Commission Working Document - on Proposed New Regulatory Framework for Electronic Communications Networks and Services - Draft Guidelines on market analysis and the calculation of significant market power under Article 14 of the proposed Directive on a common regulatory framework for electronic communications networks and services
Date: 2001-03-28
Institutions: European Commission
Subjects: approximation of laws, information technology, new technology, telecommunications, transmission network

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 28.3.2001
COM (2001) 175 final

COMMISSION WORKING DOCUMENT

On

Proposed New Regulatory Framework for
Electronic Communications Networks and Services

Draft Guidelines on market analysis
and the calculation of significant market power

under Article 14 of the proposed Directive
on a common regulatory framework for
electronic communications networks and services

CONTENTS

1.
Introduction.................................................................................................................... 3
1.1.
Scope and purpose of the Guidelines......................................................................... 3
1.2.
Principles and policy objectives of sector specific measures...................................... 5
Relationship to Competition law ............................................................................... 6
1.3.
2. Market definition............................................................................................................ 7
Introduction .............................................................................................................. 7
2.1.
Main criteria for defining the relevant market ........................................................... 9
2.2.
2.2.1.
The relevant product/service market ....................................................................... 10
2.2.1.1. Demand-side substitution..................................................................................... .. 11
2.2.1.2. Supply-side substitution....................................................................................... .. 12
2.2.2. Geographic Market ................................................................................................. 12
2.2.3. Other issues of market definition ............................................................................ 14
2.2.3.1. The Commission’s own practice .......................................................................... .. 14
3. Calculating significant market power (dominance) ....................................................... 18
Criteria for assessing SMP ...................................................................................... 18
3.1.
3.1.1.
Leverage of market power ...................................................................................... 21
3.1.2. Collective dominance ............................................................................................. 21
3.1.2.1. The Commission’s decision-making practice ....................................................... .. 24
3.1.2.2. Collective dominance and the Telecommunications sector................................... .. 26
4.

Imposition, amendment or withdrawal of obligations under Article 14 of the

Framework directive............................................................................................... 27
Designation of Significant Market Power ............................................................... 27
Regulatory obligations............................................................................................ 28
Trans-national markets: joint analysis by NRAs...................................................... 28
Regulatory obligations and WTO commitments...................................................... 29
Powers of investigation and Procedures for Co-operation ............................................. 29
Overview of Procedures by NRAs .......................................................................... 29
Market analysis and power of investigation............................................................. 30
Co-operation Procedures......................................................................................... 31
Procedures for Public Consultation and Publication of Proposed NRA decisions .......... 31
Consultation mechanism......................................................................................... 31
Adoption of the final decision................................................................................. 33

4.1.
4.2.
4.3.
4.4.
5.
5.1.
5.2.
5.3.
6.
6.1.
6.2.

ANNEX OF RELEVANT PROVISIONS………………………………… ..............................

2

Draft Guidelines on market analysis and the calculation of
significant market power under Article 14 of the proposed
Framework Directive on a common regulatory framework for
electronic communications networks and services1

Note. This document is based on the text of the Directive as proposed by the Commission. It
will be updated as necessary to reflect any changes to the Commission proposal agreed by the
EP and the Council.

1.

INTRODUCTION

1.1.

Scope and purpose of the Guidelines

1.

These Guidelines set out

the principles for use by National Regulatory
Authorities (NRAs) in the analysis of effective competition under Article 14 of the proposed
Directive [….] on a common regulatory framework for electronic communications networks
These Guidelines are for NRAs to use when determining whether an
and services.
undertaking or undertakings enjoy significant market power as defined in Article 13 of that
directive. Undertakings designated as having significant market power may be subject to
obligations under other Directives in the regulatory package.2

2.

These guidelines address the following subjects: (a) market definition (b)

assessment of Significant Market Power (c) SMP designation and (d) procedural issues.

3.

These Guidelines will be applied by NRAs in the markets identified in the
Commission Decision adopted under Article 14 of Directive [framework] that lays down the
relevant product and service markets susceptible of ex ante regulation under the directives and
in the markets identified by NRAs with the approval of the Commission under Art 14.(1) of
Directive [framework].

4.

The major objective of these Guidelines is to ensure consistency of approach
by NRAs in applying certain provisions of the Directives, as reproduced in Annex, and
especially when they designate undertakings with significant market power in application of
the provisions of the Directives.

5.

The Guidelines have been designed for NRAs to use as follows:

– To identify the geographical dimension of those product and service markets identified in
the Commission Decision under Article 14 of Directive [framework]. NRAs will not

1 Commission proposal for a Directive on a common regulatory framework for electronic communications

networks and services COM(2000) 393 (OJ C 365 E, 19.12.2000, p.198).

