). In line with Article 15 of Directive 2002/21/EC NRAs shall take utmost account of both the Commission Recommendation 2014/710/EU (7) and these SMP Guidelines in order to define relevant markets for ex ante regulation.

| 3. | In line with Article 8 of Directive 2002/21/EC, the SMP Guidelines intend to contribute to the development of the internal market in the electronic communications sector by, inter alia, developing a consistent regulatory practice and a consistent application of the Framework. |
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3.

In line with Article 8 of Directive 2002/21/EC, the SMP Guidelines intend to contribute to the development of the internal market in the electronic communications sector by, inter alia, developing a consistent regulatory practice and a consistent application of the Framework.

| 4. | The SMP Guidelines do not in any way restrict the rights conferred by EU law on individuals or undertakings. They are without prejudice to the application of EU law in general, and of competition rules more specifically, and to their interpretation by the Court of Justice of the European Union. The SMP Guidelines do not prejudice any action the Commission may take or any guidance the Commission may issue in the future with regard to the application of EU competition law. |
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4.

The SMP Guidelines do not in any way restrict the rights conferred by EU law on individuals or undertakings. They are without prejudice to the application of EU law in general, and of competition rules more specifically, and to their interpretation by the Court of Justice of the European Union. The SMP Guidelines do not prejudice any action the Commission may take or any guidance the Commission may issue in the future with regard to the application of EU competition law.

| 5. | The Commission will replace the SMP Guidelines, whenever appropriate, taking into account evolving case-law of the Court of Justice of the European Union, economic thinking and actual market experience with the objective of ensuring that they remain appropriate in rapidly developing markets. |
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5.

The Commission will replace the SMP Guidelines, whenever appropriate, taking into account evolving case-law of the Court of Justice of the European Union, economic thinking and actual market experience with the objective of ensuring that they remain appropriate in rapidly developing markets.

| 6. | These SMP Guidelines specifically address issues of market definition as well as single and collective SMP. |
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6.

These SMP Guidelines specifically address issues of market definition as well as single and collective SMP.

| 7. | The SMP Guidelines do not deal with coordination in the context of concerted practices under Article 101(1) of the Treaty on the Functioning of the European Union (the Treaty). Nor do they address market structures with a limited number of market players where the criteria of joint dominance as applied by the Court of Justice of the European Union are not met. |
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7.

The SMP Guidelines do not deal with coordination in the context of concerted practices under Article 101(1) of the Treaty on the Functioning of the European Union (the Treaty). Nor do they address market structures with a limited number of market players where the criteria of joint dominance as applied by the Court of Justice of the European Union are not met.

1.2.   Preliminary remarks

| 8. | Under Article 8 of Directive 2002/21/EC NRAs shall ensure that in carrying out the regulatory tasks under the Framework they take all reasonable measures which are aimed at achieving the regulatory objectives contained therein, inter alia, promoting efficient investment in and access to new and enhanced infrastructures. |
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8.

Under Article 8 of Directive 2002/21/EC NRAs shall ensure that in carrying out the regulatory tasks under the Framework they take all reasonable measures which are aimed at achieving the regulatory objectives contained therein, inter alia, promoting efficient investment in and access to new and enhanced infrastructures.

| 9. | Under the Framework, the definition of relevant markets and the assessment of significant market power should be based on the same methodologies as under EU competition law. This ensures that it reflects the applicable jurisprudence of the Court of Justice of the European Union and the Commission Notice on the definition of relevant markets for the purposes of Community competition law (the 1997 Notice on Market Definition) (8) and that it takes into account, to the extent relevant, the Commission's decisional practice in the enforcement of Article 102 of the Treaty and Article 2 of Council Regulation (EC) No 139/2004 (9). When NRAs consistently apply established methodologies to define markets and assess significant market power, they contribute to ensuring regulatory predictability and limit regulatory intervention to cases of market failures identified by analytical tools. |
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9.

Under the Framework, the definition of relevant markets and the assessment of significant market power should be based on the same methodologies as under EU competition law. This ensures that it reflects the applicable jurisprudence of the Court of Justice of the European Union and the Commission Notice on the definition of relevant markets for the purposes of Community competition law (the 1997 Notice on Market Definition) (8) and that it takes into account, to the extent relevant, the Commission's decisional practice in the enforcement of Article 102 of the Treaty and Article 2 of Council Regulation (EC) No 139/2004 (9). When NRAs consistently apply established methodologies to define markets and assess significant market power, they contribute to ensuring regulatory predictability and limit regulatory intervention to cases of market failures identified by analytical tools.

| 10. | When examining similar issues in similar circumstances and with the same overall objectives in mind, NRAs and competition authorities, should, in principle, reach similar conclusions. However, given the differences in scope and objectives of their intervention, and in particular the distinct focus and circumstances of the NRAs' assessment as set out below, markets defined for the purposes of EU competition law and those defined for the purposes of sector-specific regulation might not always be identical. |
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10.

When examining similar issues in similar circumstances and with the same overall objectives in mind, NRAs and competition authorities, should, in principle, reach similar conclusions. However, given the differences in scope and objectives of their intervention, and in particular the distinct focus and circumstances of the NRAs' assessment as set out below, markets defined for the purposes of EU competition law and those defined for the purposes of sector-specific regulation might not always be identical.

| 11. | Similarly, the designation of an undertaking as having significant market power in a market identified for the purpose of ex ante regulation does not automatically imply that this undertaking is also dominant for the purpose of Article 102 of the Treaty or for the purpose of application of Council Regulation (EC) No 139/2004 (10) or similar national provisions. Moreover, a significant market power (SMP) designation has no direct bearing on whether that undertaking has also abused a dominant position under Article 102 of the Treaty. It merely implies that, within the scope of Article 14 of the Directive 2002/21/EC, from a structural perspective, and in the short to medium term, in the relevant market identified the operator has and will have, sufficient market power to behave to an appreciable extent independently of its competitors, customers, and ultimately consumers. |
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11.

Similarly, the designation of an undertaking as having significant market power in a market identified for the purpose of ex ante regulation does not automatically imply that this undertaking is also dominant for the purpose of Article 102 of the Treaty or for the purpose of application of Council Regulation (EC) No 139/2004 (10) or similar national provisions. Moreover, a significant market power (SMP) designation has no direct bearing on whether that undertaking has also abused a dominant position under Article 102 of the Treaty. It merely implies that, within the scope of Article 14 of the Directive 2002/21/EC, from a structural perspective, and in the short to medium term, in the relevant market identified the operator has and will have, sufficient market power to behave to an appreciable extent independently of its competitors, customers, and ultimately consumers.

| 12. | In practice, it cannot be excluded that parallel procedures under ex ante regulation and EU competition law may apply with respect to different types of competition problem(s) identified on the underlying retail market(s). In this respect, ex ante obligations imposed by NRAs on undertakings designated as having significant market power aim to remedy market failures identified and fulfil the specific objectives set out in the Framework. On the other hand EU competition law instruments serve to address and remove concerns in relation to illegal agreements, concerted practices or unilateral abusive behaviour which restrict or distort competition in the relevant market. |
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12.

In practice, it cannot be excluded that parallel procedures under ex ante regulation and EU competition law may apply with respect to different types of competition problem(s) identified on the underlying retail market(s). In this respect, ex ante obligations imposed by NRAs on undertakings designated as having significant market power aim to remedy market failures identified and fulfil the specific objectives set out in the Framework. On the other hand EU competition law instruments serve to address and remove concerns in relation to illegal agreements, concerted practices or unilateral abusive behaviour which restrict or distort competition in the relevant market.

1.3.   The regulatory approach to market analysis

| 13. | In carrying out a market analysis in accordance with Article 16 of Directive 2002/21/EC, NRAs will conduct a forward-looking, structural evaluation of the relevant market over the relevant period. |
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13.

In carrying out a market analysis in accordance with Article 16 of Directive 2002/21/EC, NRAs will conduct a forward-looking, structural evaluation of the relevant market over the relevant period.

| 14. | The length of the relevant period (the next review period) is the one between the end of the ongoing review and the end of the next market review (11), within which the NRA should assess specific market characteristics and market developments. |
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14.

The length of the relevant period (the next review period) is the one between the end of the ongoing review and the end of the next market review (11), within which the NRA should assess specific market characteristics and market developments.

| 15. | The starting point for the identification of wholesale markets susceptible for ex ante regulation should always be the analysis of corresponding retail market(s). |
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15.

The starting point for the identification of wholesale markets susceptible for ex ante regulation should always be the analysis of corresponding retail market(s).

| 16. | NRAs should determine whether the underlying retail market(s) is (are) prospectively competitive in absence of wholesale regulation based on a finding of single or collective significant market power, and thus whether any lack of effective competition is durable (12). |
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16.

NRAs should determine whether the underlying retail market(s) is (are) prospectively competitive in absence of wholesale regulation based on a finding of single or collective significant market power, and thus whether any lack of effective competition is durable (12).

| 17. | To this aim, NRAs should take into account existing market conditions as well as expected or foreseeable market developments over the course of the next review period in the absence of regulation based on significant market power; this is known as a Modified Greenfield Approach (13). On the other hand, the analysis should take into account the effects of other types of (sector-specific) regulation, decisions or legislation applicable to the relevant retail and related wholesale market(s) during the relevant period. |
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17.

To this aim, NRAs should take into account existing market conditions as well as expected or foreseeable market developments over the course of the next review period in the absence of regulation based on significant market power; this is known as a Modified Greenfield Approach (13). On the other hand, the analysis should take into account the effects of other types of (sector-specific) regulation, decisions or legislation applicable to the relevant retail and related wholesale market(s) during the relevant period.

| 18. | If the underlying retail market(s) is (are) prospectively competitive under the Modified Greenfield Approach, the NRA should conclude that regulation is no longer needed at wholesale level. |
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18.

If the underlying retail market(s) is (are) prospectively competitive under the Modified Greenfield Approach, the NRA should conclude that regulation is no longer needed at wholesale level.

| 19. | NRAs should consider past and present data in their analysis when such data is relevant to the developments in that market over the next review period. In this respect, it needs to be underlined that any readily available evidence of past practice does not automatically suggest that this practice is likely to continue in the next review period. However, past practice is relevant if the market's characteristics have not appreciably changed or are unlikely to do so over the next review period. |
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19.

NRAs should consider past and present data in their analysis when such data is relevant to the developments in that market over the next review period. In this respect, it needs to be underlined that any readily available evidence of past practice does not automatically suggest that this practice is likely to continue in the next review period. However, past practice is relevant if the market's characteristics have not appreciably changed or are unlikely to do so over the next review period.

| 20. | It follows from the above that both static and dynamic considerations should be reflected by the NRAs in the market analysis, with a view to addressing market failure(s) identified at retail level by imposing appropriate wholesale regulatory obligations, which should, inter alia, promote competition and contribute to the development of the internal market. These obligations should be based on regulatory principles set out in Article 8 of Directive 2002/21/EC, such as promoting regulatory predictability, efficient investment and innovation and infrastructure-based competition. |
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20.

It follows from the above that both static and dynamic considerations should be reflected by the NRAs in the market analysis, with a view to addressing market failure(s) identified at retail level by imposing appropriate wholesale regulatory obligations, which should, inter alia, promote competition and contribute to the development of the internal market. These obligations should be based on regulatory principles set out in Article 8 of Directive 2002/21/EC, such as promoting regulatory predictability, efficient investment and innovation and infrastructure-based competition.

| 21. | The analysis should be based on a functional understanding of links between the relevant wholesale and underlying retail market(s), as well as on other related market(s), if deemed appropriate by the NRAs. The Commission has underlined in previous decisions (14) that retail market conditions may inform an NRA of the structure of the wholesale market, but are not in themselves conclusive as regards a finding of significant market power at the wholesale level. As established in several Commission decisions under Article 7 of Directive 2002/21/EC (15), there is no need to prove single or collective significant market power at retail level, in order to establish that (an) undertaking(s) enjoy(s) single or collective significant market power in the relevant wholesale market(s). In line with recital 18 of the Recommendation 2014/710/EU, ex ante regulation at the wholesale level should be sufficient to tackle competition problems on the related downstream markets(s). |
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21.

The analysis should be based on a functional understanding of links between the relevant wholesale and underlying retail market(s), as well as on other related market(s), if deemed appropriate by the NRAs. The Commission has underlined in previous decisions (14) that retail market conditions may inform an NRA of the structure of the wholesale market, but are not in themselves conclusive as regards a finding of significant market power at the wholesale level. As established in several Commission decisions under Article 7 of Directive 2002/21/EC (15), there is no need to prove single or collective significant market power at retail level, in order to establish that (an) undertaking(s) enjoy(s) single or collective significant market power in the relevant wholesale market(s). In line with recital 18 of the Recommendation 2014/710/EU, ex ante regulation at the wholesale level should be sufficient to tackle competition problems on the related downstream markets(s).

| 22. | When analysing the market boundaries and market power within (a) corresponding relevant wholesale market(s) to determine whether it is/they are effectively competitive, direct and indirect competitive constraints should be taken into account irrespective of whether these constraints result from electronic communications networks, electronic communications services or other types of services or applications that are comparable from the end-user's perspective (16). |
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22.

When analysing the market boundaries and market power within (a) corresponding relevant wholesale market(s) to determine whether it is/they are effectively competitive, direct and indirect competitive constraints should be taken into account irrespective of whether these constraints result from electronic communications networks, electronic communications services or other types of services or applications that are comparable from the end-user's perspective (16).

| 23. | According to recital 27 of Directive 2002/21/EC, emerging markets, where de facto the market leader is likely to have a substantial market share, should not be subject to inappropriate ex ante regulation. This is because the premature imposition of ex ante regulation may unduly influence the competitive conditions taking shape within a new and emerging market. At the same time, foreclosure of such emerging markets by the leading undertaking should be prevented. |
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23.

According to recital 27 of Directive 2002/21/EC, emerging markets, where de facto the market leader is likely to have a substantial market share, should not be subject to inappropriate ex ante regulation. This is because the premature imposition of ex ante regulation may unduly influence the competitive conditions taking shape within a new and emerging market. At the same time, foreclosure of such emerging markets by the leading undertaking should be prevented.

2.   MARKET DEFINITION

2.1.   Main criteria for defining the relevant market

| 24. | In assessing whether an undertaking has significant market power, that is whether it ‘enjoys a position of economic strength affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately consumers’ (17), defining the relevant market (18) is of fundamental importance as effective competition can only be assessed against this definition (19). |
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24.

In assessing whether an undertaking has significant market power, that is whether it ‘enjoys a position of economic strength affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately consumers’ (17), defining the relevant market (18) is of fundamental importance as effective competition can only be assessed against this definition (19).

| 25. | As explained in paragraph 9, the market must be defined in line with the methodology described in the 1997 Notice on Market Definition. Market definition is not a mechanical or abstract process but requires the analysis of all available evidence of past market behaviour and an overall understanding of the mechanics of a given sector. In particular, a dynamic rather than a static approach is required when carrying out a prospective, or forward-looking, market analysis (20). |
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25.

As explained in paragraph 9, the market must be defined in line with the methodology described in the 1997 Notice on Market Definition. Market definition is not a mechanical or abstract process but requires the analysis of all available evidence of past market behaviour and an overall understanding of the mechanics of a given sector. In particular, a dynamic rather than a static approach is required when carrying out a prospective, or forward-looking, market analysis (20).

| 26. | The starting point of any analysis should be an assessment of relevant retail market(s), taking into account demand-side and supply-side substitutability from the end-user's perspective over the next review period based on existing market conditions and their likely development. Having identified the relevant retail market(s) and established whether absent regulatory intervention upstream, a risk of consumer harm due to a lack of competition in the retail market(s) would persist, NRAs should then identify the corresponding wholesale market(s) to assess whether they are susceptible to ex ante regulation under Article 16 of Directive 2002/21/EC (21). They should start by identifying and analysing the wholesale market that is most upstream of the retail market in which said competition problems have been found, and defining market boundaries by taking into account demand-side and, to the extent relevant, supply-side substitutability of products. |
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26.

The starting point of any analysis should be an assessment of relevant retail market(s), taking into account demand-side and supply-side substitutability from the end-user's perspective over the next review period based on existing market conditions and their likely development. Having identified the relevant retail market(s) and established whether absent regulatory intervention upstream, a risk of consumer harm due to a lack of competition in the retail market(s) would persist, NRAs should then identify the corresponding wholesale market(s) to assess whether they are susceptible to ex ante regulation under Article 16 of Directive 2002/21/EC (21). They should start by identifying and analysing the wholesale market that is most upstream of the retail market in which said competition problems have been found, and defining market boundaries by taking into account demand-side and, to the extent relevant, supply-side substitutability of products.

| 27. | The extent to which the supply of a product or the provision of a service in a given geographical area constitutes a relevant market depends on the existence of competitive constraints on the price-setting behaviour of the service provider(s) concerned. There are two main competitive constraints to consider in assessing the behaviour of undertakings in the market; (i) demand-side; and (ii) supply-side substitution (22). A third source of competitive constraint on an operator's behaviour — to be considered not at the stage of market definition but when assessing whether a market is effectively competitive within the meaning of Directive 2002/21/EC — is the existence of potential competition (23). |
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27.

The extent to which the supply of a product or the provision of a service in a given geographical area constitutes a relevant market depends on the existence of competitive constraints on the price-setting behaviour of the service provider(s) concerned. There are two main competitive constraints to consider in assessing the behaviour of undertakings in the market; (i) demand-side; and (ii) supply-side substitution (22). A third source of competitive constraint on an operator's behaviour — to be considered not at the stage of market definition but when assessing whether a market is effectively competitive within the meaning of Directive 2002/21/EC — is the existence of potential competition (23).

| 28. | Demand-side substitutability is used to measure the extent to which customers are prepared to substitute other services or products for the service or product in question (24), whereas supply-side substitutability indicates whether suppliers other than those offering the product or service in question would switch their line of production in the immediate-to-short term (25) or offer the relevant products or services without incurring significant additional costs (26). Supply-side substitution is particularly relevant for network industries, such as electronic communications, as the same network may be used to provide different types of services (27). The difference between potential competition and supply-substitution lies in the fact that supply-side substitution responds promptly to a price increase whereas potential entrants may need more time before starting to supply the market. Supply substitution involves no additional significant costs whereas potential entry may occur at significant sunk costs (28) and is, for this reason, not taken into account at the stage of market definition (29). |
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28.

Demand-side substitutability is used to measure the extent to which customers are prepared to substitute other services or products for the service or product in question (24), whereas supply-side substitutability indicates whether suppliers other than those offering the product or service in question would switch their line of production in the immediate-to-short term (25) or offer the relevant products or services without incurring significant additional costs (26). Supply-side substitution is particularly relevant for network industries, such as electronic communications, as the same network may be used to provide different types of services (27). The difference between potential competition and supply-substitution lies in the fact that supply-side substitution responds promptly to a price increase whereas potential entrants may need more time before starting to supply the market. Supply substitution involves no additional significant costs whereas potential entry may occur at significant sunk costs (28) and is, for this reason, not taken into account at the stage of market definition (29).

| 29. | One possible way of assessing the existence of any demand and supply-side substitution is to apply a so-called ‘hypothetical monopolist’ or SSNIP test (30). Under this test, an NRA should ask what would happen if there was a small but significant and non-transitory increase in the price of a given product or service, assuming that the prices of all other products or services remain constant (‘relative price increase’). While the significance of a relative price increase will depend on each individual case, NRAs should consider customer (consumer or undertaking) reactions to a small but non-transitory price increase of between 5 to 10 %. Customer responses will help determine whether substitutable products exist and, if so, where the boundaries of the relevant product market should be delineated (31). |
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29.

One possible way of assessing the existence of any demand and supply-side substitution is to apply a so-called ‘hypothetical monopolist’ or SSNIP test (30). Under this test, an NRA should ask what would happen if there was a small but significant and non-transitory increase in the price of a given product or service, assuming that the prices of all other products or services remain constant (‘relative price increase’). While the significance of a relative price increase will depend on each individual case, NRAs should consider customer (consumer or undertaking) reactions to a small but non-transitory price increase of between 5 to 10 %. Customer responses will help determine whether substitutable products exist and, if so, where the boundaries of the relevant product market should be delineated (31).

| 30. | As a starting point, the NRA should first identify an electronic communications service or product that is offered in a given geographical area and may be subject to the imposition of regulatory obligations. Subsequently, the NRA may add additional products or areas depending on whether competition from these constrains the price of the main product or service in question. Since a relative price increase of a set of products is likely to lead some customers to switch to alternative services or products resulting in sales being lost, the key issue is to determine whether the sales lost by the operators would be sufficient to offset their increased profits, which would otherwise be made following the price increase. Assessing demand- and supply-side substitution provides a way of measuring the ‘critical loss’ of sales (rendering a relative price increase unprofitable) and consequently of determining the scope of the relevant market. The NRA should therefore apply this test up to the point where it can be established that a relative price increase within the geographic and product markets defined will be profitable, i.e., will no longer cause a critical loss of sales to readily available substitutes or to suppliers located in other areas. |
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30.

As a starting point, the NRA should first identify an electronic communications service or product that is offered in a given geographical area and may be subject to the imposition of regulatory obligations. Subsequently, the NRA may add additional products or areas depending on whether competition from these constrains the price of the main product or service in question. Since a relative price increase of a set of products is likely to lead some customers to switch to alternative services or products resulting in sales being lost, the key issue is to determine whether the sales lost by the operators would be sufficient to offset their increased profits, which would otherwise be made following the price increase. Assessing demand- and supply-side substitution provides a way of measuring the ‘critical loss’ of sales (rendering a relative price increase unprofitable) and consequently of determining the scope of the relevant market. The NRA should therefore apply this test up to the point where it can be established that a relative price increase within the geographic and product markets defined will be profitable, i.e., will no longer cause a critical loss of sales to readily available substitutes or to suppliers located in other areas.

| 31. | In competition law, the hypothetical monopolist test is applied with regard to products or services, the prices of which are freely determined and not subject to regulation. In the area of ex ante regulation, i.e. where a product or service is already offered at regulated, cost-based price, a regulated price will be assumed to be set at competitive levels (32) and should be taken as the starting point for the hypothetical monopolist test. |
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31.

In competition law, the hypothetical monopolist test is applied with regard to products or services, the prices of which are freely determined and not subject to regulation. In the area of ex ante regulation, i.e. where a product or service is already offered at regulated, cost-based price, a regulated price will be assumed to be set at competitive levels (32) and should be taken as the starting point for the hypothetical monopolist test.

| 32. | It is likely to be difficult to apply the SSNIP test empirically where there is not a readily available product and price. If no such product, commercial or regulated, exists on a network but could (potentially) technically and commercially be offered, NRAs should consider self-supply on that network for the delineation of markets and construct a notional market encompassing the self-supply, where there is consumer harm at the retail market and potential demand for such product exists (33). |
| --- | --- |

32.

It is likely to be difficult to apply the SSNIP test empirically where there is not a readily available product and price. If no such product, commercial or regulated, exists on a network but could (potentially) technically and commercially be offered, NRAs should consider self-supply on that network for the delineation of markets and construct a notional market encompassing the self-supply, where there is consumer harm at the retail market and potential demand for such product exists (33).

2.2.   Product market definition

| 33. | According to settled case-law, the relevant product market comprises all products or services that are sufficiently interchangeable or substitutable, not only in terms of their objective characteristics, their prices or their intended use, but also in terms of the conditions of competition and/or the structure of supply and demand in the market in question (34). Products or services that are only interchangeable to a small or relative degree do not form part of the same market (35). NRAs should thus commence the exercise of defining the relevant product or service market by grouping together products or services that are used by consumers for the same purpose (end use). |
| --- | --- |

33.

According to settled case-law, the relevant product market comprises all products or services that are sufficiently interchangeable or substitutable, not only in terms of their objective characteristics, their prices or their intended use, but also in terms of the conditions of competition and/or the structure of supply and demand in the market in question (34). Products or services that are only interchangeable to a small or relative degree do not form part of the same market (35). NRAs should thus commence the exercise of defining the relevant product or service market by grouping together products or services that are used by consumers for the same purpose (end use).

| 34. | Although the end use of a product or service is closely related to its physical characteristics, different types of products or services may be used to achieve the same end. |
| --- | --- |

34.

Although the end use of a product or service is closely related to its physical characteristics, different types of products or services may be used to achieve the same end.

| 35. | Product substitutability between different services may arise through the increasing convergence of various technologies, which often allows operators to offer similar retail product bundles. The use of digital transmission systems, for example, can lead to similarities in the performance and characteristics of network services using distinct technologies. |
| --- | --- |

35.

Product substitutability between different services may arise through the increasing convergence of various technologies, which often allows operators to offer similar retail product bundles. The use of digital transmission systems, for example, can lead to similarities in the performance and characteristics of network services using distinct technologies.

| 36. | In addition, so called ‘over-the-top’ (OTT) services or other internet-related communications paths have emerged as a potential competing force to established retail communications services. As a result, NRAs should assess whether such services may, on a forward-looking basis, provide partial or full substitutes to traditional telecommunications services (36). |
| --- | --- |

36.

In addition, so called ‘over-the-top’ (OTT) services or other internet-related communications paths have emerged as a potential competing force to established retail communications services. As a result, NRAs should assess whether such services may, on a forward-looking basis, provide partial or full substitutes to traditional telecommunications services (36).

| 37. | Therefore, in addition to considering products or services whose objective characteristics, prices and intended use make them sufficiently interchangeable, NRAs should also examine, where necessary, the prevailing conditions of demand and, where appropriate, supply substitution by applying a hypothetical monopolist or SSNIP test in order to complete their market-definition analysis. |
| --- | --- |

37.

Therefore, in addition to considering products or services whose objective characteristics, prices and intended use make them sufficiently interchangeable, NRAs should also examine, where necessary, the prevailing conditions of demand and, where appropriate, supply substitution by applying a hypothetical monopolist or SSNIP test in order to complete their market-definition analysis.

Demand-side substitution

| 38. | Demand-side substitution makes it possible for NRAs to determine the substitutable products or range of products to which customers could easily switch in response to a hypothetical small but significant and non-transitory relative price increase. In determining the existence of demand substitutability, NRAs should make use of any evidence of previous customers' behaviour as well as assess the likely response of customers and suppliers to such price increase of the service in question. |
| --- | --- |

38.

Demand-side substitution makes it possible for NRAs to determine the substitutable products or range of products to which customers could easily switch in response to a hypothetical small but significant and non-transitory relative price increase. In determining the existence of demand substitutability, NRAs should make use of any evidence of previous customers' behaviour as well as assess the likely response of customers and suppliers to such price increase of the service in question.

| 39. | The possibility for customers to substitute a product or a service for another because of a small but significant and non-transitory relative price increase may, however, be hindered by, inter alia, significant switching costs. Customers who have invested in a specific technology or made any other necessary investments in order to receive a service or use a product may be unwilling to incur any additional costs involved in switching to an otherwise substitutable service or product or may find the costs of switching prohibitively high. In the same vein, customers of existing providers may be locked in by long-term contracts. Accordingly, in a situation where customers face significant switching costs in order to substitute product A for product B, these two products may not belong to the same relevant market. |
| --- | --- |

39.

The possibility for customers to substitute a product or a service for another because of a small but significant and non-transitory relative price increase may, however, be hindered by, inter alia, significant switching costs. Customers who have invested in a specific technology or made any other necessary investments in order to receive a service or use a product may be unwilling to incur any additional costs involved in switching to an otherwise substitutable service or product or may find the costs of switching prohibitively high. In the same vein, customers of existing providers may be locked in by long-term contracts. Accordingly, in a situation where customers face significant switching costs in order to substitute product A for product B, these two products may not belong to the same relevant market.

| 40. | At retail level, technological developments have generally led to inter-platform competition, as retail services have been found to be equivalent and increasingly interchangeable (37). In order to determine whether different wholesale platforms such as copper, fibre and cable should be included in a single wholesale market the SSNIP test should be applied. Given the forward-looking character of the analysis, such assessment should take into account that potential access seekers who are not yet providing access-based services do not have to consider switching costs when choosing their access platform. This assessment should address, on a case-by-case basis, the significance of such entry, while bearing in mind that the scale of future entry is inherently difficult to predict. Furthermore, such analysis should assume a hypothetical competitive access regime facilitated by regulation, disregarding non-objectively justifiable impediments to switch which may have been artificially inflated by the network operators to prevent switching away from, or to a given platform. |
| --- | --- |

40.

At retail level, technological developments have generally led to inter-platform competition, as retail services have been found to be equivalent and increasingly interchangeable (37). In order to determine whether different wholesale platforms such as copper, fibre and cable should be included in a single wholesale market the SSNIP test should be applied. Given the forward-looking character of the analysis, such assessment should take into account that potential access seekers who are not yet providing access-based services do not have to consider switching costs when choosing their access platform. This assessment should address, on a case-by-case basis, the significance of such entry, while bearing in mind that the scale of future entry is inherently difficult to predict. Furthermore, such analysis should assume a hypothetical competitive access regime facilitated by regulation, disregarding non-objectively justifiable impediments to switch which may have been artificially inflated by the network operators to prevent switching away from, or to a given platform.

Supply–side substitution

| 41. | In assessing the scope for supply substitution, NRAs may also take into account the likelihood that undertakings not currently active on the relevant product market may decide to enter the market, within a short timeframe, following a small but significant and non-transitory relative price increase. The exact timeframe to be used to assess the likely responses of other suppliers to a relative price increase will inevitably depend on the characteristics of each market and should be decided on a case-by-case basis. In circumstances where the overall costs of switching production to the product in question are relatively negligible, the product may be included into the product market definition. NRAs will need to ascertain whether a given supplier would actually use or switch its productive assets to produce the relevant product or offer the relevant service (for instance, whether their capacity is committed under long-term supply agreements, etc.). |
| --- | --- |

41.

In assessing the scope for supply substitution, NRAs may also take into account the likelihood that undertakings not currently active on the relevant product market may decide to enter the market, within a short timeframe, following a small but significant and non-transitory relative price increase. The exact timeframe to be used to assess the likely responses of other suppliers to a relative price increase will inevitably depend on the characteristics of each market and should be decided on a case-by-case basis. In circumstances where the overall costs of switching production to the product in question are relatively negligible, the product may be included into the product market definition. NRAs will need to ascertain whether a given supplier would actually use or switch its productive assets to produce the relevant product or offer the relevant service (for instance, whether their capacity is committed under long-term supply agreements, etc.).

| 42. | Account should also be taken of any existing legal or other regulatory requirements that could hinder time-efficient entry into the relevant market and as a result discourage supply-side substitution. |
| --- | --- |

42.

Account should also be taken of any existing legal or other regulatory requirements that could hinder time-efficient entry into the relevant market and as a result discourage supply-side substitution.

Chain of substitution

| 43. | The boundaries of the relevant market may be expanded to take into consideration products or geographical areas which, although not directly substitutable, should be included in the market definition because of chain substitutability (38). Chain substitutability occurs where it can be demonstrated that although products A and C are not directly substitutable, product B is a substitute for both product A and product C and therefore products A and C may be in the same product market since their pricing might be constrained by the substitutability of product B. The same reasoning also applies to defining the geographic market. Given the inherent risk of unduly widening the scope of the relevant market, findings of chain substitutability should be adequately substantiated (39). |
| --- | --- |

43.

The boundaries of the relevant market may be expanded to take into consideration products or geographical areas which, although not directly substitutable, should be included in the market definition because of chain substitutability (38). Chain substitutability occurs where it can be demonstrated that although products A and C are not directly substitutable, product B is a substitute for both product A and product C and therefore products A and C may be in the same product market since their pricing might be constrained by the substitutability of product B. The same reasoning also applies to defining the geographic market. Given the inherent risk of unduly widening the scope of the relevant market, findings of chain substitutability should be adequately substantiated (39).

| 44. | Where prices for previous or current generations of technologies can constrain prices for future generations, it is likely that a chain of substitution exists, which would justify the grouping of all generations of technologies in the same relevant product market. As such price-constraints will normally be observable for different generations of technology, they are generally considered to be in the same market. |
| --- | --- |

44.

Where prices for previous or current generations of technologies can constrain prices for future generations, it is likely that a chain of substitution exists, which would justify the grouping of all generations of technologies in the same relevant product market. As such price-constraints will normally be observable for different generations of technology, they are generally considered to be in the same market.

| 45. | Once most customers have switched to a higher performing infrastructure, a group of users may still be using the legacy technology. In this event, NRAs should take a regulatory approach that does not unduly perpetuate the cycle of captivity by defining overly narrow markets. |
| --- | --- |

45.

Once most customers have switched to a higher performing infrastructure, a group of users may still be using the legacy technology. In this event, NRAs should take a regulatory approach that does not unduly perpetuate the cycle of captivity by defining overly narrow markets.

2.3.   Geographic market definition

| 46. | Once the relevant product market has been identified, the next step is to define its geographical dimension. It is only when the geographical dimension of the product or service market has been defined that an NRA may properly assess the competitive conditions on this market. |
| --- | --- |

46.

Once the relevant product market has been identified, the next step is to define its geographical dimension. It is only when the geographical dimension of the product or service market has been defined that an NRA may properly assess the competitive conditions on this market.

| 47. | The process of delineating geographic markets follows the same principles as those discussed in the section above in relation to assessing demand- and supply-side substitution in response to a relative price increase. |
| --- | --- |

47.

The process of delineating geographic markets follows the same principles as those discussed in the section above in relation to assessing demand- and supply-side substitution in response to a relative price increase.

| 48. | According to established case-law, the relevant geographic market comprises an area in which the undertakings concerned are involved in the supply and demand of the relevant products or services, in which the conditions of competition are sufficiently homogeneous, and which can be distinguished from neighbouring areas in which the prevailing conditions of competition are significantly different (40). Areas in which the conditions of competition are heterogeneous do not constitute a uniform market (41). |
| --- | --- |

48.

According to established case-law, the relevant geographic market comprises an area in which the undertakings concerned are involved in the supply and demand of the relevant products or services, in which the conditions of competition are sufficiently homogeneous, and which can be distinguished from neighbouring areas in which the prevailing conditions of competition are significantly different (40). Areas in which the conditions of competition are heterogeneous do not constitute a uniform market (41).

| 49. | With regard to the choice of the geographic unit from which an NRA should start its assessment, the Commission has frequently stated (42) that NRAs should ensure that these units: (a) are of an appropriate size, i.e. small enough to avoid significant variations of competitive conditions within each unit but big enough to avoid a resource-intensive and burdensome micro-analysis that could lead to market fragmentation, (b) are able to reflect the network structure of all relevant operators, and (c) have clear and stable boundaries over time. |
| --- | --- |

49.

With regard to the choice of the geographic unit from which an NRA should start its assessment, the Commission has frequently stated (42) that NRAs should ensure that these units: (a) are of an appropriate size, i.e. small enough to avoid significant variations of competitive conditions within each unit but big enough to avoid a resource-intensive and burdensome micro-analysis that could lead to market fragmentation, (b) are able to reflect the network structure of all relevant operators, and (c) have clear and stable boundaries over time.

| 50. | If regional differences are found, but not considered to be sufficient to warrant different geographic markets or SMP findings, NRAs may pursue geographically differentiated remedies (43). The stability of the differentiation — specifically the degree to which the boundary of the competitive area can be clearly identified and remains consistent over time — is the key to distinguishing between a geographical segmentation at market-definition level and remedy segmentation. |
| --- | --- |

50.

If regional differences are found, but not considered to be sufficient to warrant different geographic markets or SMP findings, NRAs may pursue geographically differentiated remedies (43). The stability of the differentiation — specifically the degree to which the boundary of the competitive area can be clearly identified and remains consistent over time — is the key to distinguishing between a geographical segmentation at market-definition level and remedy segmentation.

| 51. | In the electronic communications sector, the geographical scope of the relevant market has traditionally been determined based on to two main criteria (44):






  (a) | the area covered by a network (45); and |
| --- | --- | --- |

51.

In the electronic communications sector, the geographical scope of the relevant market has traditionally been determined based on to two main criteria (44):

(a)

the area covered by a network (45); and

| (b) | the existence of legal and other regulatory instruments (46). |
| --- | --- |

(b)

the existence of legal and other regulatory instruments (46).

3.   ASSESSING SMP

| 52. | Under Article 14(2) of Directive 2002/21/EC an undertaking is deemed at having SMP if, either individually or jointly with others, it enjoys a position equivalent to dominance, that is to say a position of economic strength affording it the power to behave to an appreciable extent independently of competitors, customers and consumers (47). |
| --- | --- |

52.

Under Article 14(2) of Directive 2002/21/EC an undertaking is deemed at having SMP if, either individually or jointly with others, it enjoys a position equivalent to dominance, that is to say a position of economic strength affording it the power to behave to an appreciable extent independently of competitors, customers and consumers (47).

3.1.   Single SMP

| 53. | Single SMP is found based on a number of criteria, the assessment of which, in light of requirements specified in Article 16 of Directive 2002/21/EC as referred to in paragraph 13 of the present Guidelines, is set out below. |
| --- | --- |

53.