2 Proposal for a Directive of the European Parliament and of the Council on access to, and interconnection of,
electronic communications networks and associated facilities COM(200) 384, OJ C365E, 19.12.2000,
p.215
Proposal for a Directive of the European Parliament and of the Council on universal service and users’
rights relating to electronic communications networks and services COM(2000)392, OJ C365E,
19.12.2000, p.238

3

define the geographic scope of trans-national markets, as the Commission Decision under
Article 14(1) will identify the geographic dimension of trans-national markets.

– To identify relevant product and service markets other than those identified in the

Commission’s Decision, and this, in agreement with the Commission.

– To analyse the characteristics of competition in both the markets identified in the
identify themselves using the

Commission Decision and in markets that NRAs
methodology set out in Section 2 of the Guidelines,

– To identify undertakings in a relevant market with significant market power and to impose
ex ante measures consistently with the terms of Directives [Framework, Access and
Interconnection and Universal Service and Users Rights] as set out in Sections 3 and 4 of
the Guidelines.

– To assist Member States and NRAs in enforcing Article 11.1(f) of Directive [

] on the
Authorisation of electronic communications networks and services3, and Article 5(1) of
Directive [framework], by ensuring that companies comply with the obligation to provide
information necessary for NRAs to determine relevant markets and significant market
power thereon.

– To assist NRAs when dealing with confidential information, which is likely to be provided

by:

• undertakings under Article 11.1(f) of the Authorisation Directive

• National Competition Authorities (NCAs) as part of the co-operation foreseen in Article

3.5 of the Framework Directive and in these Guidelines and

• the Commission as part of the co-operation foreseen in Article 5.2 of the Framework

Directive and these Guidelines

• To recommend co-operation procedures for NRAs to use in their dealings with NCAs, with

other NRAs and with the Commission.

6.

The Guidelines are structured in the following way:

Section 2 describes the methodology for market definitions. Section 3 describes the criteria
for assessing SMP in a relevant market. Section 4 outlines the possible outcomes that NRAs
may reach in their assessments of markets and sets out the possible actions in respect of each
possible outcome. Section 5 describes the powers of investigations of NRAs, suggests
procedures for co-ordination between NRAs, between NRAs and NCAs, and describes co-
ordination and co-operation procedures between NRAs and the Commission. Section 6
describes procedures for public consultation and publication of NRAs’ proposed decisions.

7.

By issuing these Guidelines,

the Commission also intends to explain to
interested parties and companies operating in the electronic communications sector how
NRAs will make their assessments of SMP under Directive [framework]. By publishing these
Guidelines, the Commission intends to maximise the transparency and legal certainty in the

3 Proposal for a Directive of the European Parliament and of the Council on the authorisation of electronic

communications networks and services, COM(2000)386, OJ C365E, 19.12.2000, p.230

4

application of the sector specific legislation to which they are complementary.
The
in the light of NRAs’
Commission will amend the Guidelines, whenever appropriate,
experience and related developments, for example, in response to future judgements of the
Court of First Instance and the Court of Justice in competition law cases.

8.

Under the terms of Article 14.2 of Directive [framework], NRAs should follow
the Guidelines in their market analyses and SMP designations. This will be an important
factor in any assessment by the Commission of proposed decisions by NRAs, pursuant to
Article 6 of Directive [framework]. These Guidelines do not in any way restrict the rights
conferred by Community law on individuals or undertakings and are without prejudice to the
application by the Commission of the competition rules of the Treaty and to any interpretation
of the competition rules that may be given by the European Court of Justice and the Court of
First Instance of the EC.

1.2.

Principles and policy objectives of sector specific measures

9.

In the absence of effective competition in the relevant markets identified in the
Commission Decision, or in respect of electronic communications markets identified by
NRAs using the methodology described in section 2 of the Guidelines, NRAs will designate
undertakings as having SMP and impose specific obligations as appropriate. NRAs must
decide which of the specific obligations should be imposed as a measure to substitute for
effective competition (Article 14.5 of the Framework Directive).

10. When evaluating whether specific ex ante measures would be appropriate to
impose upon one or more undertakings designated as having SMP, NRAs must seek to
achieve the policy objectives identified in Article 7 (2), (3) and (4) of Directive [framework].
These are:

– to promote an open and competitive market for electronic communications networks,

services and associated facilities

– to develop the internal market and

– to promote the interests of European citizens.

11.

In the absence of effective competition, NRAs therefore have a threefold
mandate. NRAs must consider what effect
the measures imposed will have on the
competitive environment, on the development of the internal market and on the interests of
European citizens.

12. Where NRAs take decisions using the Guidelines, they will necessarily affect
the development of the internal market. These decisions cannot be allowed to jeopardise the
functioning of the internal market. Therefore, NRAs must ensure there is consistency of
approach as between themselves in the application of the rules to which these Guidelines
apply. Such consistency can only be achieved by close co-ordination and co-operation with
other NRAs, with national competition authorities (NCAs) and with the Commission, as
provided in Directive [framework] and suggested in Section 5.3 of the Guidelines. .

13.