Single SMP is found based on a number of criteria, the assessment of which, in light of requirements specified in Article 16 of Directive 2002/21/EC as referred to in paragraph 13 of the present Guidelines, is set out below.

| 54. | When considering the market power of an undertaking it is important to consider the market share of the undertaking (48) and its competitors as well as constraints exercised by potential competitors in the medium term. Market shares can provide a useful first indication for the NRAs of the market structure and of relative importance of the various operators active on the market. However, the Commission will interpret market shares in the light of the relevant market conditions, and in particular of the dynamics of the market and of the extent to which products are differentiated (49). |
| --- | --- |

54.

When considering the market power of an undertaking it is important to consider the market share of the undertaking (48) and its competitors as well as constraints exercised by potential competitors in the medium term. Market shares can provide a useful first indication for the NRAs of the market structure and of relative importance of the various operators active on the market. However, the Commission will interpret market shares in the light of the relevant market conditions, and in particular of the dynamics of the market and of the extent to which products are differentiated (49).

| 55. | According to established case-law, very large market share held by an undertaking for some time — in excess of 50 % — is in itself, save in exceptional circumstances, evidence of the existence of a dominant position (50). Experience suggests that the higher the market share and the longer the period of time over which it is held, the more likely it is that it constitutes an important preliminary indication of SMP (51). |
| --- | --- |

55.

According to established case-law, very large market share held by an undertaking for some time — in excess of 50 % — is in itself, save in exceptional circumstances, evidence of the existence of a dominant position (50). Experience suggests that the higher the market share and the longer the period of time over which it is held, the more likely it is that it constitutes an important preliminary indication of SMP (51).

| 56. | However, even an undertaking with a high market share may not be able to act to an appreciable extent independently of customers with sufficient bargaining strength (52). In addition, the fact that an undertaking with a strong position in the market is gradually losing market share may well indicate that the market is becoming more competitive, but does not preclude a finding of SMP. Significant fluctuation of market share over time may be indicative of a lack of market power in the relevant market. The ability of a new entrant to increase its market share quickly may also reflect that the relevant market in question is more competitive and that entry barriers (53) can be overcome within a reasonable timeframe (54). |
| --- | --- |

56.

However, even an undertaking with a high market share may not be able to act to an appreciable extent independently of customers with sufficient bargaining strength (52). In addition, the fact that an undertaking with a strong position in the market is gradually losing market share may well indicate that the market is becoming more competitive, but does not preclude a finding of SMP. Significant fluctuation of market share over time may be indicative of a lack of market power in the relevant market. The ability of a new entrant to increase its market share quickly may also reflect that the relevant market in question is more competitive and that entry barriers (53) can be overcome within a reasonable timeframe (54).

| 57. | If the market share is high (55) but below the 50 % threshold, NRAs should rely on other key structural market features to assess SMP. They should carry out a thorough structural evaluation of the economic characteristics of the relevant market before drawing any conclusions on the existence of SMP. |
| --- | --- |

57.

If the market share is high (55) but below the 50 % threshold, NRAs should rely on other key structural market features to assess SMP. They should carry out a thorough structural evaluation of the economic characteristics of the relevant market before drawing any conclusions on the existence of SMP.

| 58. | The following non-exhaustive criteria are relevant to measure the market power of an undertaking to behave to an appreciable extent independently of its competitors, customers and consumers (56):






  — | barriers to entry, |
| --- | --- | --- |

58.

The following non-exhaustive criteria are relevant to measure the market power of an undertaking to behave to an appreciable extent independently of its competitors, customers and consumers (56):

—

barriers to entry,

| — | barriers to expansion, |
| --- | --- |

—

barriers to expansion,

| — | absolute and relative size of the undertaking, |
| --- | --- |

—

absolute and relative size of the undertaking,

| — | control of infrastructure not easily duplicated, |
| --- | --- |

—

control of infrastructure not easily duplicated,

| — | technological and commercial advantages or superiority, |
| --- | --- |

—

technological and commercial advantages or superiority,

| — | absence of or low countervailing buying power, |
| --- | --- |

—

absence of or low countervailing buying power,

| — | easy or privileged access to capital markets/financial resources, |
| --- | --- |

—

easy or privileged access to capital markets/financial resources,

| — | product/services diversification (for example, bundled products or services), |
| --- | --- |

—

product/services diversification (for example, bundled products or services),

| — | economies of scale, |
| --- | --- |

—

economies of scale,

| — | economies of scope, |
| --- | --- |

—

economies of scope,

| — | direct and indirect network effects (57), |
| --- | --- |

—

direct and indirect network effects (57),

| — | vertical integration, |
| --- | --- |

—

vertical integration,

| — | a highly developed distribution and sales network, |
| --- | --- |

—

a highly developed distribution and sales network,

| — | conclusion of long-term and sustainable access agreements; |
| --- | --- |

—

conclusion of long-term and sustainable access agreements;

| — | engagement in contractual relations with other market players that could lead to market foreclosure (58), |
| --- | --- |

—

engagement in contractual relations with other market players that could lead to market foreclosure (58),

| — | absence of potential competition. |
| --- | --- |

—

absence of potential competition.

If taken separately, the above criteria may not necessarily be determinative of a finding of SMP. Such finding must be based on a combination of factors.

| 59. | An SMP finding depends on an assessment of the ease of market entry. In the electronic communications sector, barriers to entry are often high due to, in particular, the existence of technological barriers such as scarcity of spectrum which may limit the amount of available spectrum or where entry into the relevant market requires large infrastructure investments and the programming of capacities over a long time in order to be profitable (59). |
| --- | --- |

59.

An SMP finding depends on an assessment of the ease of market entry. In the electronic communications sector, barriers to entry are often high due to, in particular, the existence of technological barriers such as scarcity of spectrum which may limit the amount of available spectrum or where entry into the relevant market requires large infrastructure investments and the programming of capacities over a long time in order to be profitable (59).

| 60. | However, high barriers to entry may become less relevant in markets characterised by ongoing technological progress, in particular, due to the emergence of new technologies permitting new entrants to provide qualitatively different services that can challenge the SMP operator (60). In electronic communications markets, competitive constraints may come from innovative threats of potential competitors not currently in the market. |
| --- | --- |

60.

However, high barriers to entry may become less relevant in markets characterised by ongoing technological progress, in particular, due to the emergence of new technologies permitting new entrants to provide qualitatively different services that can challenge the SMP operator (60). In electronic communications markets, competitive constraints may come from innovative threats of potential competitors not currently in the market.

| 61. | NRAs should therefore take into account the likelihood that undertakings not currently active on the relevant product market may in the medium term decide to enter the market. Undertakings which, in case of a price increase, are in a position to switch or extend their line of production/services and enter the market should be treated by NRAs as potential market participants even if they do not currently produce the relevant product or offer the relevant service. |
| --- | --- |

61.

NRAs should therefore take into account the likelihood that undertakings not currently active on the relevant product market may in the medium term decide to enter the market. Undertakings which, in case of a price increase, are in a position to switch or extend their line of production/services and enter the market should be treated by NRAs as potential market participants even if they do not currently produce the relevant product or offer the relevant service.

| 62. | Market entry is more likely when potential new entrants are already present in neighbouring markets (61) or provide services that are relevant in order to supply or contest the relevant retail services (62). The ability to achieve the minimum cost-efficient scale of operations may be critical to determine whether entry is likely and sustainable (63). |
| --- | --- |

62.

Market entry is more likely when potential new entrants are already present in neighbouring markets (61) or provide services that are relevant in order to supply or contest the relevant retail services (62). The ability to achieve the minimum cost-efficient scale of operations may be critical to determine whether entry is likely and sustainable (63).

| 63. | NRAs should also carefully take into account the economies of scale and scope, the network effects, the importance of accessing to scarce resources and the sunk costs linked to the network roll-out. |
| --- | --- |

63.

NRAs should also carefully take into account the economies of scale and scope, the network effects, the importance of accessing to scarce resources and the sunk costs linked to the network roll-out.

| 64. | NRAs should also consider whether the market power of an incumbent operator can be (price) constrained by products or services from outside the relevant market and underlying retail market(s), such as OTT players operating on the basis of providing online communications services. Thus, even where an NRA has considered that constraints coming from these products and services at retail level are not sufficiently strong for the retail market to be effectively competitive or are not sufficiently strong to act as indirect constraint for the provision of wholesale services (for the purpose of the wholesale market definition), potential constraints should still be assessed at the SMP assessment stage (64). Since, currently, OTT providers do not provide access services themselves, they do not generally exercise competitive pressure on access markets. |
| --- | --- |

64.

NRAs should also consider whether the market power of an incumbent operator can be (price) constrained by products or services from outside the relevant market and underlying retail market(s), such as OTT players operating on the basis of providing online communications services. Thus, even where an NRA has considered that constraints coming from these products and services at retail level are not sufficiently strong for the retail market to be effectively competitive or are not sufficiently strong to act as indirect constraint for the provision of wholesale services (for the purpose of the wholesale market definition), potential constraints should still be assessed at the SMP assessment stage (64). Since, currently, OTT providers do not provide access services themselves, they do not generally exercise competitive pressure on access markets.

3.2.   Joint SMP

| 65. | The definition of what constitutes a position of joint dominance in competition law is provided by the jurisprudence of the Court of Justice of the European Union and has evolved over time. The joint SMP concept is to be derived from the same basis. A dominant position can be held by several undertakings, which are legally and economically independent of each other, provided that — from an economic point of view — they present themselves or act together on a particular market as a collective entity (65). In the Gencor case (66) the Court examined how appropriate market characteristics could lead to a relationship of interdependence between parties, allowing them to anticipate one another's behaviour. As clearly stated in Airtours
   (67), the existence of an agreement or of other links in law is not indispensable to a finding of a collective position of dominance. Such a finding may be based on other connecting factors and would depend on an economic assessment, and in particular an assessment of the structure of the market (68). |
| --- | --- |

65.

The definition of what constitutes a position of joint dominance in competition law is provided by the jurisprudence of the Court of Justice of the European Union and has evolved over time. The joint SMP concept is to be derived from the same basis. A dominant position can be held by several undertakings, which are legally and economically independent of each other, provided that — from an economic point of view — they present themselves or act together on a particular market as a collective entity (65). In the Gencor case (66) the Court examined how appropriate market characteristics could lead to a relationship of interdependence between parties, allowing them to anticipate one another's behaviour. As clearly stated in Airtours
   (67), the existence of an agreement or of other links in law is not indispensable to a finding of a collective position of dominance. Such a finding may be based on other connecting factors and would depend on an economic assessment, and in particular an assessment of the structure of the market (68).

| 66. | A collective dominant position exists where, in view of actual characteristics of the relevant market, each member of the dominant oligopoly in question, as it becomes aware of common interests, considers it possible, economically rational, and hence preferable, to adopt — on a lasting basis — a common policy for their market conduct with the aim of selling at above competitive prices, without having to enter into an agreement or resort to a concerted practice within the meaning of Article 101 of the Treaty and without any actual or potential competitors, customers or consumers, being able to react effectively (69). |
| --- | --- |

66.

A collective dominant position exists where, in view of actual characteristics of the relevant market, each member of the dominant oligopoly in question, as it becomes aware of common interests, considers it possible, economically rational, and hence preferable, to adopt — on a lasting basis — a common policy for their market conduct with the aim of selling at above competitive prices, without having to enter into an agreement or resort to a concerted practice within the meaning of Article 101 of the Treaty and without any actual or potential competitors, customers or consumers, being able to react effectively (69).

| 67. | The General Court held in Airtours that three cumulative conditions are necessary for a finding of collective dominance as defined (70):






  — | First, each member of the dominant oligopoly must have the ability to know how the other members are behaving in order to monitor whether or not they are adopting a common policy. It is not enough for each member of the dominant oligopoly to be aware that interdependent market conduct is profitable for all of them but each member must also have a means of knowing whether the other operators are adopting the same strategy and whether they are maintaining it. There must, therefore, be sufficient market transparency for all members of the dominant oligopoly to be aware, sufficiently precisely and quickly, of the way in which the other members' market conduct is evolving; |
| --- | --- | --- |

67.

The General Court held in Airtours that three cumulative conditions are necessary for a finding of collective dominance as defined (70):

—

First, each member of the dominant oligopoly must have the ability to know how the other members are behaving in order to monitor whether or not they are adopting a common policy. It is not enough for each member of the dominant oligopoly to be aware that interdependent market conduct is profitable for all of them but each member must also have a means of knowing whether the other operators are adopting the same strategy and whether they are maintaining it. There must, therefore, be sufficient market transparency for all members of the dominant oligopoly to be aware, sufficiently precisely and quickly, of the way in which the other members' market conduct is evolving;

| — | Second, the situation of tacit coordination must be sustainable over time, that is to say, there must be an incentive not to depart from the common policy in the market. It is only if all the members of the dominant oligopoly maintain the parallel conduct that all can benefit. The notion of retaliation in respect of conduct deviating from the common policy is thus inherent in this condition. For a situation of collective dominance to be viable, there must be adequate deterrents to ensure that there is a long-term incentive in not departing from the common policy, which means that each member of the dominant oligopoly must be aware that highly competitive action on its part designed to increase its market share would provoke identical actions from others, so it would derive no benefits from its initiative; |
| --- | --- |

—

Second, the situation of tacit coordination must be sustainable over time, that is to say, there must be an incentive not to depart from the common policy in the market. It is only if all the members of the dominant oligopoly maintain the parallel conduct that all can benefit. The notion of retaliation in respect of conduct deviating from the common policy is thus inherent in this condition. For a situation of collective dominance to be viable, there must be adequate deterrents to ensure that there is a long-term incentive in not departing from the common policy, which means that each member of the dominant oligopoly must be aware that highly competitive action on its part designed to increase its market share would provoke identical actions from others, so it would derive no benefits from its initiative;

| — | Third, to prove the existence of a dominant position to the requisite legal standard, it must also be established that the foreseeable reaction of current and future competitors, as well as customers, would not jeopardise the results expected from the common policy. |
| --- | --- |

—

Third, to prove the existence of a dominant position to the requisite legal standard, it must also be established that the foreseeable reaction of current and future competitors, as well as customers, would not jeopardise the results expected from the common policy.

| 68. | In Impala II
   (71) case the Court of Justice confirmed these criteria as identifying the conditions in the presence of which tacit coordination is more likely to emerge. According to the Court of Justice, such tacit collusion is more likely if competitors can easily arrive at a common perception as to how the coordination should work, and, in particular, of the parameters that lend themselves to being a focal point (72) of the proposed coordination. At the same time, it indicated the necessity to avoid a mechanical approach involving the separate verification of each of those criteria taken in isolation, while taking no account of the overall economic mechanism of a hypothetical tacit coordination (73). Market characteristics must be assessed by reference to that mechanism of hypothetical coordination. |
| --- | --- |

68.

In Impala II
   (71) case the Court of Justice confirmed these criteria as identifying the conditions in the presence of which tacit coordination is more likely to emerge. According to the Court of Justice, such tacit collusion is more likely if competitors can easily arrive at a common perception as to how the coordination should work, and, in particular, of the parameters that lend themselves to being a focal point (72) of the proposed coordination. At the same time, it indicated the necessity to avoid a mechanical approach involving the separate verification of each of those criteria taken in isolation, while taking no account of the overall economic mechanism of a hypothetical tacit coordination (73). Market characteristics must be assessed by reference to that mechanism of hypothetical coordination.

| 69. | Against this background, when determining whether two or more undertakings in a relevant market have joint SMP, for the purposes of determining whether to impose ex ante regulatory obligations on them, NRAs must conduct an analysis of likely developments during the next review period (74).They must consider whether, in light of all considerations, market conditions would be conducive to a mechanism of tacit coordination, on the basis of the economic test set out by the Court. As set out in recital 26 of Directive 2002/21/EC, two or more undertakings can be found to enjoy a dominant position not only where there exist structural or other links between them but also where the structure of the relevant market is conducive to coordinated effects. |
| --- | --- |

69.

Against this background, when determining whether two or more undertakings in a relevant market have joint SMP, for the purposes of determining whether to impose ex ante regulatory obligations on them, NRAs must conduct an analysis of likely developments during the next review period (74).They must consider whether, in light of all considerations, market conditions would be conducive to a mechanism of tacit coordination, on the basis of the economic test set out by the Court. As set out in recital 26 of Directive 2002/21/EC, two or more undertakings can be found to enjoy a dominant position not only where there exist structural or other links between them but also where the structure of the relevant market is conducive to coordinated effects.

| 70. | A prospective analysis must consider expected or foreseeable market developments over the course of the next review period to ascertain whether tacit collusion is the likely market outcome. The likelihood of the elements of the economic test set out by the Court must be established considering market structures and any available evidence of market behaviour, that are conducive to the hypothetical mechanism of coordination developing and to a tacitly collusive equilibrium being reached. A postulated mechanism must be analysed as forming part of a plausible theory of tacit coordination (75), including considerations as regards available evidence and data, as well as hypothetical considerations. As can be derived from the above cited case-law, a checklist approach should be avoided. |
| --- | --- |

70.

A prospective analysis must consider expected or foreseeable market developments over the course of the next review period to ascertain whether tacit collusion is the likely market outcome. The likelihood of the elements of the economic test set out by the Court must be established considering market structures and any available evidence of market behaviour, that are conducive to the hypothetical mechanism of coordination developing and to a tacitly collusive equilibrium being reached. A postulated mechanism must be analysed as forming part of a plausible theory of tacit coordination (75), including considerations as regards available evidence and data, as well as hypothetical considerations. As can be derived from the above cited case-law, a checklist approach should be avoided.

| 71. | Similarly to the Commission's guidance on horizontal mergers (76), all available relevant information on the characteristics of the markets concerned, including both structural features and the past behaviour of market participants, must be taken into account in a prospective analysis. |
| --- | --- |

71.

Similarly to the Commission's guidance on horizontal mergers (76), all available relevant information on the characteristics of the markets concerned, including both structural features and the past behaviour of market participants, must be taken into account in a prospective analysis.

| 72. | Arriving at a common understanding on coordinated behaviour is generally easier in less complex and more stable economic environments. Given that coordination is generally simpler among fewer players, it would seem relevant in particular to examine the number of market participants. Further, it may be easier to reach a common understanding on the terms of coordination if a relative symmetry can be observed, especially in terms of cost structures, market shares, capacity levels including coverage, levels of vertical integration and the capacity to replicate bundles. |
| --- | --- |

72.