NRAs are directed to apply ex ante rules only in the absence of effective
competition except where specific public policy objectives apply. In carrying out a market
analysis under the terms of Article 14.1 of Directive [framework], NRAs will conduct a
forward-looking, structural, evaluation of the relevant market(s).

5

14.
The shortest meaningful period that should be used for such an assessment is
Therefore, NRAs’ assessments should take into account expected or
twelve months.
reasonably foreseeable market developments, over a period of up to 12 months, with longer
periods used, if appropriate, depending on the specificities of the relevant market.

15.

NRAs will make determinations as to whether there is effective competition in
any of the markets identified in the Commission Decision, will designate SMP operators in
those markets and will impose appropriate sector specific obligations on such undertakings.
Co-ordination procedures for NRAs to use with NCAs for these purposes are described in
Section 5.

16.

If NRAs determine that there is no effective competition in a market other than
a market identified in the Commission’s Decision, and competition law remedies do not
suffice to address the problems identified, NRAs must seek the prior agreement of the
Commission, in accordance with the provisions of Article 14.1 of Directive [framework]
before designating undertakings as having SMP and imposing specific obligations on such
SMP operators.

17.

The purpose of imposing obligations on undertakings designated as having
SMP is to guarantee that the undertaking’s market power could not be used to restrict or
distort competition on the relevant market nor could such market power be leveraged onto
adjacent markets. NRAs will impose one or more obligations, as set out in the Specific
Directives, and as described further in Section 4, and may impose obligations, for access and
interconnection, that go beyond the measures foreseen in Directive [access] only with the
prior agreement of the Commission in accordance with the provisions of Article 8 of the
Access Directive.

1.3.

Relationship to Competition law

18.

To ensure consistency of approaches,

these Guidelines are based on (1)
existing jurisprudence of the Court of First Instance and the Court of Justice concerning
market definition and the notion of dominant position within the meaning of Article 82 of the
EC Treaty, (2) the “Guidelines on the application of EEC competition rules in the
telecommunications sector”4, the “Commission Notice on the definition of relevant market for
the purposes of Community competition law”5, and the “Notice on the application of
competition rules to access agreements in the telecommunications sector”6.

19. Markets defined by the Commission and NCAs in competition cases may,
nevertheless, vary from those identified in the Commission Decision and from market
definitions identified by NRAs under Section 2. The market definitions used by NRAs are
without prejudice to those used by NCAs and by the Commission in the exercise of their
respective powers.

20.

In practice, parallel procedures under ex ante regulation and competition law

4 Guidelines on the application of EEC Competition rules in the Telecommunications sector, OJ C
233, 6.9.1991, p.2.

5 Commission Notice on the definition of relevant market for the purposes of Community Competition
law, OJ 1997 C 372, p. 5, (hereafter Notice on market definition)
6 Notice on the application of the competition rules to access agreements in the telecommunications sector, OJ
C 265, 22.8.1998, p. 2 (hereafter, Access notice).

6

may arise with respect to different kinds of problems in relevant markets. NCAs may
therefore investigate a market and market behaviour and impose appropriate competition law
remedies alongside any sector specific measures applied by NRAs However; it must be noted
that such simultaneous application of remedies by different regulators would address different
problems in such markets. The principle previously set out above, i.e., autonomy of regulatory
action in the exercise of their respective regulatory powers, would apply.

21.

NRAs will exercise their powers under Article 14 of Directive [framework] to
In so doing,
determine whether to designate undertakings in the market as having SMP.
NRAs enjoy considerable discretion in the exercise of their powers, with respect to the
complexity of inter-related factors that must be assessed concerning the economic, factual and
legal elements of identified markets,subject to the consultation and transparency procedure
foreseen in Article 6 of the Framework Directive (see below, Section 6).

22.

These Guidelines are meant to facilitate the work of NRAs, assisting them in
reaching coherent and consistent results in each Member State and between Member States.
Because each NRA has wide range of discretionary powers, it is extremely important for a
balanced system to have mechanisms and facilitate co-operation between authorities that can
ensure overall consistency and coherence (specific cooperation procedures are described
below, in Section 5.3).

23.

The new Directives cover electronic communications networks and services in
general, and not just traditional telecommunications. However, ex-ante regulation is limited
to those markets where competition is not effective, namely markets identified in the
Commission’s Decision or by NRAs in accordance with Article 14 of the Directive
[framework]

2.

MARKET DEFINITION

2.1.

Introduction

24.

In the Competition Guidelines issued in 19917, the Commission recognised the
difficulties inherent in defining the relevant market in an area of rapid technological change,
such as the telecommunications sector. Whilst this statement still holds true today as far as
the electronic communications sector is concerned, the Commission since the publication of
those Guidelines, has gained considerable experience in applying the competition rules in a
dynamic sector shaped by constant technological changes and innovation, as a result of its
It should
role in managing the transition from monopoly to competition in this sector.
however be recalled that the present Guidelines do not purport to explain how the competition
rules apply, generally, in the telecommunications sector, but focus only on issues related to (i)
market definition and (ii) the calculation of significant market power within the meaning of
Article 13 of the Framework Directive (hereafter, “SMP”).