Arriving at a common understanding on coordinated behaviour is generally easier in less complex and more stable economic environments. Given that coordination is generally simpler among fewer players, it would seem relevant in particular to examine the number of market participants. Further, it may be easier to reach a common understanding on the terms of coordination if a relative symmetry can be observed, especially in terms of cost structures, market shares, capacity levels including coverage, levels of vertical integration and the capacity to replicate bundles.

| 73. | Transparency of prices can be more easily assumed for retail mass markets, and homogeneity of products can increase the level of transparency, but even product and tariff complexity at retail level can be reduced by establishing simpler pricing rules, such as the identification of a small number of flagship reference products. In electronic communications markets with near complete mobile and fixed penetration, demand volatility tends to be low and new customers can only be acquired from other market players, increasing transparency in relation to market shares (77). |
| --- | --- |

73.

Transparency of prices can be more easily assumed for retail mass markets, and homogeneity of products can increase the level of transparency, but even product and tariff complexity at retail level can be reduced by establishing simpler pricing rules, such as the identification of a small number of flagship reference products. In electronic communications markets with near complete mobile and fixed penetration, demand volatility tends to be low and new customers can only be acquired from other market players, increasing transparency in relation to market shares (77).

| 74. | When making a forecast of current data and of the most likely future developments, NRAs should do so under a Modified Greenfield Approach, as set out in paragraph 17, which requires that the effects of any regulation based on significant market power in place are excluded from the assessment (78). |
| --- | --- |

74.

When making a forecast of current data and of the most likely future developments, NRAs should do so under a Modified Greenfield Approach, as set out in paragraph 17, which requires that the effects of any regulation based on significant market power in place are excluded from the assessment (78).

| 75. | The type of evidence that is available to NRAs in markets that are regulated at the time of the analysis will be different in character to the evidence that is available in markets that are not regulated. However, NRAs might still be able to adduce evidence on market structure and behaviour, for example in cases where the regulation in place may not have fully redressed the observed market failures. This does not mean that the standard of proof should be lower, or that the mechanism of tacit coordination that is hypothesised should be different. |
| --- | --- |

75.

The type of evidence that is available to NRAs in markets that are regulated at the time of the analysis will be different in character to the evidence that is available in markets that are not regulated. However, NRAs might still be able to adduce evidence on market structure and behaviour, for example in cases where the regulation in place may not have fully redressed the observed market failures. This does not mean that the standard of proof should be lower, or that the mechanism of tacit coordination that is hypothesised should be different.

| 76. | Having regard to paragraph 15 when assessing the presence of joint SMP to determine whether to impose ex ante regulation, NRAs can therefore take into account all market circumstances to establish that a tacit collusive behaviour is likely to emerge as a market outcome, in the absence of ex ante regulation, if (i) these circumstances are consistent with the economics of the tacit collusion theory advanced by the NRA and (ii) when assessed, they are found to be relevant in explaining that the market is conducive to the described hypothetical tacit collusive behaviour, on the basis of an integrated analysis, based on the criteria set out in the Airtours case and later confirmed and further clarified in the Impala cases. |
| --- | --- |

76.

Having regard to paragraph 15 when assessing the presence of joint SMP to determine whether to impose ex ante regulation, NRAs can therefore take into account all market circumstances to establish that a tacit collusive behaviour is likely to emerge as a market outcome, in the absence of ex ante regulation, if (i) these circumstances are consistent with the economics of the tacit collusion theory advanced by the NRA and (ii) when assessed, they are found to be relevant in explaining that the market is conducive to the described hypothetical tacit collusive behaviour, on the basis of an integrated analysis, based on the criteria set out in the Airtours case and later confirmed and further clarified in the Impala cases.

| 77. | The analysis of joint SMP has to take account of specificities of the electronic communications sector, in particular the fact that due to the links which typically exist between the wholesale and retail markets, the economic mechanism of tacit collusion is not limited to the wholesale level but should be assessed, taking into account the interaction of both levels. In this respect, focal point(s) can be identified either at retail or wholesale level and retaliation can take place within the functionally connected wholesale and downstream retail market(s) as well as related retail markets, or even outside those markets if the oligopolists are present there and interact there. |
| --- | --- |

77.

The analysis of joint SMP has to take account of specificities of the electronic communications sector, in particular the fact that due to the links which typically exist between the wholesale and retail markets, the economic mechanism of tacit collusion is not limited to the wholesale level but should be assessed, taking into account the interaction of both levels. In this respect, focal point(s) can be identified either at retail or wholesale level and retaliation can take place within the functionally connected wholesale and downstream retail market(s) as well as related retail markets, or even outside those markets if the oligopolists are present there and interact there.

| 78. | As stated by the Court of Justice in Impala II, besides market transparency, a market structure conducive to tacit collusion may also be characterised by market concentration and product homogeneity (79). Other characteristics that may lead to the same conclusion can be extrapolated from case-law or prior regulatory decisions. A non-exhaustive list of market characteristics that the NRAs may consider in their case by case assessment are, by a way of an example, market shares, elasticity of demand, vertical integration, cost and output compatibilities, comprehensive network coverage, profitability and Average Revenue per User (ARPU) levels, relative symmetry of operator and related similarity of retail operations. However, no exhaustive list is suggested. In addition, the relevance of these parameters should be established and assessed on a case-by-case basis and account should be taken of the national circumstances. If NRAs wish to use parameters inspired by ex post competition practice or merger review, they should do so taking account of the specificities of ex ante regulation in the electronic communications sector (80), with the aim of identifying in the specific circumstances, whether the characteristics of the relevant market are such that each member of the dominant oligopoly considers it possible, economically rational, and hence preferable, to adopt — on a lasting basis — a common policy for their market conduct (81). |
| --- | --- |

78.

As stated by the Court of Justice in Impala II, besides market transparency, a market structure conducive to tacit collusion may also be characterised by market concentration and product homogeneity (79). Other characteristics that may lead to the same conclusion can be extrapolated from case-law or prior regulatory decisions. A non-exhaustive list of market characteristics that the NRAs may consider in their case by case assessment are, by a way of an example, market shares, elasticity of demand, vertical integration, cost and output compatibilities, comprehensive network coverage, profitability and Average Revenue per User (ARPU) levels, relative symmetry of operator and related similarity of retail operations. However, no exhaustive list is suggested. In addition, the relevance of these parameters should be established and assessed on a case-by-case basis and account should be taken of the national circumstances. If NRAs wish to use parameters inspired by ex post competition practice or merger review, they should do so taking account of the specificities of ex ante regulation in the electronic communications sector (80), with the aim of identifying in the specific circumstances, whether the characteristics of the relevant market are such that each member of the dominant oligopoly considers it possible, economically rational, and hence preferable, to adopt — on a lasting basis — a common policy for their market conduct (81).

Transparency

| 79. | Based on guidance set out in paragraphs 72, 73 and 77, a starting point for finding joint SMP is the establishment of a common policy on which to align future behaviour. |
| --- | --- |

79.

Based on guidance set out in paragraphs 72, 73 and 77, a starting point for finding joint SMP is the establishment of a common policy on which to align future behaviour.

| 80. | When examining whether a market is sufficiently transparent to enable tacit coordination, it should be examined whether market operators have a strong incentive to converge to an identifiable coordinated market outcome and refrain from reliance on competitive conduct. This is the case where long-term benefits of anti-competitive conduct outweigh any short-term gains resulting from competitive behaviour. As set out in paragraph 78, implementing and sustaining tacit coordination is facilitated by certain market characteristics which can make a particular market more prone to coordination. |
| --- | --- |

80.

When examining whether a market is sufficiently transparent to enable tacit coordination, it should be examined whether market operators have a strong incentive to converge to an identifiable coordinated market outcome and refrain from reliance on competitive conduct. This is the case where long-term benefits of anti-competitive conduct outweigh any short-term gains resulting from competitive behaviour. As set out in paragraph 78, implementing and sustaining tacit coordination is facilitated by certain market characteristics which can make a particular market more prone to coordination.

| 81. | In the specific circumstances of electronic communications, which have high barriers to entry and high sunk costs, newcomers have an incentive to increase their market share to ensure cost recovery. On the other hand, market share symmetry is not necessary for an incentive to tacitly collude, as long as a minimum scale (82) has been achieved or cost structures are comparable (83). |
| --- | --- |

81.

In the specific circumstances of electronic communications, which have high barriers to entry and high sunk costs, newcomers have an incentive to increase their market share to ensure cost recovery. On the other hand, market share symmetry is not necessary for an incentive to tacitly collude, as long as a minimum scale (82) has been achieved or cost structures are comparable (83).

| 82. | In the context of the assessment of existence of collective significant market power and without prejudice to the criteria described in paragraph 67 above, close alignment of prices over a long period, especially if they are above competitive level, together with other factors typical of a collective dominant position, might, in the absence of an alternative reasonable explanation, suffice to demonstrate the existence of a collective dominant position, even where there is no firm direct evidence of strong market transparency, as such transparency may be presumed in such circumstances (84). The investigation of such circumstances must be carried out with care, and, above all, should adopt an approach based on the analysis of plausible coordination strategies that may exist in the circumstances (85). In particular, for the purpose of ex ante regulation in the electronic communications sector, a finding of pre-existing coordination as described above is not a perquisite but may be relevant in particular if the market's characteristics have not appreciably changed and/or are unlikely to do so in the next review period. |
| --- | --- |

82.

In the context of the assessment of existence of collective significant market power and without prejudice to the criteria described in paragraph 67 above, close alignment of prices over a long period, especially if they are above competitive level, together with other factors typical of a collective dominant position, might, in the absence of an alternative reasonable explanation, suffice to demonstrate the existence of a collective dominant position, even where there is no firm direct evidence of strong market transparency, as such transparency may be presumed in such circumstances (84). The investigation of such circumstances must be carried out with care, and, above all, should adopt an approach based on the analysis of plausible coordination strategies that may exist in the circumstances (85). In particular, for the purpose of ex ante regulation in the electronic communications sector, a finding of pre-existing coordination as described above is not a perquisite but may be relevant in particular if the market's characteristics have not appreciably changed and/or are unlikely to do so in the next review period.

| 83. | Where past behaviour can inform the NRA's forward-looking assessment of likely market dynamics in the next review period, NRAs should be conscious of the fact that even in the presence of regulation, the mere imposition of price-controlled wholesale access products may not be a sufficient explanation of an observed alignment of prices over a long period at the retail level. Such an alignment, in the absence of an alternative reasonable explanation, can be sign of a tacit collusive behaviour, if other factors typical for a collective dominant position are present. Alternative reasonable explanations, aside from regulatory obligations setting price levels, may be, for example, economic in nature, if price levels can be justified in view of costs structures in a competitive market. |
| --- | --- |

83.

Where past behaviour can inform the NRA's forward-looking assessment of likely market dynamics in the next review period, NRAs should be conscious of the fact that even in the presence of regulation, the mere imposition of price-controlled wholesale access products may not be a sufficient explanation of an observed alignment of prices over a long period at the retail level. Such an alignment, in the absence of an alternative reasonable explanation, can be sign of a tacit collusive behaviour, if other factors typical for a collective dominant position are present. Alternative reasonable explanations, aside from regulatory obligations setting price levels, may be, for example, economic in nature, if price levels can be justified in view of costs structures in a competitive market.

| 84. | Further, for the purposes of assessing the transparency criterion, in the specific circumstances of ex ante regulation of electronic communications markets, where barriers to entry for new entrants are typically high, a refusal by network owners to provide wholesale access on reasonable terms may be a potential focal point of a common policy adopted by members of an oligopoly. Such a refusal by network operators may therefore point towards the existence of a common policy, which is taken into account alongside other factors when carrying out a joint SMP analysis. A focal point based on the denial of access can either be observed in the case of operators that are not subject to ex ante access obligations, or foreseen in the case of operators that are subject to such obligations at the time of the analysis, provided certain conditions are met. Such conditions include a shared incentive in sustaining significant or abnormally high rents (profits) on downstream or related retail markets, which the NRA finds to be out of proportion to investments made and risks incurred (86), or other non-price-related types of common policy in a market conducive to tacit coordination incompatible with a well-functioning retail market as set out by the Court in the Impala II judgment (87), that can also be adduced as evidence that refusal of access is a credible focal point. It is also relevant to assess whether the operator in question has a sufficient scale to justify the provision of a wholesale service to third parties. |
| --- | --- |

84.

Further, for the purposes of assessing the transparency criterion, in the specific circumstances of ex ante regulation of electronic communications markets, where barriers to entry for new entrants are typically high, a refusal by network owners to provide wholesale access on reasonable terms may be a potential focal point of a common policy adopted by members of an oligopoly. Such a refusal by network operators may therefore point towards the existence of a common policy, which is taken into account alongside other factors when carrying out a joint SMP analysis. A focal point based on the denial of access can either be observed in the case of operators that are not subject to ex ante access obligations, or foreseen in the case of operators that are subject to such obligations at the time of the analysis, provided certain conditions are met. Such conditions include a shared incentive in sustaining significant or abnormally high rents (profits) on downstream or related retail markets, which the NRA finds to be out of proportion to investments made and risks incurred (86), or other non-price-related types of common policy in a market conducive to tacit coordination incompatible with a well-functioning retail market as set out by the Court in the Impala II judgment (87), that can also be adduced as evidence that refusal of access is a credible focal point. It is also relevant to assess whether the operator in question has a sufficient scale to justify the provision of a wholesale service to third parties.

Sustainability

| 85. | In order to make the common policy sustainable over time, there must be an incentive for each member of the oligopoly not to depart from the terms of coordination. This derives from the fact that members of the dominant oligopoly can benefit only if they all maintain the parallel conduct. The existence of a credible threat of retaliation, deterring deviation, is a necessary requirement to ensure that the coordination mechanism remains credible over time. |
| --- | --- |

85.

In order to make the common policy sustainable over time, there must be an incentive for each member of the oligopoly not to depart from the terms of coordination. This derives from the fact that members of the dominant oligopoly can benefit only if they all maintain the parallel conduct. The existence of a credible threat of retaliation, deterring deviation, is a necessary requirement to ensure that the coordination mechanism remains credible over time.

| 86. | As regards the need to resort to the exercise of a sanction, the General Court clarified that the mere existence of an effective deterrent mechanism is, in principle, sufficient since if the members of the oligopoly conform with the common policy, there is no need to resort to the exercise of a sanction. The most effective deterrent mechanism is that which has not been used (88). |
| --- | --- |

86.

As regards the need to resort to the exercise of a sanction, the General Court clarified that the mere existence of an effective deterrent mechanism is, in principle, sufficient since if the members of the oligopoly conform with the common policy, there is no need to resort to the exercise of a sanction. The most effective deterrent mechanism is that which has not been used (88).

| 87. | This clarification is particularly relevant, by way of an example, in cases where an NRA considers that the focal point of tacit collusion at the wholesale level consists of a (constructive) refusal of wholesale access (89), and where wholesale transactions are typically scarce. In such cases, NRAs do not need to establish that the retaliation would consist of the conclusion of another access agreement by the other tacitly colluding operator(s), but may identify a different (90) credible retaliatory mechanism on the underlying or related retail market(s) (such as short-term price wars) (91). Considerations related to portability and churn (92) in the specific circumstances could further substantiate the assumed responsiveness of consumers to price changes and help the NRA to predict the likelihood of retaliation at retail level being effective (93). |
| --- | --- |

87.

This clarification is particularly relevant, by way of an example, in cases where an NRA considers that the focal point of tacit collusion at the wholesale level consists of a (constructive) refusal of wholesale access (89), and where wholesale transactions are typically scarce. In such cases, NRAs do not need to establish that the retaliation would consist of the conclusion of another access agreement by the other tacitly colluding operator(s), but may identify a different (90) credible retaliatory mechanism on the underlying or related retail market(s) (such as short-term price wars) (91). Considerations related to portability and churn (92) in the specific circumstances could further substantiate the assumed responsiveness of consumers to price changes and help the NRA to predict the likelihood of retaliation at retail level being effective (93).

| 88. | The credibility of a threat of sanction (mechanism) and/or its exercise is to be considered by the NRAs in the case-by-case analysis. |
| --- | --- |

88.

The credibility of a threat of sanction (mechanism) and/or its exercise is to be considered by the NRAs in the case-by-case analysis.

External factors

| 89. | The assessment of countervailing factors to the theory of tacit collusion includes economic considerations as to whether the operators currently present in the market outside the tacitly colluding oligopoly act as fringe competitor(s) or have the potential to become maverick(s), or to whether customers have sufficient countervailing buyer power to jeopardise the collusive mechanism. |
| --- | --- |

89.

The assessment of countervailing factors to the theory of tacit collusion includes economic considerations as to whether the operators currently present in the market outside the tacitly colluding oligopoly act as fringe competitor(s) or have the potential to become maverick(s), or to whether customers have sufficient countervailing buyer power to jeopardise the collusive mechanism.

| 90. | In the framework of ex ante regulation in the electronic communications sector the market position and strength of the rivals can be assessed based on various factors, related to barriers of entry for potential competitors and the competitive situation of and barriers to expansion for existing market players. The relevant parameters in this assessment will include market share in the market under assessment, related economies of scope, potential to provide input to all products requested by the customers at the retail level, its relative strength in the major area of activity, the existence of fringe or maverick competitors, etc. In this respect, NRAs should include in their draft measure an assessment as to whether or not fringe competitors have the ability to challenge the anti-competitive coordinated outcome (94). |
| --- | --- |

90.

In the framework of ex ante regulation in the electronic communications sector the market position and strength of the rivals can be assessed based on various factors, related to barriers of entry for potential competitors and the competitive situation of and barriers to expansion for existing market players. The relevant parameters in this assessment will include market share in the market under assessment, related economies of scope, potential to provide input to all products requested by the customers at the retail level, its relative strength in the major area of activity, the existence of fringe or maverick competitors, etc. In this respect, NRAs should include in their draft measure an assessment as to whether or not fringe competitors have the ability to challenge the anti-competitive coordinated outcome (94).

| 91. | As mentioned in paragraph 59, markets for the provision of electronic communications services have high barriers to entry, in particular of an economic nature, as network roll-out, in the absence of wholesale access agreement, is costly and time-consuming; but also barriers of a legal nature, as in particular spectrum policy can limit the number of mobile network operators (95). For this reason, a hypothetical new entrant that could disrupt a tacit collusive equilibrium is likely to have to rely, at least partly, on the infrastructure of others. In the absence of regulatory intervention or sustainable commercial agreements or disruptive technological innovation, it can typically be assumed that the likelihood of a disruptive entry is generally low in the short and medium term. |
| --- | --- |

91.

As mentioned in paragraph 59, markets for the provision of electronic communications services have high barriers to entry, in particular of an economic nature, as network roll-out, in the absence of wholesale access agreement, is costly and time-consuming; but also barriers of a legal nature, as in particular spectrum policy can limit the number of mobile network operators (95). For this reason, a hypothetical new entrant that could disrupt a tacit collusive equilibrium is likely to have to rely, at least partly, on the infrastructure of others. In the absence of regulatory intervention or sustainable commercial agreements or disruptive technological innovation, it can typically be assumed that the likelihood of a disruptive entry is generally low in the short and medium term.

| 92. | As regards customers, consumers in mass markets are unlikely to be able to individually exercise buyer power of any significance. On the other hand, some business end-users who purchase business-grade or tailored products may be able to exercise countervailing buyer power and their potential reaction should be analysed, if appropriate, in the specific market. |
| --- | --- |

92.

As regards customers, consumers in mass markets are unlikely to be able to individually exercise buyer power of any significance. On the other hand, some business end-users who purchase business-grade or tailored products may be able to exercise countervailing buyer power and their potential reaction should be analysed, if appropriate, in the specific market.

| 93. | This Communication is addressed to the Member States. |
| --- | --- |

93.

This Communication is addressed to the Member States.

For the Commission,

Mariya GABRIEL

Member of the Commission

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(1)  Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (OJ L 108, 24.4.2002, p. 33).

1

(2)  Explanatory Note accompanying Guidelines on market analysis and the assessment of significant market power under the EU regulatory framework for electronic communications networks and services, SWD(2018)124.

2

(3)  Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (Access Directive) (OJ L 108, 24.4.2002, p. 7).

3

(4)  Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services (Authorisation Directive) (OJ L 108, 24.4.2002, p. 21).

4

(5)  Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users' rights relating to electronic communications networks and services (Universal Service Directive) (OJ L 108, 24.4.2002, p. 51).

5

(6)  Regulation (EU) No 531/2012 of the European Parliament and of the Council of 13 June 2012 on roaming on public mobile communications networks within the Union (OJ L 172, 30.6.2012, p. 10), as amended by Regulation (EU) 2015/2120 of the European Parliament and of the Council of 25 November 2015 (OJ L 310, 26.11.2015, p. 1) and Regulation (EU) 2017/920 of the European Parliament and of the Council of 17 May 2017 (OJ L 147, 9.6.2017, p. 1).

6

(7)  Commission Recommendation 2014/710/EU of 9 October 2014 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services (OJ L 295, 11.10.2014, p. 79).

7

ex ante

(8)  Commission Notice on the definition of relevant market for the purposes of Community competition law (OJ C 372, 9.12.1997, p. 5) (1997 Notice on Market Definition). For the purposes of the application of competition law, the 1997 Notice on Market Definition explains that the concept of the relevant market is closely linked to the objectives pursued under relevant policies, ex post enforcement under Articles 101 and 102 of the Treaty or ex ante assessment under the EU Merger Regulation.

8

ex post

ex ante

(9)  Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ L 24, 29.1.2004, p. 1).

9

(10)  OJ L 24, 29.1.2004, p. 1.

10

(11)  Article 16(6) of the Framework Directive currently states that NRAs shall notify the Commission of new draft measures within three years of the adoption of a previous measure relating to that market.

11

(12)  Recital 27 of the Framework Directive.

12

(13)  Explanatory Note accompanying the Commission Recommendation 2014/710/EU, SWD(2014) 298, p. 8.

13

(14)  Cases FI/2004/0082, ES/2005/0330 and NL/2015/1727. See also CZ/2012/1322.

14

(15)  Cases IE/2004/0121, ES/2005/0330, SI/2009/0913 and NL/2015/1727.

15

(16)  See point 4 of the Commission Recommendation 2014/710/EU and its Explanatory Note and Case FR/2014/1670.

16

(17)  Article 14(2) of Directive 2002/21/EC.

17

(18)  The use of the term ‘relevant market’ implies the description of the products or services that make up the market and the assessment of the geographical scope of that market and the terms ‘products’ and ‘services’ are used interchangeably throughout this text. According to paragraph 7 of the 1997 Notice on Market Definition, a relevant product market ‘comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products’ characteristics, their prices and their intended use'.

18

(19)  Case C-209/98, Entreprenørforeningens Affalds EU:C:2000:279, paragraph 57 and Case C-242/95 GT-Link EU:C:1997:376, paragraph 36. It should be recognised that the objective of market definition is not an end in itself, but part of a process, namely assessing the degree of an undertaking's market power.

19

(20)  Joined Cases C-68/94 and C-30/95, France and Others v Commission EU:C:1998:148. See, also, 1997 Notice on Market Definition at paragraph 12.

20

(21)  The main product and service markets whose characteristics may be such as to warrant, in principle, the imposition of ex ante regulatory obligations are identified in the Recommendation 2014/710/EU, of which NRAs are required to take utmost account when defining relevant markets.

21

ex ante

(22)  As is also stated in the 1997 Notice on Market Definition, from an economic point of view, for the definition of the relevant market, demand-side substitution constitutes the most immediate and effective disciplinary force on the suppliers of a given product, in particular in relation to their pricing decisions.

22

(23)  See also 1997 Notice on Market Definition, paragraph 24.

23

(24)  It is not necessary that all consumers switch to a competing product; it suffices that enough or sufficient switching takes place so that a relative price increase is not profitable. This requirement corresponds to the principle of ‘sufficient interchangeability’ laid down in the case-law of the Court of Justice; see footnote 27.

24

(25)  The notion of ‘short term’ depends on market characteristics and national circumstances. In COMP/39.525, Telekomunikacja Polska, the Commission set out, in paragraph 580 that ‘there is supply-side substitution where suppliers are able to switch production to the relevant products and market them in short term in response to small and permanent changes in relative prices’. According to footnote 4 in paragraph 20 of the 1997 Notice on Market Definition, the relevant period is ‘such a period that does not entail a significant adjustment of existing and intangible assets’.

25

(26)  See also 1997 Notice on Market Definition, paragraph 20.

26

(27)  See COMP/39.525, Telekomunikacja Polska, paragraph 580.

27

(28)  See, also, the 1997 Notice on Market Definition, paragraphs 20-23, Case IV/M.1225 — Enso/Stora, OJ L 254, 29.9.1999, paragraph 39.

28

(29)  See also 1997 Notice on Market Definition, paragraph 24.

29

(30)  See Case T-83/91, Tetra Pak v Commission EU:T:1994:246, paragraph 68. The test is also known as the SSNIP (small but significant non-transitory increase in price) test. Although the SSNIP test is but one example of a method used for defining the relevant market and notwithstanding its formal econometric nature or its margin for errors (the so-called ‘cellophane fallacy’), its importance lies primarily in its use as a conceptual tool for assessing evidence of competition between different products or services.

30

(31)  In other words, where the cross-price elasticity of demand between two products is high, one may conclude that consumers view these products as close substitutes. Where consumer choice is influenced by considerations other than price increases, the SSNIP test may not be an adequate measurement of product substitutability; see Case T-25/99, Colin Arthur Roberts and Valérie Ann Roberts v Commission, EU:T:2001:177. See also 1997 Notice on Market Definition, paragraph 17.

31

(32)  This assumption can be rebutted if there are strong indications that the previously regulated price has not been set at competitive levels. In such circumstances it may be appropriate to use as a starting point a price resulting from an updated cost model or benchmarking.

32

(33)  Explanatory note to the Recommendation 2014/710/EU, SWD(2014)298, page 18; Case NL/2015/1727, C(2015)3078. See also CZ/2017/1985.

33

(34)  Case C-333/94 P, Tetra Pak v Commission EU:C:1996:436, paragraph 13, Case 31/80 L'Oréal EU:C:1980:289, paragraph 25, Case 322/81, Michelin v Commission EU:C:1983:313, paragraph 37, Case C-62/86, AkzoChemie v Commission EU:C:1991:286, paragraph 51, Case T-504/93, Tiercé Ladbroke v Commission EU:T:1997:84, paragraph 81, T-65/96, Kish Glass v Commission EU:T:2000:93, paragraph 62, Case C-475/99, Ambulanz Glöckner and Landkreis Südwestpfalz EU:C:2001:577, paragraph 33. The test of sufficient substitutability or interchangeability was first laid down by the Court of Justice in Case 6/72, Europemballage and Continental Can v Commission EU:C:1973:22, paragraph 32 and Case 85/76, Hoffmann La-Roche v Commission EU:C:1979:36, paragraph 23.

34

(35)  Case C-333/94 P, Tetra Pak v Commission EU:C:1996:436, paragraph 13, Case 66/86, Ahmed Saeed EU:C:1989:140, paragraphs 39 and 40, Case 27/76, United Brands v Commission EU:C:1978:22, paragraphs 22 and 29, and 12; Case T-229/94, Deutsche Bahn v Commission EU:T:1997:155, paragraph 54. In Tetra Pak, the Court confirmed that the fact that demand for cartons used for packaging fruit juice was marginal and stable over time compared to the demand for cartons used for packaging milk was evidence of a very little interchangeability between the milk and the non-milk packaging sector, idem, paragraphs 13 and 15.

35

(36)  Where no sufficient substitutability patterns can be established to warrant including such OTT-based services in the relevant product market, NRAs should, nevertheless, consider the potential competitive constraints exercised by these services at the stage of the SMP assessment (see also cases CZ/2017/1985 as well as CZ/2012/1322 and further below).

36

(37)  While NRA's have generally found retail services provided over fixed networks to be in the same retail market irrespective of the underlying transmission platform (i.e. irrespective of whether the retail service was provided via coaxial cable, fibre or copper), they generally found retail services provided over fixed and mobile networks to be in separate markets.

37

(38)  See 1997 Notice on Market Definition, paragraphs 57 and 58. For instance, chain substitutability could occur where an undertaking providing services at national level constrains the prices charged by undertakings providing services in separate geographical markets. This may be the case where the prices charged by undertakings providing cable networks in particular areas are constrained by a dominant undertaking operating nationally. See also: Case COMP/M.1628 — TotalFina/Elf, paragraph 188.

38

(39)  Evidence should show clear price interdependence at the extremes of the chain. The degree of substitutability between the relevant products or geographical areas should be sufficiently strong.

39

(40)  United Brands, op. cit., paragraph 44, Michelin, op. cit., paragraph 26, Case 247/86 Alsatel v Novasam EU:C:1988:469, paragraph 15; Tiercé Ladbroke v Commission, op. cit., paragraph 102.

40

(41)  Deutsche Bahn v Commission, op. cit., paragraph 92. Case T-139/98 AAMS v Commission, EU:T:2001:272, paragraph 39.

41

(42)  See, for example, Section 2.5 of the Explanatory Note accompanying the Recommendation 2014/710/EU, SWD(2014)298.

42

(43)  Explanatory Note to the Recommendation 2014/710/EU, SWD(2014)298, page 14. See also CZ/2012/1322.

43

(44)  See, for instance, Case IV/M.1025 Mannesmann/Olivetti/Infostrada, paragraph 17, and Case COMP/JV.23 — Telefónica/Portugal Telecom/Médi Telecom.

44

(45)  In practice, this area will correspond to the limits of the area in which an operator is authorised to operate. In Case COMP/M.1650 — ACEA/Telefónica, the Commission pointed out that since the notified joint venture would have a licence limited to the area of Rome, the geographical market could be defined as local, paragraph 16.

45

(46)  For example, mobile operators may provide mobile services only in the geographic areas for which they have been granted authorisations for the use of radio spectrum, thus contributing to the geographical dimension of the relevant markets; see Case IV/M.1439 — Telia/Telenor, paragraph 124, Case IV/M.1430 — Vodafone/Airtouch, paragraphs 13-17, Case COMP/JV.17 — Mannesmann/Bell Atlantic/Omnitel, paragraph 15.

46

(47)  This definition corresponds to the definition that the case-law ascribes to the concept of dominant position in Article 102 of the Treaty. See United Brands, op. cit., paragraph 65; Hoffmann-La Roche v Commission, op. cit., paragraph 38.

47

(48)  In terms of value, volume, connection lines, subscriber numbers, as appropriate in a given market.

48

(49)  See point 13 of the Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings.

49

(50)  AKZO Chemie v Commission, op. cit., paragraph 60; Case T-228/97, Irish Sugar v Commission EU:T:1999:246, para 70, Hoffmann-La Roche v Commission, op. cit, paragraph 41, AAMS and Others v Commission op. cit., paragraph 51. However, large market share can function as an accurate indicator only on the assumption that competitors are unable to expand their output by sufficient volume to meet the shifting demand resulting from a rival's price increase. Irish Sugar v Commission, op. cit., paragraphs 97 to 104.

50

(51)  See point 15 of the Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings.

51

(52)  See point 18 of the Communication from the Commission — Guidance on the Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings.

52

(53)  Barriers to entry in this sector may be structural, legal or regulatory. Structural barriers to entry result from original cost or demand conditions that create asymmetric conditions between incumbents and new entrants impeding or preventing market entry of the latter. Legal or regulatory barriers are not based on economic conditions, but result from legislative, administrative or other measures that have a direct effect on the conditions of entry and/or the positioning of operators in the relevant market. See Commission Recommendation 2014/710/EU.

53

(54)  Case COMP/M.5532 — Carphone Warehouse/TiscaliUK.

54

(55)  The Commission's experience suggests that dominance is not likely if the undertaking's market share is below 40 % in the relevant market. However, there may be specific cases below that threshold where competitors are not in a position to constrain effectively the conduct of a dominant undertaking. See United Brands, op. cit. and Case COMP/M.1741 — MCI WorldCom/Sprint.

55

(56)  Cases NL/2017/1958-59 and NL/2017/1960. See Case PT/2017/2023.

56

(57)  Direct network effects are present when the value of a good or service for a consumer derives from the increased use of such good/service by others. Indirect network effects occur when such increased value derives from the increased use of a complementary good or service.

57

(58)  In particular, roaming agreements, network sharing agreements as well as co-investment agreements not opened to third parties, that could, inter alia, eliminate an independent trading partner with whom the smaller operator can deal. See Case COMP/M.7612 — Hutchinson 3G UK/Telefónica UK.

58

(59)  Hoffmann-La Roche v Commission, op. cit., at paragraph 48. The most important types of entry barriers are economies of scale and sunk costs. These barriers are particularly relevant to the electronic communications sector in view of the fact that large investments are necessary to create, for instance, an efficient electronic communications network for the provision of access services and it is likely that little could be recovered if a new entrant decides to exit the market.

59

(60)  Case COMP/M.5532 — Carphone Warehouse/Tiscali UK, Case COMP/M.7018 — Telefónica Deutschland/E-Plus and Case COMP/M.7612 — Hutchinson 3G UK/Telefónica UK.

60

(61)  Case COMP/M.1564 — Astrolink JV.

61

(62)  Case COMP/M.1564 — Astrolink JV.

62

(63)  Case COMP/M.1741 — MCI WorldCom/Sprint.

63

(64)  Case FR/2014/1670.

64

(65)  Case C-395/96 P, Compagnie Maritime Belge EU:C:2000:132, paragraphs 35-36.

65

(66)  Case T-102/96, Gencor Ltd v Commission EU:T:1999:65, paragraph 163.

66

(67)  Case T-342/99, Airtours plc v Commission EU:T:2002:146.

67

(68)  Compagnie Maritime Belge, paragraph 45.

68

(69)  Case T-342/99, Airtours plc v Comission EU:T:2002:146, paragraph 61; Case C-413/06 Impala II EU:C:2008:392, paragraph 122.

69

(70)  Ibid, paragraph 62.

70

(71)  Impala II, paragraph 123.

71

(72)  Which is understood as the tacit understanding of the terms of the coordination between the jointly dominant undertakings, a solution that tacitly colluding operators will tend to adopt in the specific market circumstances and which requires market transparency to become established. See paragraph 123 of Impala II judgement.

72

(73)  Ibid, paragraph 125.

73

(74)  Ibid, paragraph 123.

74

(75)  Ibid, paragraph 130.

75

(76)  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings (OJ C 31, 5.2.2004, p. 5).

76

(77)  In the merger context, these considerations were discussed in depth in relation to the electronic communications market, for example, in case COMP M.7758 — Hutchison 3G Italy/WIND/JV.

77

(78)  See Case SI/2009/0913, in which the Commission clarified that this approach is well suited to assess a market's conduciveness to tacit collusion in the presence of existing regulation based on single SMP, stating that ‘what counts here is the situation which would prevail absent the regulatory obligations imposed on Mobitel in this specific market (modified greenfield approach)’.

78

(79)  Impala II, paragraph 121.

79

(80)  The assessment for the purposes of ex ante regulation requires a specific framework of analysis in certain aspects, such as the aforementioned need to disregard regulation currently in place, the need to take into account a specific timeframe of regulation, or the lack of a specific binary counterfactual which is present in a merger analysis.

80

ex ante

(81)  Airtours plc v Comission, op. cit., pararaph 61; Case C-413/06, Impala II EU:C:2008:392, paragraph 122.

81

(82)  This is to be assessed under the national circumstances and relevant market in question, taking into account the need to promote efficient entry. See for example the Annex to Commission Recommendation 2009/396/EC of 7 May 2009 on the regulatory treatment of fixed and mobile termination rates in the EU (OJ L 124, 20.5.2009, p. 67).

82

(83)  Case ES/2005/0330.

83

(84)  Case T-464/04, Impala I EU:T:2006:216, paragraph 252.

84

(85)  Impala II, paragraph 129.

85

(86)  Case ES/2005/0330.

86

(87)  Impala II, paragraph 121. See also this Explanatory note, section ‘market failures at the retail level.’

87

(88)  Impala I, paragraph 466.

88

(89)  Access that would enable an access seeker to effectively compete at retail level.

89

(90)  While the second criterion of the Airtours test requires ‘identical action from others’ this is to be read as highly competitive action by one member of the dominant oligopoly in response to highly competitive action of the other member of the dominant oligopoly which may however take a different form, see Airtours, op. cit., paragraph 62.

90

Airtours

Airtours

(91)  This is important because a sanction against oligopolist 1 for its grant of access to a competitor through grants of access by oligopolist 2 to other competitors could have long-term effects on the market, further undermining profits of the retaliating party, and thus not be a credible deterrent of opportunistic behaviour. See also Case ES/2005/0330.

91

(92)  Number portability is the possibility for end-users to retain a number from the national telephone numbering plan independently of the undertaking providing the service, and churn is the percentage of subscribers to a service who discontinue their subscriptions to that service over certain period.

92

(93)  Case ES/2005/0330.

93

(94)  Case IE/2004/0121.

94

(95)  See footnote 52 and Explanatory note to the Recommendation 2014/710/EU, SWD(2014)298, page 4.