25.

In assessing whether an undertaking has SMP, 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” (Article 13, paragraph
is of fundamental
2 of the Framework Directive), the definition of the relevant market

7 Guidelines on the application of EEC Competition rules in the Telecommunications sector, OJ C
233, 6.9.1991, p.2.

7

importance since effective competition can only be assessed by reference to the market thus
defined8. 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
(the terms “products” and “services” are used interchangeably throughout this text). In that
regard, it should be recalled that relevant markets defined under the previous regulatory
framework were distinct from those identified for competition-law purposes, since they were
based on certain specific aspects of end-to-end communications rather than on the demand
and supply criteria used in a competition-law analysis9.

26. Market definition is not a mechanical or abstract process but requires an
analysis of any 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 analysis10.
In this
respect, any experience gained by NRAs or NCAs through the application of competition
rules to the telecommunication sector clearly will be of particular relevance in applying
Article 13 of the Framework directive. Thus, any information gathered, any findings made
and any studies or reports commissioned or relied upon by NRAs in the exercise of their
tasks,
in relation to the conditions of competition in the telecommunications markets
(provided of course that market conditions have since remained unchanged), should serve as a
starting point for the purposes of applying Article 13 of the Framework Directive11.

27.

The main product and service markets which are likely to justify the
imposition of ex ante regulatory obligations will be identified in the “Decision on Relevant
Product and service markets” which the Commission is required to adopt pursuant to Article
14 of the Framework directive12. Normally, the task of NRAs will be to define only the
geographical scope of the relevant market, although NRAs will have the possibility under the
Framework Directive to define markets other than those listed in the above mentioned

8 Case C-209/98, Entreprenørforeningens Affalds [2000] ECR I-3743, par. 57, and Case C-242/95 GT-
Link [1997] ECR I-4449, par. 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 a firm’s market power.
9 See Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on
interconnection in Telecommunications with regard to ensuring universal service and interoperability
through application of the principles of Open Network Provision (ONP), OJ 1997 L199/32 (the
“Interconnection Directive”); Council Directive 90/387/EEC of 28 June 1990 on the establishment of
the internal market for telecommunications services through the implementation of open network
provision, OJ 1990 L192/1 (the “ONP Framework Directive”); Council Directive 92/44/EEC of 5 June
1992 on the application of open network provision to leased lines, OJ 1992 L165/27 (the “Leased
Lines Directive"); Directive 95/62/EC of the European Parliament and of the Council of 13 December
1995 on the application of open network provision (ONP) to voice telephony, OJ 1995 L321/6,
replaced by Directive 98/10/EC of the European Parliament and of the Council of 26 February 1998
on the application of open network provision (ONP) to voice telephony and on universal service for
telecommunications in a competitive environment, OJ 1998 L101/24 (the “ONP Voice Telephony
Directive”).

10 Joined Cases C-68/94 and C-30/95, France and Others v Commission [1998] ECR I-1375. See also
Notice on market definition, at par.12..

11 To the extent that the electronic communications sector is technology and innovation-driven, any
previous market definition may not necessarily be relevant at a later point in time.

12 Article 14, paragraph 1 of the Framework Directive.

8

Decision, with the agreement of the Commission.

28. Whilst a prospective analysis of market conditions may in some cases lead to a
market definition different from that resulting from a market analysis based on past
behaviour13, nonetheless NRAs should seek to preserve, where possible, consistency between,
on the one hand, market definition developed for the purposes of ex-ante regulation, and on
the other hand, market definition developed for the purposes of ex post application of the
competition rules.

2.2.

Main criteria for defining the relevant market

29.

The extent to which the supply of a product or the provision of a service in a
given geographical area constitutes the relevant market depends on the existence of
competitive constraints on the price-setting behaviour of
the producer(s) or service
provider(s) concerned. There are two main competitive constraints to consider in assessing
the behaviour of undertakings on the market,
(ii) supply-side
substitution. A third source of competitive constraint on an operator’s behaviour exists,
namely potential competition. However, the existence of potential competition may more
usefully be examined for the purposes of assessing whether a market
is effectively
competitive within the meaning of the Framework Directive, that is, whether there exist
undertakings with significant market power14.

(i) demand-side and,

30.

Demand-side substitutability is used to measure the extent to which consumers
are prepared to substitute other services or products for the service or product in question,
whereas supply-side substitutability indicates whether suppliers other than those offering the
product or services in question would switch their line of production or offer the relevant
products or services without incurring significant additional costs.

31.

One way of assessing the existence of any demand and supply-side substitution
is to apply the so-called “hypothetical monopolist test”15. Under this test, an NRA should ask
what would happen if there were a small but significant, lasting increase in the price of a
given product or service, assuming that the prices of all other products or services remain
constant (hereafter, “relative price increase”). While the significance of a price increase will
depend on each individual case, in practice, NRAs should normally consider the effects of a
price increase of between 5 to 10%. The likely responses by consumers will aid in
determining whether substitutable products do exist and if so, where the boundaries of the
relevant product market should be delineated16.