95

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| 7.5.2018 | EN | Official Journal of the European Union | C 159/16 |
| --- | --- | --- | --- |

7.5.2018

EN

Official Journal of the European Union

C 159/16

---

Non-opposition to a notified concentration

(Case M.8824 — Mitsui Rail Capital Europe/Siemens Nederland/JV)

(Text with EEA relevance)

(2018/C 159/02)

On 26 April 2018, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

| — | in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes, |
| --- | --- |

—

in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

| — | in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32018M8824. EUR-Lex is the online access to European law. |
| --- | --- |

—

in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32018M8824. EUR-Lex is the online access to European law.

---

(1)  OJ L 24, 29.1.2004, p. 1.

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| 7.5.2018 | EN | Official Journal of the European Union | C 159/16 |
| --- | --- | --- | --- |

7.5.2018

EN

Official Journal of the European Union

C 159/16

---

Non-opposition to a notified concentration

(Case M.8805 — Panalpina/DFG/PA NL Perishables)

(Text with EEA relevance)

(2018/C 159/03)

On 26 April 2018, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

| — | in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes, |
| --- | --- |

—

in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

| — | in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32018M8805. EUR-Lex is the online access to European law. |
| --- | --- |

—

in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32018M8805. EUR-Lex is the online access to European law.

---

(1)  OJ L 24, 29.1.2004, p. 1.

---

IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

| 7.5.2018 | EN | Official Journal of the European Union | C 159/17 |
| --- | --- | --- | --- |

7.5.2018

EN

Official Journal of the European Union

C 159/17

---

Euro exchange rates (1)

4 May 2018

(2018/C 159/04)

1 euro =

| | Currency | Exchange rate |
| --- | --- | --- |
| USD | US dollar | 1,1969 |
| JPY | Japanese yen | 130,37 |
| DKK | Danish krone | 7,4492 |
| GBP | Pound sterling | 0,88235 |
| SEK | Swedish krona | 10,5715 |
| CHF | Swiss franc | 1,1950 |
| ISK | Iceland króna | 122,20 |
| NOK | Norwegian krone | 9,6440 |
| BGN | Bulgarian lev | 1,9558 |
| CZK | Czech koruna | 25,503 |
| HUF | Hungarian forint | 313,87 |
| PLN | Polish zloty | 4,2543 |
| RON | Romanian leu | 4,6620 |
| TRY | Turkish lira | 5,0963 |
| AUD | Australian dollar | 1,5915 |
| CAD | Canadian dollar | 1,5410 |
| HKD | Hong Kong dollar | 9,3952 |
| NZD | New Zealand dollar | 1,7067 |
| SGD | Singapore dollar | 1,5962 |
| KRW | South Korean won | 1 288,32 |
| ZAR | South African rand | 15,1135 |
| CNY | Chinese yuan renminbi | 7,6113 |
| HRK | Croatian kuna | 7,4040 |
| IDR | Indonesian rupiah | 16 729,91 |
| MYR | Malaysian ringgit | 4,7134 |
| PHP | Philippine peso | 61,847 |
| RUB | Russian rouble | 75,4816 |
| THB | Thai baht | 38,008 |
| BRL | Brazilian real | 4,2446 |
| MXN | Mexican peso | 22,9276 |
| INR | Indian rupee | 80,0270 |

Currency

Exchange rate

USD

US dollar

1,1969

JPY

Japanese yen

130,37

DKK

Danish krone

7,4492

GBP

Pound sterling

0,88235

SEK

Swedish krona

10,5715

CHF

Swiss franc

1,1950

ISK

Iceland króna

122,20

NOK

Norwegian krone

9,6440

BGN

Bulgarian lev

1,9558

CZK

Czech koruna

25,503

HUF

Hungarian forint

313,87

PLN

Polish zloty

4,2543

RON

Romanian leu

4,6620

TRY

Turkish lira

5,0963

AUD

Australian dollar

1,5915

CAD

Canadian dollar

1,5410

HKD

Hong Kong dollar

9,3952

NZD

New Zealand dollar

1,7067

SGD

Singapore dollar

1,5962

KRW

South Korean won

1 288,32

ZAR

South African rand

15,1135

CNY

Chinese yuan renminbi

7,6113

HRK

Croatian kuna

7,4040

IDR

Indonesian rupiah

16 729,91

MYR

Malaysian ringgit

4,7134

PHP

Philippine peso

61,847

RUB

Russian rouble

75,4816

THB

Thai baht

38,008

BRL

Brazilian real

4,2446

MXN

Mexican peso

22,9276

INR

Indian rupee

80,0270

---

(1)  Source: reference exchange rate published by the ECB.

---

V Announcements

PROCEDURES RELATING TO THE IMPLEMENTATION OF THE COMMON COMMERCIAL POLICY

European Commission

| 7.5.2018 | EN | Official Journal of the European Union | C 159/18 |
| --- | --- | --- | --- |

7.5.2018

EN

Official Journal of the European Union

C 159/18

---

Notice of initiation of a partial interim review of the anti-dumping measures applicable to imports of certain seamless tubes and pipes originating, inter alia, in Ukraine

(2018/C 159/05)

The European Commission (‘the Commission’) has received a request for review pursuant to Article 11(3) of Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’).

1.   Request for review

The request for review was lodged by the Interpipe group (‘the applicant’), an exporting producer group from Ukraine (‘the country concerned’).

The partial interim review is limited in scope to the examination of dumping as far as the applicant is concerned.

2.   Product under review

The product under review is certain seamless pipes and tubes of iron or steel, of circular cross-section, of an external diameter not exceeding 406,4 mm with a Carbon Equivalent Value (CEV) not exceeding 0,86 according to the International Institute of Welding (IIW) formula and chemical analysis (2), currently falling within CN codes ex 7304 11 00, ex 7304 19 10, ex 7304 19 30, ex 7304 22 00, ex 7304 23 00, ex 7304 24 00, ex 7304 29 10, ex 7304 29 30, ex 7304 31 80, ex 7304 39 58, ex 7304 39 92, ex 7304 39 93, ex 7304 51 89, ex 7304 59 92 and ex 7304 59 93 (TARIC codes 7304110010, 7304191020, 7304193020, 7304220020, 7304230020, 7304240020, 7304291020, 7304293020, 7304318030, 7304395830, 7304399230, 7304399320, 7304518930, 7304599230 and 7304599320) and originating in Ukraine (‘the product concerned’).

3.   Existing measures

The measures currently in force are a definitive anti-dumping duty imposed by Council Implementing Regulation (EU) No 585/2012 (3), as amended by Implementing Regulations (EU) No 795/2012 (4) and (EU) No 1269/2012 (5).

4.   Grounds for the review

The request pursuant to Article 11(3) is based on sufficient evidence, provided by the applicant, that, as far as the applicant is concerned, the circumstances on the basis of which the existing measures were imposed have changed and that these changes are of a lasting nature.

The applicant alleges that its production structure has changed. Interpipe has set up a new plant producing steel billets, which is the major raw material used in the production of the product concerned. Therefore the applicant is now a vertically-integrated group for the production and sale of the product concerned, with significant optimisations of its manufacturing process and cost.

This newly built plant has also allowed the broadening of the portfolio of steel grades and the corresponding range of product types. It enabled the applicant to start producing high-end products such as higher value-added line pipes and industry pipes. The enlargement of the product range implies an important quality change in the product types manufactured and exported by the group in comparison with the last review.

The applicant provided sufficient evidence showing that, as far as the group exporting producer is concerned, the continued imposition of the measures at its current level is no longer necessary to counteract the injurious dumping. In particular the applicant alleges that the significant changes in the production organisation and in their product range have had a direct impact both on the domestic and on the export markets. A comparison of the applicant's normal value and their export prices to the Union indicates that the dumping margin appears to be lower than the current level of the measures.

Therefore, the continued imposition of measures at the existing level, which was based on the level of dumping previously established, appears to be no longer necessary to offset dumping.

5.   Procedure

Having determined, after informing the Member States that sufficient evidence exists to justify the initiation of a partial interim review limited to the examination of dumping, the Commission hereby initiates a review in accordance with Article 11(3) of the basic Regulation.

The investigation will also assess the need for the continuation, removal or amendment of the existing measures in respect of the applicant.

5.1.   Questionnaires

In order to obtain the information it deems necessary for its investigation, the Commission will send a questionnaire to the applicant. This information and supporting evidence must reach the Commission within 37 days of the date of publication of this Notice in the Official Journal of the European Union.

5.2.   Other written submissions

Subject to the provisions of this Notice, all interested parties are hereby invited to make their views known, submit information and provide supporting evidence. Unless otherwise specified, this information and supporting evidence must reach the Commission within 37 days of the date of publication of this Notice in the Official Journal of the European Union.

5.3.   Possibility to be heard by the Commission investigation services

All interested parties may request to be heard by the Commission investigation services. Any request to be heard must be made in writing and must specify the reasons for the request. For hearings on issues pertaining to the initial stage of the investigation the request must be submitted within 15 days of the date of publication of this Notice in the Official Journal of the European Union. Thereafter, a request to be heard must be submitted within the specific deadlines set by the Commission in its communication with the parties.

5.4.   Instructions for making written submissions and sending completed questionnaires and correspondence

Information submitted to the Commission for the purpose of trade defence investigations shall be free from copyrights. Interested parties, before submitting to the Commission information and/or data which is subject to third party copyrights, must request specific permission to the copyright holder explicitly allowing (a) the Commission to use the information and data for the purpose of this trade defence proceeding; and (b) to provide the information and/or data to interested parties to this investigation in a form that allows them to exercise their rights of defence.

All written submissions, including the information requested in this Notice, completed questionnaires and correspondence provided by interested parties for which confidential treatment is requested shall be labelled ‘Limited’. Parties submitting information in the course of this investigation are invited to reason their request for confidential treatment.

Parties providing ‘Limited’ information are required to furnish non-confidential summaries of it pursuant to Article 19(2) of the basic Regulation, which will be labelled ‘For inspection by interested parties’. These summaries should be sufficiently detailed to permit a reasonable understanding of the substance of the information submitted in confidence.

If a party providing confidential information fails to show good cause for a confidential treatment request or does not furnish a non-confidential summary of it in the requested format and quality, the Commission may disregard such information unless it can be satisfactorily demonstrated from appropriate sources that the information is correct.

Interested parties are invited to make all submissions and requests by email including scanned powers of attorney and certification sheets, with the exception of voluminous replies which shall be submitted on a CD-R or DVD by hand or by registered mail. By using email, interested parties express their agreement with the rules applicable to electronic submissions contained in the document ‘CORRESPONDENCE WITH THE EUROPEAN COMMISSION IN TRADE DEFENCE CASES’ published on the website of the Directorate-General for Trade: http://trade.ec.europa.eu/doclib/docs/2011/june/tradoc_148003.pdf The interested parties must indicate their name, address, telephone and a valid email address and they should ensure that the provided email address is a functioning official business email which is checked on a daily basis. Once contact details are provided, the Commission will communicate with interested parties by email only, unless they explicitly request to receive all documents from the Commission by another means of communication or unless the nature of the document to be sent requires the use of a registered mail. For further rules and information concerning correspondence with the Commission including principles that apply to submissions by email, interested parties should consult the communication instructions with interested parties referred to above.

| Commission address for correspondence: |
| --- |
| European Commission |
| Directorate-General for Trade |
| Directorate H |
| Office: CHAR 04/039 |
| 1049 Bruxelles/Brussel |
| BELGIQUE/BELGIË |
| Email: TRADE-R689-SPT@ec.europa.eu |

Commission address for correspondence:

European Commission

Directorate-General for Trade

Directorate H

Office: CHAR 04/039

1049 Bruxelles/Brussel

BELGIQUE/BELGIË

Email: TRADE-R689-SPT@ec.europa.eu

6.   Non-cooperation

In cases where any interested party refuses access to or does not provide the necessary information within the time limits, or significantly impedes the investigation, findings, affirmative or negative, may be made on the basis of facts available, in accordance with Article 18 of the basic Regulation.

Where it is found that any interested party has supplied false or misleading information, the information may be disregarded and use may be made of facts available.

If an interested party does not cooperate or cooperates only partially and findings are therefore based on facts available in accordance with Article 18 of the basic Regulation, the result may be less favourable to that party than if it had cooperated.

Failure to give a computerised response shall not be deemed to constitute non-cooperation, provided that the interested party shows that presenting the response as requested would result in an unreasonable extra burden or unreasonable additional cost. The interested party should immediately contact the Commission.

7.   Hearing Officer

Interested parties may request the intervention of the Hearing Officer in trade proceedings. The Hearing Officer acts as an interface between the interested parties and the Commission investigation services. The Hearing Officer reviews requests for access to the file, disputes regarding the confidentiality of documents, requests for extension of time limits and requests by third parties to be heard. The Hearing Officer may organise a hearing with an individual interested party and mediate to ensure that the interested parties' rights of defence are being fully exercised.

A request for a hearing with the Hearing Officer should be made in writing and should specify the reasons for the request. For hearings on issues pertaining to the initial stage of the investigation the request must be submitted within 15 days of the date of publication of this Notice in the Official Journal of the European Union. Thereafter, a request to be heard must be submitted within specific deadlines set by the Commission in its communication with the parties.

For further information and contact details interested parties may consult the Hearing Officer's web pages on DG Trade's website: http://ec.europa.eu/trade/trade-policy-and-you/contacts/hearing-officer/

8.   Schedule of the investigation

The investigation will be concluded, pursuant to Article 11(5) of the basic Regulation within 15 months of the date of the publication of this Notice in the Official Journal of the European Union.

9.   Processing of personal data

Any personal data collected in this investigation will be treated in accordance with Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (6).

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(1)  OJ L 176, 30.6.2016, p. 21.

(2)  The CEV shall be determined in accordance with Technical Report, 1967, IIW doc. IX-535-67, published by the International Institute of Welding (IIW).

(3)  OJ L 174, 4.7.2012, p. 5.

(4)  OJ L 238, 4.9.2012, p. 1.

(5)  OJ L 357, 28.12.2012, p. 1.

(6)  OJ L 8, 12.1.2001, p. 1.

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OTHER ACTS

European Commission

| 7.5.2018 | EN | Official Journal of the European Union | C 159/22 |
| --- | --- | --- | --- |

7.5.2018

EN

Official Journal of the European Union

C 159/22

---

Application for approval of a minor amendment in accordance with the second subparagraph of Article 53(2) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council on quality schemes for agricultural products and foodstuffs

(2018/C 159/06)

The European Commission has approved this minor amendment in accordance with the third subparagraph of Article 6(2) of Commission Delegated Regulation (EU) No 664/2014 (1)

APPLICATION FOR APPROVAL OF A MINOR AMENDMENT

Application for approval of a minor amendment in accordance with the second subparagraph of Article 53(2) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council
   (2)

‘CORDERO DE NAVARRA’/‘NAFARROAKO ARKUMEA’

EU No: PGI-ES-0212-AM01 — 8.9.2017

PDO ( ) PGI ( X ) TSG ( )

1.   Applicant group and legitimate interest

| Name: | Consejo Regulador de la Indicación Geográfica Protegida Cordero de Navarra o Nafarroako Arkumea |
| --- | --- |
| Address: | Avenida Serapio Huici, 22 |
| Edificio Peritos |
| 31610 Villava |
| NAVARRA |
| ESPAÑA |

Name:

Consejo Regulador de la Indicación Geográfica Protegida Cordero de Navarra o Nafarroako Arkumea

Address:

Avenida Serapio Huici, 22

Edificio Peritos

31610 Villava

NAVARRA

ESPAÑA

Tel.

+34 948013040

Fax

+34 948013041

Email address:

info@intiasa.es

The applicant group represents the collective interests of the producers of ‘Cordero de Navarra’/‘Nafarroako Arkumea’. It holds a legitimate interest in this application for an amendment to the product specification and is also the same group that originally applied for PGI status for ‘Cordero de Navarra’/‘Nafarroako Arkumea’.

The Governing Board for the PGI ‘Cordero de Navarra’ is an association comprising producers who work with ‘Cordero de Navarra’. The Board’s aims include enhancing the product’s value and improving the performance of the PGI scheme, in accordance with Article 45 of Regulation (EU) No 1151/2012.

Under the applicable national legislation, the Board is entrusted with the task of promoting the quality of ‘Cordero de Navarra’ and overseeing and defending the product’s reputation. These aspects are reflected in the Board’s rules of procedure, which form part of the Regulations governing the Protected Geographical Indication ‘Cordero de Navarra’/‘Nafarroako Arkumea’ and its Governing Board, which were passed by Ministry of Agriculture, Fisheries and Food Order APA/1413/2002 of 23 May 2002.

2.   Member State or Third Country

Spain

3.   Heading in the product specification affected by the amendment(s)

| — | ☒ | Description of product |
| --- | --- | --- |
| — | ☒ | Proof of origin |
| — | ☒ | Method of production |
| — | ☐ | Link |
| — | ☐ | Labelling |
| — | ☒ | Other [inspection body and binding national law] |

—

☒

Description of product

—

☒

Proof of origin

—

☒

Method of production

—

☐

Link

—

☐

Labelling

—

☒

Other [inspection body and binding national law]

4.   Type of amendment(s)

| — | ☐ | Amendment to product specification of registered PDO or PGI to be qualified as minor in accordance with the third subparagraph of Article 53(2) of Regulation (EU) No 1151/2012, that requires no amendment to the published single document |
| --- | --- | --- |
| — | ☒ | Amendment to product specification of registered PDO or PGI to be qualified as minor in accordance with the third subparagraph of Article 53(2) of Regulation (EU) No 1151/2012, that requires an amendment to the published single document. |
| — | ☐ | Amendment to product specification of registered PDO or PGI to be qualified as minor in accordance with the third subparagraph of Article 53(2) of Regulation (EU) No 1151/2012, for which a single document (or equivalent) has not been published. |
| — | ☐ | Amendment to product specification of registered TSG to be qualified as minor in accordance with the fourth subparagraph of Article 53(2) of Regulation (EU) No 1151/2012. |

—

☐

Amendment to product specification of registered PDO or PGI to be qualified as minor in accordance with the third subparagraph of Article 53(2) of Regulation (EU) No 1151/2012, that requires no amendment to the published single document

—

☒

Amendment to product specification of registered PDO or PGI to be qualified as minor in accordance with the third subparagraph of Article 53(2) of Regulation (EU) No 1151/2012, that requires an amendment to the published single document.

—

☐

Amendment to product specification of registered PDO or PGI to be qualified as minor in accordance with the third subparagraph of Article 53(2) of Regulation (EU) No 1151/2012, for which a single document (or equivalent) has not been published.

—

☐

Amendment to product specification of registered TSG to be qualified as minor in accordance with the fourth subparagraph of Article 53(2) of Regulation (EU) No 1151/2012.