32.

As a starting point, an NRA should apply this test firstly to an electronic
communications service or product offered in a given geographical area, the characteristics of
which may be such as to justify the imposition of regulatory obligations, and having done so,
add additional products or areas depending on whether competition from those products or
areas constrains the price of the main product or service in question.

13 Notice on market definition, p.5.

14 See Notice on market definition, par.20.

15 See also, Access Notice, par 46. This test is also known as “SSNIP” (small but significant non
transitory increase in price).

16 In other words, where the cross-elasticity of demand between two products is high, one may
conclude that consumers view these products as close substitutes.

9

33.

In principle, the “hypothetical monopolist test” is relevant only with regard to
products or services, the price of which is freely determined and not subject to regulation.
Thus, the working assumption will be that current prevailing prices are set at competitive
levels. If, however, a service or product is offered at a regulated, cost-based price, then such
price is presumed, in the absence of indications to the contrary, to be set at what would
otherwise be a competitive level and should therefore be taken as the starting point for
applying the “hypothetical monopolist test”.
In theory, if the demand elasticity of a given
product or service is significant, even at relative competitive prices, the firm in question lacks
market power. If, however, elasticity is high even at current prices, that may mean only that
the firm in question has already exercised market power to the point that further price
increases will not increase its profits.
In this case, the application of the hypothetical
monopoly test may lead to a different market definition from that which would be produced if
the prices were set at a competitive level.

34.

The hypothetical monopolist test should be applied up to the point where it can
be established that a relative price increase within the geographic and product markets defined
will not lead consumers to switch to readily available substitutes or to suppliers located in
other areas.

2.2.1.

The relevant product/service market

35.

According to settled case-law, the relevant product/service market comprises
all those products or services that are sufficiently interchangeable or substitutable, not only in
terms of their objective characteristics, by virtue of which they are particularly suitable for
satisfying the constant needs of consumers, but also in terms of the conditions of competition
and/or the structure of supply and demand on the market in question17. Products or services
which are only to a small, or relative degree interchangeable with each other do not form part
of the same market18. 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 purposes (end use).

36.

Although the aspect of the end use of a product or service is closely related to
its physical characteristics, different kind of products or services may be used for the same
end.
For instance, consumers may use dissimilar services such as cable and satellite
connections for the same purpose, namely to access the Internet. In such a case, both services
(cable and satellite access services) may be included in the same product market. Conversely,
paging services and mobile telephony services, which may appear to be capable of offering
the same service, that is, dispatching of two-way short messages, may be found to belong to
distinct product markets in view of their different perceptions by consumers as regards their
functionality and end use.

37.

Differences in pricing models and offerings for a given product or service may
also imply different groups of consumers. Thus, by looking into prices, NRAs may define

17 Case 31/80 L’Oréal [1980] ECR 3775, par. 25, Case 322/81 Michelin v Commission [1983] ECR
3461, par. 37, Case C-62/86 AkzoChemie v Commission [1991] ECR I-3359, Case T-504/93 Tiercé
Ladbroke v Commission [1997] ECR II-923, par. 81, T-65/96, Kish Glass v Commission [2000] ECR
II-0000, par.62.

18 Case 66/86, Ahmed Saeed [1989] ECR 803, paras 39 and 40, Case United Brands v Commission
[1978] ECR 207, paras 22 and 29 and 12; CaseT-229/94, Deutsche Bahn v Commission [1997] ECR
II-1689, par. 54.

10

the ability of operators engaged in providing international

separate markets for business and residential customers for essentially the same service. For
retail electronic
instance,
communications services to discriminate between residential and business customers, by
applying different sets of prices and discounts, has led the Commission to decide that these
two groups form separate markets as far as such services are concerned (see below).

38.

product

Furthermore,

substitutability

electronic
communications services will arise increasingly through the convergence of various
technologies. Use of digital systems leads to an increasing similarity in the performance and
characteristics of network services using distinct technologies. A packet-switched network,
for instance, such as Internet, may be used to transmit digitised voice signals in competition
with traditional voice telephony services19.

different

between

39.

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

2.2.1.1. Demand-side substitution

40.

Demand-side substitution enables NRAs to determine the substitutable
products or range of products to which consumers could easily switch in case of a relative
In determining the existence of demand substitutability, NRAs should make
price increase.
use of any previous evidence of consumers’ behaviour. Where available, an NRA should
examine historical price fluctuations in potentially competing products, any records of price
movements, and relevant tariff information. Evidence showing that consumers have in the
past promptly shifted to other products or services, in response to past price changes, should
be given appropriate consideration.

41.

The possibility for consumers to substitute a product or a service for another
because of a small, but significant lasting price increase may, however, be hindered by
considerable switching costs. Consumers who have invested in 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. In
the same vein, customers of existing providers may also be “locked in” by long-term contracts
or by the prohibitively high cost of switching terminals. Accordingly, in a situation where
end users face significant switching costs in order to substitute product A for product B, these
two products should not be included in the same relevant market.

42.

Demand substitutability focuses on the interchangeable character of products
or services from the buyer’s point of view. Proper delineation of the product market may,
however, require further consideration of potential substitutability from the supply side.

19 Communication from the Commission - Status of voice on the Internet under Community law, and
in particular, under Directive 90/388/EEC - Supplement to the Communication by the Commission to
the European Parliament and the Council on the status and implementation of Directive 90/388/EEC
on competition in the markets for telecommunications services, OJ C 369, 22.12.2000, p.3.

11

2.2.1.2. Supply-side substitution

43.

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 reasonable time frame20, following a relative price
In circumstances where the
increase, that is, a small but significant, lasting price increase.
overall costs of switching production to the product in question are relatively negligible, then
that product may be incorporated 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.). Mere hypothetical supply-side
substitution is not sufficient for the purposes of market definition.

44.

Account should also be taken of any existing legal, statutory or other
regulatory requirements which could defeat a time-efficient entry into the relevant market and
as a result discourage supply-side substitution.
For instance, delays and obstacles in
concluding interconnection or collocation agreements, negotiating any other form of network
access, or obtaining rights of ways for network expansion, may render unlikely in the short
term the provision of new services and the deployment of new networks by potential
competitors.

45.

As can been seen from the above considerations, supply substitution may serve
not only for defining the relevant market but also for identifying the number of market
participants.

2.2.2. Geographic Market

46.

Once the relevant product market is identified, the next step to be undertaken is
the definition of the geographical dimension of the market. It is only when the geographical
dimension of the product or service market has been defined that a NRA may properly assess
the conditions of effective competition therein.

47.

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 area the conditions of competition are similar or
sufficiently homogeneous and which can be distinguished from neighbouring areas in which
the prevailing conditions of competition are appreciably different21. The definition of the
geographic market does not require the conditions of competition between traders or
It is sufficient that they are similar or
providers of services to be perfectly homogeneous.
sufficiently homogeneous, and accordingly, only those areas in which the conditions of

20 The time frame to be used to assess the likely responses of other suppliers in case of a relative price
increase will inevitably depend on the characteristics of each market and should be decided on a case-
by case basis. Given the constant technological developments of the telecommunications markets,
NRA’s should, in principle, evaluate the likely responses of suppliers in a period which is less than
one year.

21 United Brands, cit., par 44, Michelin, cit., par 26, Case 247/86 Alsatel v Novasam [1988] ECR 5987,
para.15; Tiercé Ladbroke v Commission, cit., par 102.

12

competition are “heterogeneous” may not be considered to constitute a uniform market22.

48.

The process of defining the limits of the geographic market proceeds along the
same lines as those discussed above in relation to the assessment of the demand and supply-
side substitution in response to a relative price increase.

49.

Accordingly, with regard to demand-side substitution, NRAs should assess
mainly consumers’ preferences as well as their current geographic patterns of purchase.
In
particular, linguistic reasons may explain why certain services are not available or marketed
in different language areas. As far as supply-side substitution is concerned, where it can be
established that operators which are not currently engaged or present on the relevant market,
will, however, decide to enter that market in the short term in the event of a relative price
increase, then the market definition should be expanded to incorporate those “outside”
operators.

50.

In the telecommunications sector, the geographical scope of the relevant

market has traditionally been determined by reference to two main criteria23:

•

•

(a) the area covered by a network24, and

(b) the existence of legal and other regulatory instruments25.

51.

On the basis of these two main criteria26, markets can be considered to be
local, regional, national or covering territories of two or more countries (pan-European, EEA-
wide or global markets).

52.

In certain cases, the geographic market may be defined on a route-by-route
basis. In particular, when considering the geographical dimension of markets for international
retail or wholesale electronic communications services, it may be appropriate to treat paired
countries or paired cities as separate markets. Clearly, from the demand side, the delivery of a
call to one country is not a substitute for the delivery of the same to a another country. On the
other hand, the question of whether indirect transmission services, that is re-routing or transit
of the same call via a third country, represent effective supply-side substitutes depends on the

22 Deutsche Bahn v Commission, cit., par 92.

23 See for instance, Case No IV/ML.1025, Mannesmann/Olivetti/Infostrada, par. 17, Case No
COMP/JV.23 – Telefonica Portugal Telecom/Médi Telecom.

24 In practice, this area will correspond to the limits of the area in which an operator is authorised to
operate.
In Case No COMP/M.1650 – ACEA/Telefonica, 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; at par.16.