The minor amendment described in this proposal corrects errors and updates certain references to circumstances which have changed since the initial approval of the product specification. Changes have been made to the following sections of the specification:

—   B) Description of product
  — the references to carcass classification have been updated to reflect the legislation currently in force; this update does not entail any change to the description of the certified product.

—   D) Proof of origin
  — the reference to an inspection body that no longer exists has been removed; the reference to the inspection body can be found in Section G.

—   E) Method of production
  — an error has been removed from the rules on the composition of the feed used to fatten light lambs, and the reference to the Spanish national standard 45011 has been updated with a reference to ISO/IEC 17065.

—   G) Inspection body
  — the reference to the inspection body has been adjusted to reflect a name change.

—   I) Binding national law
  — this section has been updated to reflect the legislation currently in force in Spain.

—   Other— the reference to the now-repealed Council Regulation (EEC) No 2081/92 has been removed from the cover page.

In view of the foregoing, and based on the grounds detailed in this application, we consider that the amendments to the product specification for PGI ‘Cordero de Navarra’/‘Nafarroako Arkumea’ described in this application for approval of a minor amendment should be qualified as minor in accordance with the third subparagraph of Article 53(2) of Regulation (EU) No 1151/2012 because:

| — | The amendment to section B) (Description of product) does not affect the product’s essential characteristics. It is merely an updating of the text to refer to the EU legislation that is currently in force. |
| --- | --- |

—

The amendment to section B) (Description of product) does not affect the product’s essential characteristics. It is merely an updating of the text to refer to the EU legislation that is currently in force.

| — | The link, as described in section F) of the product specification, remains unchanged. |
| --- | --- |

—

The link, as described in section F) of the product specification, remains unchanged.

| — | There is no change to the name or any part of the name of the product. |
| --- | --- |

—

There is no change to the name or any part of the name of the product.

| — | The defined geographical area described in section C) (Geographical area) is unaffected. |
| --- | --- |

—

The defined geographical area described in section C) (Geographical area) is unaffected.

| — | There is no increase in restrictions on trade in the product or its raw materials. |
| --- | --- |

—

There is no increase in restrictions on trade in the product or its raw materials.

5.   Amendment(s)

Amendment 1: description and reasons

Section B: Description of product

In implementation of EU legislation, the Spanish legislation on sheep carcass quality cited in the product specification (Order of 18 September 1975 as amended by Order of 24 September 1987) was expressly repealed by Ministerial Order ARM/2279/2010 of 20 August 2010. The references to the previous legislation have therefore been deleted.

The text has been updated to refer to the EU’s classification scale for lamb carcasses weighing less than 13 kilograms, based on the legal framework in force as at 20 April 2017. This revision does not entail any change to the description of the product characteristics because lamb carcasses continue to be classified using the model previously in place as described in the product specification.

Current text:

B.   Description of product

a)   Milk-fed lambs:

Lambs from the Extra and Primera milk-fed lamb categories under the Quality Standard for Sheep Carcasses (Order of 18 September 1975 as amended by Order of 24 September 1987). The ‘1st’ quality of categories ‘A’ or ‘B’ of the Community scale for the classification of carcases of light lambs (Council Regulation (EEC) No 2137/92 and Commission Regulation (EEC) No 461/93) is also applicable for carcasses that originated as live Navarra and Lacho lambs.

Male or female lambs of the Lacho or Navarra breeds, suckled by the ewe up to the time of slaughter, with a carcass weight — including the head and offal — of 5-8 kg (Lacho breed) or 6-8 kg (Navarra breed), and aged no more than 45 days.

Slight to average fat cover (class 2 or 3 of the Community scale for the classification of carcasses of light lambs established in Council Regulation (EEC) No 2137/92 and Commission Regulation (EEC) No 461/93).

Pearly white to pale pink meat.

Meat that is tender and very succulent, with a smooth texture and distinctive flavour.

b)   Light lambs

Lambs from the Extra and Primera light lamb categories under the Quality Standard for Sheep Carcasses (Order of 18 September 1975 as amended by Order of 24 September 1987). The ‘1st’ quality of categories ‘B’ or ‘C’ of the Community scale for the classification of carcases of light lambs (Council Regulation (EEC) No 2137/92 and Commission Regulation (EEC) No 461/93) is also applicable for carcasses that originated as live Navarra lambs.

Male or female lambs of the Navarra breed, suckled by the ewe for at least 45 days from birth. During the fattening stage, the lambs are fed white straw, cereal-based concentrates, legumes, vitamins and minerals. If the lamb has not been weaned at 45 days, the foregoing substances are supplemented with its mother’s milk during the fattening stage. Light lambs have a carcass weight — not including the head or offal — of 9-12 kg and are aged no more than 110 days.

Slight to average fat cover (class 2 or 3 of the Community scale for the classification of carcasses of light lambs established in Council Regulation (EEC) No 2137/92 and Commission Regulation (EEC) No 461/93).

Pale pink meat.

The meat is slightly marbled with intramuscular fat, tender and very succulent, with a smooth texture and distinctive flavour.

Amended text:

a)   Milk-fed lambs:

Carcasses from the ‘1st’ quality of categories ‘A’ or ‘B’ of the ‘Classification scale for carcasses of lambs of less than 13 kg carcass weight’ (Commission Delegated Regulation (EU) 2017/1182) that originated as live Navarra and Lacho lambs.

Male or female lambs of the Lacho or Navarra breeds, suckled by the ewe up to the time of slaughter, with a carcass weight — including the head and offal — of 5-8 kg (Lacho breed) or 6-8 kg (Navarra breed), and aged no more than 45 days.

Slight to average fat cover (class 2 or 3 of the ‘Classification scale for carcasses of lambs of less than 13 kg carcass weight’ laid down in Commission Delegated Regulation (EU) 2017/1182).

Pale pink meat.

Meat that is tender and very succulent, with a smooth texture and distinctive flavour.

b)   Light lambs

Carcasses from the ‘1st’ quality of categories ‘B’ or ‘C’ of the ‘Classification scale for carcasses of lambs of less than 13 kg carcass weight’ (Commission Delegated Regulation (EU) 2017/1182) that originated as live Navarra lambs.

Male or female lambs of the Navarra breed, suckled by the ewe for at least 45 days from birth. During the fattening stage, the lambs are fed white straw, cereal-based concentrates, legumes, vitamins and minerals. If the lamb has not been weaned at 45 days, the foregoing substances are supplemented with its mother’s milk during the fattening stage. Light lambs have a carcass weight — not including the head or offal — of 9-12 kg and are aged no more than 110 days.

Slight to average fat cover (class 2 or 3 of the ‘Classification scale for carcasses of lambs of less than 13 kg carcass weight’ laid down in Commission Delegated Regulation (EU) 2017/1182).

Pale pink meat.

The meat is slightly marbled with intramuscular fat, tender and very succulent, with a smooth texture and distinctive flavour.

Amendment 2: description and reasons

Section D: Proof that the product originated in the area

We propose that the reference to the inspection body (which no longer exists) be removed from the first paragraph of this section. This means that only reference to the inspection body is found in section G (Inspection body), thus avoiding duplication.

Current text:

D.   Proof that the product originated in the area

The Instituto de Calidad Agroalimentaria de Navarra (ICAN) is the inspection body for this Protected Geographical Indication.

It is responsible for managing the product certification system and therefore for conducting inspections to verify two aspects: firstly that the product is produced and processed or prepared within the specified geographical area, and secondly that the product’s characteristics meet the description laid down in the product specification.

Amended text:

The inspection body for this PGI is responsible for managing the product certification system and therefore for conducting inspections to verify two aspects: firstly that the product is produced and processed or prepared within the specified geographical area, and secondly that the product’s characteristics meet the description laid down in the product specification.

Amendment 3: description and reasons

Section E Method of production

b)   Growth and fattening stage:

The second paragraph of this sub-section has been changed to make it easier to understand. The use of legally permitted products of plant origin other than those originating from cereals and legumes was not permitted under the original text due to an error, which has now been corrected.

The product specification for this PGI was drawn up between 2002 and 2006, when the use of by-products in feed was subject to debate as a result of the BSE crisis. The EU therefore put a number of preventive measures in place, including a ban on feeding ruminants meat meal, blood meal or gelatine (among other substances).

Since the product specification was drafted at that time, and the intention was to ban animal by-products, our prudence led us to commit the error described above.

The subject of feed has since been developed, regulated and implemented in EU law. There are now set rules on feed for the purpose of protecting human and animal health, including a list of permitted and banned raw materials, accepted treatments, conditions of use and upper limits for undesirable substances.

General provision 11 of Commission Regulation (EU) No 68/2013 of 16 January 2013, establishing the Catalogue of Feed Materials, states that ‘the word ‘product’ is used instead of the word ‘by-product’ to reflect the market situation and the language used in practice by [...] operators’. It therefore is no longer necessary for us to continue using the term ‘by-product’ in the product specification.

As the use of vitamins and minerals in fattening feedstuffs is covered at the beginning of the section that we propose to amend, this change to state that the use of products of animal origin (categories 9 and 10 of the Catalogue of Feed Materials) in feed composition is banned is in keeping with the spirit in which the specification was drafted.

The use of raw materials of plant origin — including those covered by categories 2 (Oil seeds, oil fruits, and products derived thereof), 4 (Tubers, roots, and products derived thereof), 5 (Other seeds and fruits, and products derived thereof) — is commonplace in ruminant feedstuffs. Their inclusion in the feedstuffs used to fatten lambs is necessary both from a nutritional perspective and in the interests of ensuring the quality of the end product.

In order to rear healthy lambs and produce high-quality meat, the feed administered to the animals must provide a balanced dose of all the nutrients they need, avoiding any surpluses or deficiencies of nutritional compounds.

The use of proteins from oil seeds — such as sunflower meal, rapeseed meal, etc. — is necessary to ensure that there is enough protein in the feed used to fatten lambs.

The required amount of protein might not be achieved with cereals and legumes alone. Even using large amounts of legumes and supplementing them with protein crops such as broad beans does not always give the protein level needed. Moreover, protein provided in this way is highly degradable and its amino acid profile is not particularly suitable.

Feed containing a large amount of highly degradable protein can lead to high circulating blood ammonia, which sometimes causes lambs to develop liver disorders.

The diet administered at the fattening stage should therefore be based on products of plant origin with a balanced nutritional composition, following the recommendations and limits established in the feed formulations listed in the feed tables periodically published by authoritative bodies such as:

| — | National Research Council (NRC), Board on Agriculture and Natural Resources (USA); |
| --- | --- |

—

National Research Council (NRC), Board on Agriculture and Natural Resources (USA);

| — | Institut National de la Recherche Agronomique (INRA) (France); |
| --- | --- |

—

Institut National de la Recherche Agronomique (INRA) (France);

| — | Fundación Española para el Desarrollo de la Nutrición Animal (FEDNA) (Spain). |
| --- | --- |

—

Fundación Española para el Desarrollo de la Nutrición Animal (FEDNA) (Spain).

To ensure the use of safe and fit-for-purpose feedstuffs, FEDNA’s feed ingredients table gives a description of each product used to make feed, usage recommendations, nutritional values and, where applicable, maximum limits by species. As an example, the entries for the different oil seed crops are as follows:

| — | Sunflower meal, 36 % crude protein |
| --- | --- |

—

Sunflower meal, 36 % crude protein

| — | Linseed meal |
| --- | --- |

—

Linseed meal

| — | Cottonseed meal, 38 % crude protein |
| --- | --- |

—

Cottonseed meal, 38 % crude protein

A number of publications endorse the use of raw materials other than cereals and legumes as a way of providing the necessary nutrients at the fattening stage while maintaining the quality of the resulting carcasses:

| — | O. Urrutia, J.A. Mendizabal, K. Insausti, B. Soret, A. Purroy, A. Arana, ‘Effect of linseed dietary supplementation on adipose tissue development, fatty acid composition, and lipogenic gene expression in lambs’, in Livestock Science, Volume 178, 2015, pages 345-356. |
| --- | --- |

—

O. Urrutia, J.A. Mendizabal, K. Insausti, B. Soret, A. Purroy, A. Arana, ‘Effect of linseed dietary supplementation on adipose tissue development, fatty acid composition, and lipogenic gene expression in lambs’, in Livestock Science, Volume 178, 2015, pages 345-356.

| — | O. Urrutia, B. Soret, K. Insausti, J.A. Mendizabal, A. Purroy, A. Arana, ‘The effects of linseed or chia seed dietary supplementation on adipose tissue development, fatty acid composition, and lipogenic gene expression in lambs’, in Small Ruminant Research, Volume 123, 2015, pages 204-211. |
| --- | --- |

—

O. Urrutia, B. Soret, K. Insausti, J.A. Mendizabal, A. Purroy, A. Arana, ‘The effects of linseed or chia seed dietary supplementation on adipose tissue development, fatty acid composition, and lipogenic gene expression in lambs’, in Small Ruminant Research, Volume 123, 2015, pages 204-211.

| — | Juan Ignacio Gutiérrez Cabanillas, ‘Efecto de la adición de subproductos derivados del tomate y otras fuentes de antioxidantes durante el cebo de corderos de raza merina sobre la calidad de la canal y de la carne fresca y envasada en atmósferas protectoras’ (‘Addition of by-products derived from tomatoes and other sources of antioxidants during the fattening of Merino lambs: effects on carcass quality and the quality of fresh meat in modified atmosphere packaging’], University of Extremadura, 2015. |
| --- | --- |

—

Juan Ignacio Gutiérrez Cabanillas, ‘Efecto de la adición de subproductos derivados del tomate y otras fuentes de antioxidantes durante el cebo de corderos de raza merina sobre la calidad de la canal y de la carne fresca y envasada en atmósferas protectoras’ (‘Addition of by-products derived from tomatoes and other sources of antioxidants during the fattening of Merino lambs: effects on carcass quality and the quality of fresh meat in modified atmosphere packaging’], University of Extremadura, 2015.

Finally, the reference to the Spanish national standard 45011 in the last paragraph of the ‘health and wellbeing’ sub-section has been replaced with a reference to the standard that is currently applicable, ISO/IEC 17065:2012.

Current text:

b)   Growth and fattening stage:

Only light lambs [ternascos] undergo this stage. It begins at weaning (which is not mandatory) when the lamb is approximately 45 days old and ends with its slaughter.

During this stage, the lamb should be fed with white straw, cereal-based concentrates, legumes, vitamins and minerals. If the lamb has not been weaned, the foregoing substances are to be supplemented with its mother’s milk. Concentrated feedstuffs may not include urea or any by-products not derived from cereals or legumes.

The use of substances that could interfere with the lamb’s normal rate of growth and development in any way is expressly banned.

Amended text:

b)   Growth and fattening stage:

Only light lambs [ternascos] undergo this stage. It begins at weaning (which is not mandatory) when the lamb is approximately 45 days old and ends with its slaughter.

During this stage, the lamb should be fed with white straw, concentrates based mainly on cereals, legumes, vitamins and minerals. If the lamb has not been weaned, the foregoing substances are to be supplemented with its mother’s milk. Concentrated feedstuffs may not include urea or any products of animal origin.

The use of substances that could interfere with the lamb’s normal rate of growth and development in any way is expressly banned.

Current text:

If the Governing Board considers it necessary to do so, it may produce documents laying down any conditions necessary to ensure that animals are handled correctly at farms, complying at all times with the requirements laid down in Standard 45011.

Amended text:

If the Governing Board considers it necessary to do so, it may produce documents laying down any conditions necessary to ensure that animals are handled correctly at farms, complying at all times with the requirements laid down in Standard ISO/IEC 17065.

Amendment 4: description and reasons

Section G: Inspection body

The reference to the inspection body has been updated to reflect its new name. The state-owned businesses Riegos del Canal de Navarra, S.A.U., Riegos de Navarra, S.A.U., Instituto de Calidad Agroalimentaria de Navarra, S.A.U. (ICAN), Instituto Técnico y de Gestión Ganadera, S.A.U. and Instituto Técnico y de Gestión Agrícola, S.A.U. were merged on 1 October 2011 to form a single entity, Instituto Navarro de Tecnologías e Infraestructuras Agroalimentarias, S.A. (INTIA).

This merger has not caused any changes in relations with the accreditation agency, competent authorities and certified operators because:

| — | the agreements and contracts signed with ICAN remain in force and INTIA, S.A. has assumed all the above entities’ rights and obligations; |
| --- | --- |

—

the agreements and contracts signed with ICAN remain in force and INTIA, S.A. has assumed all the above entities’ rights and obligations;

| — | the certificates issued by ICAN’s certification division are still valid; |
| --- | --- |

—

the certificates issued by ICAN’s certification division are still valid;

| — | the entire ICAN certification division has been transferred to the agri-food department of the new entity, retaining the same structure and with the same responsibilities and tasks assigned to its staff; |
| --- | --- |

—

the entire ICAN certification division has been transferred to the agri-food department of the new entity, retaining the same structure and with the same responsibilities and tasks assigned to its staff;

| — | the 52/C-PR-120 accreditation that was originally granted to ICAN under ISO/IEC 17065 for the certification of PGI ‘Cordero de Navarra’ (among other things) remains in force, with INTIA as the accredited entity. |
| --- | --- |

—

the 52/C-PR-120 accreditation that was originally granted to ICAN under ISO/IEC 17065 for the certification of PGI ‘Cordero de Navarra’ (among other things) remains in force, with INTIA as the accredited entity.

Current text:

Instituto de Calidad Agroalimentaria de Navarra (ICAN) is the inspection body for the Protected Geographical Indication ‘Cordero de Navarra’/‘Nafarroako Arkumea’.

The inspection body’s name and contact details are as follows:

| Name: | Instituto de Calidad Agroalimentaria de Navarra (ICAN) |
| --- | --- |
| Address: | Avenida Serapio Huici, 22 |
| Edificio Peritos |
| 31610 Villava |
| NAVARRA |
| ESPAÑA |

Name:

Instituto de Calidad Agroalimentaria de Navarra (ICAN)

Address:

Avenida Serapio Huici, 22

Edificio Peritos

31610 Villava

NAVARRA

ESPAÑA

Tel.

+34 948013045

Fax

+34 948071549

Amended text:

Instituto Navarro de Tecnologías e Infraestructuras Agroalimentarias, S.A. (INTIA) is the inspection body for the Protected Geographical Indication ‘Cordero de Navarra’/‘Nafarroako Arkumea’.

The current inspection body’s name and contact details are as follows:

| Name: | Instituto Navarro de Tecnologías e Infraestructuras Agroalimentarias, S.A. (INTIA) |
| --- | --- |
| Address: | Avenida Serapio Huici, 22 |
| Edificio Peritos |
| 31610 Villava |
| NAVARRA |
| ESPAÑA |

Name:

Instituto Navarro de Tecnologías e Infraestructuras Agroalimentarias, S.A. (INTIA)

Address:

Avenida Serapio Huici, 22

Edificio Peritos

31610 Villava

NAVARRA

ESPAÑA

Tel.