25 The fact that mobile operators can provide services only in the areas where they have been
authorised to and the fact that a network architecture reflects the geographical dimension of the mobile
licenses, explains why mobile markets are considered to be national in scope. The extra connection
and communications costs that consumers face when roaming abroad, coupled with the loss of certain
additional service functionalities (i.e., lack of voice mail abroad) further supports this definition; see
Case No IV/M.1430 – Vodafone/Airtouch, paras. 13-17, Case No COMP/JV.17 – Mannesmann/Bell
Atlantic/Omnitel, para.15..

26 Physical
geographical scope of the market, Case No IV/M.570 – TBT/BT/TeleDanmark/Telenor, par. 35.

interconnection agreements may also be taken into consideration for defining the

13

specificities of the market and should be decided on a case-by-case basis27.

2.2.3. Other issues of market definition

53.

In its Notice on market definition the Commission drew attention to certain
cases where 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 so-called “chain substitutability”28.
In essence, 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 for defining the
geographic market. Given the inherent risk of unduly widening the scope of the relevant
market, findings of chain substitutability should be adequately substantiated29.

2.2.3.1. The Commission’s own practice

54.

The Commission has adopted a number of decisions under Regulation No 17
and Regulation No 4064/8930 relating to the telecommunications sector. In these decisions the
Commission has identified a number of relevant markets which may be of particular
relevance for NRAs when applying Article 13 of the Framework Directive. As stated above,
however,
innovation and rapid technological
convergence, it is clear that any current market definition runs the risk of becoming inaccurate
or irrelevant in the near future31.

in a sector characterised by constant

55.

As stated in the Access Notice, there are in the telecommunications sector at
least two main types of relevant markets to consider, that of services provided to end users
(services market) and that of access to facilities necessary to provide such services (access
market)32. Within these two broad market definitions further market distinctions may be
made depending on demand and supply side patterns.

56.

As regards the fixed services market, the Commission has defined the relevant
market as being the market for domestic and international voice and data communications
services, with further segmentation between the voice market (in which both private

27 Reference may be made, for instance, to the market for backhaul capacity in international routes (i.e.
cable station serving country A to country E) where a potential for substitution between cable stations
serving different countries (i.e., cable stations connecting Country A to B, A to C and A to D) may
exist where a supplier of backhaul capacity in relation to the route A to E is or would be constrained
by the ability of consumers to switch to any of the other “routes”, also able to deal with traffic from or
to country E.

28 See Notice on market definition, paras. 57 and 58.

29 Evidence should show clear price interdependence at the extremes of the chain and the degree of
substitutability between the relevant products or geographical areas should be sufficiently strong.

30Regulation (EEC) no 4064/89 on the control of concentrations between undertakings, OJ L 395,
30.12.1989, p.1, as last amended by Council Regulation (EC) no 1310/97 of 30 June 1997,OJ L 180,
09.7.1997, p. 1 (hereafter, the “Merger Control Regulation).

31 See also, Joined Cases T-125/97 and T-127/97 The Coca-Cola Company and Others v Commission
[2000] ECR II-0000, at paras 81 and 82.

32 Access Notice, par. 45.

14

for

In the market

fixed telephony retail services,

households and business customers participate) and the data market (primarily used by
business)33.
the Commission has
distinguished various services: the initial connection, the monthly rental, local calls and long
distance calls34. These services are offered to two distinct classes of consumers, namely,
residential and business users, the latter possibly being broken down further into two sub-
markets, one for professional, small firms customers and another for large businesses. With
regard to the fixed telephony retail services offered to residential users, demand patterns
seems to indicate that
traditional fixed
telephony services (voice and narrowband data transmissions) on the one hand, and high
speed communications services (currently in the form of xDSL services) on the other hand.35

two main services are currently being offered,

57.

As regards mobile telecommunications, the Commission has found that, from a
demand-side point of view, mobile services and fixed telephony services constitute separate
markets36. Within the mobile market, evidence gathered from the Commission has indicated
that the market for mobile telecommunications services encompasses both GSM 900 and
GSM 1800 and possibly analogue platforms37.

58.

Specifically, the Commission has made references in its decisions to the

existence of the following main markets:

•

international voice-telephony services38

33 See Commission decision of 20 May 1999, Cégétel + 4 (OJ L 218, 18.8.1999), par. 22. With regard
to the emerging market
the
Commission has found that such services can be supported by three main network architectures: (i)
terrestrial wireline systems, (ii) terrestrial wireless systems and (iii) satellite-based systems, and that
from a demand side, satellite-based GBDS can be considered as a separate market, Case No
COMP/M.1564 – Astrolink, paras. 20-23.

for “Global broadband data communications services -GBDS”,

34 Directive 96/19/EC, recital 20, OJ L 74 22.3.1996, p.13. See also, Communication from the
Commission, Unbundled access to the local loop: enabling the competitive provision of a full range of
electronic communication services, including broadband multimedia and high speed Internet, OJ C
272, 23.9.2000, p. 55. Pursuant to point 3.2, “While categories of services have to be monitored
closely, particularly given the speed of technological change, and regularly reassessed on a case-by-
case basis, these services are presently normally not substitutable for one another, and would therefore
be considered as forming different relevant markets”.