+34 948013045

Fax

+34 948071549

Amendment 5: description and reasons

Section I: Binding national law

The list of binding national statutes has been updated to reflect the legislation that is now in force.

Current text:

Wine, Vine and Alcohol Statute (Act 25/1970 of 2 December 1970)

Implementing Regulations for Act 25/1970 (Decree 835/1972 of 23 March 1972)

Order of 25 January 1994 specifying the equivalence between Spanish legislation and Council Regulation (EEC) No 2081/92 on designations of origin and geographical indications for agricultural products and foodstuffs

Royal Decree 1643/99 of 22 October 1999 establishing the procedure for processing applications for listing on the Community register of protected designations of origin and protected geographical indications

Amended text:

Royal Decree 1335/2011 of 3 October 2011 establishing the procedure for processing applications for the registration of protected designations of origin and protected geographical indications and objections to such applications

Royal Decree 149/2014 of 7 March 2014 amending Royal Decree 1335/2011 of 3 October 2011 establishing the procedure for processing applications for the registration of protected designations of origin and protected geographical indications and objections to such applications

Amendment 6: description and reasons

Cover page of the product specification

The reference to the article of the European legislation establishing the minimum information that product specifications had to include (Council Regulation (EEC) No 2081/92) has been removed from the cover page. As well as the fact that this Regulation has since been repealed, it has been decided that the specification should not contain any such reference.

Current text:

PRODUCT SPECIFICATION in accordance with Article 4 of Council Regulation (EEC) No 2081/92

Amended text:

PRODUCT SPECIFICATION

6.   Updated product specification (only for PDO and PGI)

https://goo.gl/YqXXi6

SINGLE DOCUMENT

‘CORDERO DE NAVARRA’/‘NAFARROAKO ARKUMEA’

EU No: PGI-ES-0212-AM01 — 8.9.2017

PDO ( ) PGI ( X )

1.   Name(s)

‘Cordero de Navarra’/‘Nafarroako Arkumea’

2.   Member State or Third Country

Spain

3.   Description of the agricultural product or foodstuff

3.1.   Type of product [listed in Annex XI]

Class 1.1 Fresh meat (and offal)

3.2.   Description of the product to which the name in (1) applies

This geographical indication protects pure-bred lambs of the Navarra and Lacho breeds sold as fresh meat.

There are two distinct categories: milk-fed (lechal) lambs and light (ternasco) lambs.

Milk-fed lambs are male or female lambs of the Lacho or Navarra breeds, suckled by the ewe up to the time of slaughter, with a carcass weight — including the head and offal — of 5-8 kg (Lacho breed) or 6-8 kg (Navarra breed).

Light lambs are male or female lambs of the Navarra breed, suckled by the ewe for at least 45 days from birth, with a carcass weight — not including the head or offal — of 9-12 kg.

Milk-fed lambs must be from the ‘1st’ quality of categories ‘A’ or ‘B’ of the Classification scale for carcasses of lambs of less than 13 kg carcass weight (Commission Delegated Regulation (EU) 2017/1182), while light lambs must be from the ‘1st’ quality of categories ‘B’ or ‘C’ of the same scale.

The carcasses must also have the following characteristics:

Milk-fed lamb (lechal): slight to average fat cover (class 2 or 3 of the Classification scale for carcasses of lambs of less than 13 kg carcass weight in Annex III of Commission Delegated Regulation (EU) 2017/1182) and pearly white to pale pink meat that is tender and very succulent, with a smooth texture and distinctive flavour.

Light lamb (ternasco): slight to average fat cover (class 2 or 3 of the Classification scale for carcasses of lambs of less than 13 kg carcass weight in Annex III of Commission Delegated Regulation (EU) 2017/1182) and pale pink meat, slightly marbled with intramuscular fat, that is tender and very succulent, with a smooth texture and distinctive flavour.

3.3.   Feed (for products of animal origin only) and raw materials (for processed products only)

The lambs covered by this PGI must be the offspring of ewes whose reproduction cycle has taken place under extensive or semi-extensive rearing systems, fed with pasture and other natural plant resources in application of practices that are traditional to the geographical area.

Milk-fed lambs are suckled by ewes until they are slaughtered, at which point their carcasses will weigh 5-8 kg.

Light lambs are suckled until they are at least 45 days old. During the fattening stage, the lambs are fed white straw, concentrates (mainly cereal-based), legumes, vitamins and minerals. If the lamb has not been weaned at 45 days, the foregoing substances are supplemented with its mother’s milk during the fattening stage. The carcass weight at slaughter is 9-12 kg. Concentrated feedstuffs may not include urea or any products of animal origin.

The use of products that could interfere with the lamb’s normal rate of growth and development in any way is expressly banned.

3.4.   Specific steps in production that must take place in the identified geographical area

The area in which the lambs are bred, reared and fattened spans the whole of the province of Navarre. The Lacho breed is found in the northern half of the province, while the Navarra breed is found throughout Navarre with the exception of the north-west. The specific municipalities for each breed are those listed in the product specification.

The area in which the protected lamb meat is produced and processed spans the whole of the Autonomous Community of Navarre.

3.5.   Specific rules concerning slicing, grating, packaging, etc. of the product the registered name refers to

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3.6.   Specific rules concerning labelling of the product the registered name refers to

Lamb carcasses covered by this PGI must be labelled with a numbered main label or secondary label issued by the Governing Board, bearing the words ‘Indicación Geográfica Protegida Cordero de Navarra o Nafarroako Arkumea’.

There are three types of label for the three types of lamb covered by this scheme: 1) ‘raza Navarra ternasco’ (‘light lamb, Navarra breed’]; 2) ‘raza Navarra lechal’ (‘milk-fed lamb, Navarra breed’]; and 3) ‘raza Lacha lechal’ (‘milk-fed lamb, Lacho breed’]. All of these labels are marked with a serial number and the PGI logo. A blue background is used for the ‘light lamb, Navarra breed’ labels, a yellow background for the ‘milk-fed lamb, Navarra breed’ labels, and a red background for the ‘milk-fed lamb, Lacho breed’ labels.

4.   Concise definition of the geographical area

The defined geographical area covers the entire territory of the Autonomous Community of Navarre. which is located in the northern Iberian Peninsula at the western end of the Pyrenees. It spans the area between 41°55′34′′N to 43°, 18′36′′N and 1°11′33′′E to 2°56′57′′E (on the ‘Madrid Meridian’), and has a surface area of 10 421 km2. Navarre is bordered by France to the north, La Rioja and Zaragoza to the south, Zaragoza and Huesca to the east, and Araba/Álava and Gipuzkoa to the west.

5.   Link with the geographical area

The importance of lamb to the Navarrese people is indisputable: the meat is one of the main ingredients of local popular cuisine. Praise from culinary experts and historians for the virtues of Navarrese lamb can be found in documentary sources dating back through the ages.

Historical documents refer to lamb’s popularity among the people of medieval Navarre, including at monasteries and royal banquets.

The tradition is still very much alive today. Culinary experts have been making notable references to Navarrese lamb and its benefits throughout the twentieth century. These include Cristino Álvarez (known by the pseudonym ‘Caius Apicius’), according to whom ‘the lambs of Navarre — specifically those of the Pamplona basin — enjoy well-deserved fame. Lamb is probably the most traditional meat-based dish served in Navarre, and the quality of the meat — an essential requirement for a successful dish — is more than guaranteed’.

As for the link between the Navarra and Lacho breeds of sheep and the local area, it has been proven that these two breeds have co-existed in Navarre since prehistoric times, sometimes sharing the same lands and pastures and other times spreading into different areas that are more suited to their different characteristics.

Navarre’s ovine population has endured throughout Roman, medieval and modern times, overcoming the crises and drastic changes that have hit the rural world this century.

Reference to publication of the product specification

(the second subparagraph of Article 6(1) of this Regulation)

https://goo.gl/YqXXi6

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(1)  OJ L 179, 19.6.2014, p. 17.

(2)  OJ L 343, 14.12.2012, p. 1.

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| 7.5.2018 | EN | Official Journal of the European Union | C 159/32 |
| --- | --- | --- | --- |

7.5.2018

EN

Official Journal of the European Union

C 159/32

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Publication of an application pursuant to Article 50(2)(a) of Regulation (EU) No 1151/2012 of the European Parliament and of the Council on quality schemes for agricultural products and foodstuffs

(2018/C 159/07)

This publication confers the right to oppose the application pursuant to Article 51 of Regulation (EU) No 1151/2012 of the European Parliament and of the Council (1).

SINGLE DOCUMENT

‘CIOCCOLATO DI MODICA’

EU No: PGI-IT-02314 — 12.6.2017

PDO ( ) PGI ( X )

1.   Name(s)

‘Cioccolato di Modica’

2.   Member State or Third Country

Italy

3.   Description of the agricultural product or foodstuff

3.1.   Type of product

Class 2.2. Chocolate and derived products

3.2.   Description of product to which the name in (1) applies

The name ‘Cioccolato di Modica’ designates exclusively the product obtained by working bitter cocoa paste with sugar.

When released for consumption, ‘Cioccolato di Modica’ has the following characteristics:

| — | Physical characteristics

  Shape: rectangular parallelepiped with sides tapering into a truncated pyramid.

  Weight: not exceeding 100 g.

  Chocolate mass: brown in colour with evident graininess owing to the presence of sugar crystals within the product. Possible visible blooming of the cocoa butter on the outer surface. |
| --- | --- |

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Physical characteristics

Shape: rectangular parallelepiped with sides tapering into a truncated pyramid.

Weight: not exceeding 100 g.

Chocolate mass: brown in colour with evident graininess owing to the presence of sugar crystals within the product. Possible visible blooming of the cocoa butter on the outer surface.

| — | Organoleptic characteristics

  Taste: sweet with bitter note. Grainy or sandy sensation. Melts well in the mouth and has a crunchy texture. |
| --- | --- |

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Organoleptic characteristics

Taste: sweet with bitter note. Grainy or sandy sensation. Melts well in the mouth and has a crunchy texture.

| — | Chemical characteristics

  Minimum cocoa solids content: not less than 50 %;

  Minimum cocoa butter content: not less than 25 %.

  Moisture content: not exceeding 2,5 %.
  ‘Cioccolato di Modica’ may be supplemented by adding one or more of the optional ingredients mentioned in point 3.3 below. |
| --- | --- |

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Chemical characteristics

Minimum cocoa solids content: not less than 50 %;

Minimum cocoa butter content: not less than 25 %.

Moisture content: not exceeding 2,5 %.

‘Cioccolato di Modica’ may be supplemented by adding one or more of the optional ingredients mentioned in point 3.3 below.

3.3.   Feed (for products of animal origin only) and raw materials (for processed products only)

‘Cioccolato di Modica’ involves the use of the following ingredients as a percentage of total product weight.

Mandatory:

—   Bitter cocoa paste: from 50 % to 99 %,

—   Sugar including refined or raw cane sugar: from 50 % to 1 %.

Optional:

—   Spices: cinnamon min. 0,02 %, vanilla min 0,02 %, chili pepper min. 0,02 %, nutmeg min. 0,01 %,

—   Natural flavourings: citrus fruit min. 0,02 %, wild fennel min. 0,02 %, jasmine min. 0,01 %, ginger min. 0,02 %,

—   Fruit including dried or dehydrated: citrus fruit min. 2 %, pistachio min. 5 %, hazelnut min. 5 %, almond min. 5 %,

—   Salt: min. 0,02 %.

In addition to those mentioned above, at the producer’s discretion it is also permitted to use other spices (min. 0,02 %), natural flavourings (0,02 %) and fruit including dried or dehydrated (min. 2 %).

Prohibited:

| — | Colourings, preservatives, emulsifiers, vegetable fats, vanillin, milk. |
| --- | --- |

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Colourings, preservatives, emulsifiers, vegetable fats, vanillin, milk.

3.4.   Specific steps in production that must take place in the identified geographical area

All steps in production of ‘Cioccolato di Modica’, from when the bitter cocoa paste is worked until the finished product is obtained, take place in the identified geographical area.

3.5.   Specific rules concerning slicing, grating, packaging, etc. of the product the registered name refers to

‘Cioccolato di Modica’ is marketed in single- or multi-product packages.

Packaging operations must occur within at most 12 hours of cooling and take place within the production facility or in premises annexed thereto. This makes it possible to avoid any bacteriological contamination or absorption of foreign odours that would compromise the organoleptic profile of the product and ensures that the chocolate does not absorb moisture from the external environment, which would lead to the risk of mould forming during storage and the characteristic brown colour of the product’s outer surface being lost.

3.6.   Specific rules concerning labelling of the product the registered name refers to

Packaging must feature the words ‘Cioccolato di Modica’ and the European Union PGI symbol. The following information is also mandatory:

| — | the name, company name and address of the producer firm and packaging firm, |
| --- | --- |

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the name, company name and address of the producer firm and packaging firm,

| — | the logo of the product, which must always be used together with the protected geographical indication. |
| --- | --- |

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the logo of the product, which must always be used together with the protected geographical indication.

The words ‘Indicazione Geografica Protetta’ (‘Protected Geographical Indication’) and the acronym IGP (PGI) are optional.

The country of origin of the cocoa from which the bitter cocoa paste was obtained may also be mentioned on the label.

Product logo:

4.   Concise definition of the geographical area

The production area of ‘Cioccolato di Modica’ is the entire administrative territory of the municipality of Modica in the province of Ragusa.

5.   Link with the geographical area

‘Cioccolato di Modica’ has its origins in the town of the same name and over time has attained great repute linked to both its distinctive characteristics and the specific nature of its production process.

‘Cioccolato di Modica’ has organoleptic characteristics that result from a process involving neither the addition of cocoa butter or other vegetable fats nor the conching stage, i.e. the process of mixing and heating the chocolate mass at high temperatures for a very long time in order to make the mass smooth and render the lumps of such a size that they are imperceptible with the tongue.

When ‘Cioccolato di Modica’ is being produced, the fact that there is no conching and that the temperature at which the ingredients are processed is carefully controlled stops the sugar crystals dissolving and gives the product its characteristic graininess which is perceptible to the palate. This feature makes ‘Cioccolato di Modica’ distinguishable from all other types of chocolate on the market.

Many publications and domestic and foreign press articles have extolled the distinctiveness of ‘Cioccolato di Modica’. An article published in Panorama magazine (31 October 1996, p. 258) describes ‘Cioccolato di Modica’ as follows: ‘When the bar is broken the sugar crystals clearly stand out. Indeed, the chocolate does not pass through the liquid state like in traditional production ...’; the book Le denominazioni comunali: opportunità di sviluppo territoriale includes an article published in an online newspaper in which the manufacture of ‘Cioccolato di Modica’ is described as follows: ‘the unique feature of production is that the cocoa paste is worked raw and never reaches the liquid state; this is why it does not allow the sugar crystals to dissolve. The flavour of this chocolate is considered unique, because the flavours of both the chocolate and the sugar emerge’ (Le denominazioni comunali: opportunità di sviluppo territoriale, Milan, Giuffrè, 2005, pp. 241-253); an article published in the magazine ‘The Times’ (5 November 2011, p. 20) stated: ‘Modican chocolate is dark not milky and has a crumbling texture rather than a melting one ... and is made from a centuries-old recipe’; the article ‘Modica, barocca e granulosa’ (published in the magazine Italo — I viaggi del gusto, December 2014, p. 107) states: ‘The sugar crystals that do not melt and instead stay crunchy are one of the most beloved features of the characteristic product of the Sicilian town, its chocolate’; the article ‘Nasce a Modica il museo storico del cioccolato’ published in the magazine Emotions (12 July 2014, p. 93) refers to ‘Cioccolato di Modica’ as being ‘unique for its cold processing that gives it a graininess and crumbliness that have won the hearts of food lovers worldwide’.

Very recent testimony to the renown of the characteristic feature of ‘Cioccolato di Modica’ is provided by the book Die Insel der Dolci by Hanns-Josef Ortheil, a German author, screenwriter and German-language scholar who visited Modica: ‘it is a great shock when I taste Cioccolato di Modica, because unexpectedly I can taste the sugar crystals on my tongue, like a whirlwind of grains sliding from one part of the tongue to another ...’.

The distinctiveness of how ‘Cioccolato di Modica’ is produced, its characteristic sensory profile and its grainy texture have also been the subject of scientific studies. The following can be cited: ‘Microstructural Characterization of Multiphase Chocolate Using X-Ray Microtomography’ published in the Journal of Food Science (Vol. 75, No 7, 2010, pp. E469-E476); ‘Sensory profile of a speciality Sicilian chocolate’, published in the Italian Journal of Food Science (Vol. XXIII, No 1-2011).

Producing ‘Cioccolato di Modica’ requires a good deal of dexterity and specific skills, which entail the use of proficient staff with expertise in measuring out the ingredients, controlling the temperatures at which the chocolate mass is worked, combining the ingredients and carrying out moulding operations.

The importance of ‘Cioccolato di Modica’ in the geographical area should be considered in the light not only of the presence of a local industry linked to its production, but also of the adaptation of machinery used in its production, which is clear proof of the strong and lasting interconnection between the product and the local economy.

The production of ‘Cioccolato di Modica’ has always been an important opportunity for the local population to find work and to this day it is a significant economic activity and one of the most important sources of employment in the Sicilian municipality of Modica. Over the last thirty years the flourishing of a series of small firms has given rise to a veritable ‘Cioccolato di Modica district’, characterised by the particular vitality of its operators, some of whom have established major export activities. Over the years, this feature of the production system has made it possible to develop and maintain knowledge and skills that are handed down from generation to generation and cannot be found elsewhere.

Reference to publication of the specification

(the second subparagraph of Article 6(1) of this Regulation)

This Ministry initiated the national opposition procedure by publishing the application for registration of ‘Cioccolato di Modica’ PGI in Official Gazette of the Italian Republic No 103 of 5 May 2017.

The consolidated text of the product specification can be consulted on the following website:

http://www.politicheagricole.it/flex/cm/pages/ServeBLOB.php/L/IT/IDPagina/3335

or alternatively:

by going directly to the homepage of the Ministry of Agricultural, Food and Forestry Policy (www.politicheagricole.it) and clicking on ‘Prodotti DOP IGP’ (at the top right-hand side of the screen), then on ‘Prodotti DOP IGP STG’ (on the left-hand side of the screen), and finally by clicking on ‘Disciplinari di Produzione all’esame dell’UE’.

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(1)  OJ L 343, 14.12.2012, p. 1.

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