35 Id. at point 3.2

36 It could also be argued that dial-up access to the Internet via existing 2G mobile telephones is a
separate market from dial-up access via the public switched telecommunications network. According
to the Commission, accessing the internet via a mobile phone is unlikely to be a substitute for existing
methods of accessing the Internet via a PC due to difference in sizes of the screen and the format of
the material that can be obtained through the different platforms; see Case No COMP/M.1982 –
Telia/Oracle/Drutt, para.15, and Case No COMP/JV.48 Vodafone/Vivendi/Canal+.

37 Case No IV/M.1430 – Vodafone/Airtouch, Case No IV/M.1669, Deutsche Telecom/One2One, par 7.
Whether this market can be further segmented into a carrier (network operator) market and a
downstream service market should be decided on a case-by-case basis; see Case No IN/1760,
Mannesmann/Orange, paras.8–10, and Case No COMP/M.2053 – Telenor/BellSouth/Sonofon, paras 9-
10.

38 Case No IV/M.856 - BT/MCI (II), OJ L 8.12.1997. These services are provided on the basis of
existing international transmission facilities existing between the countries concerned or through the
In that decision, the
use of international private leased circuits hired from facilities based operators.

15

•

•

•

•

•

•

•

•

advanced telecommunications services to corporate users39

standardised low-level packet-switched data-communications services
resale of international transmission capacity40
audioconferencing41
satellite services42
enhanced global telecommunications services43
directory-assistance services44
Internet-access services to end users45

• Seamless pan-European mobile telecommunications services to internationally mobile

customers46

59.

The Commission has decided that with regard to the “access” market, the latter
comprises all types of infrastructure that can be used for the provision of a given service47.

Commission considered that cable and satellite networks are not substitutable for the provision of
international voice services at the required standard, para.13.

39Case No IV/35.337, Atlas (OJ L 239, 19.9.1996) paras. 5-7, Case No IV/35617, Phoenix/Global/One
(OJ L239, 19.9.1996), par. 6, Case IV/34.857, BT-MCI (OJ L 223, 27.8.1994), Case No IV/M.802 -
Telecom Eireann, par. 22.

40 Case No IV/M.975 - Albacom/BT/ENI, par 24.

41 Idem, par 17; From the point of view of end users, audioconferencing was considered a separate
market, given that demand substitutes such as videoconferencing were significantly more expensive
and it was unlikely that consumers would switch to such services in response to a small but significant
permanent price increase (the “hypothetical monopolist test”).

42 Case IV/350518 – Iridium, OJ L 16, 18.1.1997.

43 Case No IV/M.570 – TBT/BT/TeleDanmark/Telenor, Case No IV/M.900 – BT/TELE
DK/SBB/Migros/UBS, par. 25.

44 Case No COMP/M.1957 – VIAG Interkom/Telenor Media, par 8.

45 From a demand point of view access to the Internet can be provided at a variety of bandwidths, with
to residential customers and high-
low bandwidth service (dial-up service) offered, generally,
bandwidth service (i.e., dedicated, high speed connections) to business customers, Case no IV/M.1439
– Telia/Telenor, Case No COMP/JV.46 – Blackstone/CDPQ/Kabel Nordrhein/Westfalen, par. 26,
Case No COMP/M.1838 – BT/Esat, par 7.
In the latter case, the Commission left open the question
whether the dial-up market could also be segmented into a residential and a business market (SME)
given that business dial-up was being provided on the basis of more sophisticated dial-up mechanisms.

46 Case No COMP/M.1975 – Vodafone Airtouch/Mannesmann, Case No COMP/M.2016 – France
Telecom/Orange, para.15.

47 For instance, in British Interactive Broadcasting/Open, the Commission noted that for the provision
of basic voice services to consumers,
included not only the
traditional copper network of BT but also the cable networks of the cable operators, which were
capable of providing basic telephony services, and possibly wireless fixed networks see Case No
IV/36.359, OJ L 312, 6.12.1999, paras.33-38.
the
Commission recognised that electricity networks using “Digital Power Line” technology could
provide an alternative to existing traditional local telecommunications access loop, par. 28-29.

In Case No IV/M.1113 – Nortel/Norweb,

infrastructure market

the relevant

16

Whether the market for network infrastructures should be divided into as many separate
submarkets as there are existing categories of network infrastructure, depends clearly on the
degree of substitutability among such (alternative) networks and should be decided on a case-
by-case basis48. This exercise should be carried out in relation to the class of users to which
access to the network is provided. A distinction should, therefore, be made between provision
of infrastructure to other operators (wholesale level) and provision to end users (retail level).
At the retail level, a further segmentation may take place between business and residential
customers49.

60. When the service to be provided concerns only end users subscribed to a
particular network, access to the termination points of that network may well constitute the
relevant product market. This will not be the case if it can be established that the same
services may be offered to the same class of consumers by means of alternative, easily
accessible competing networks. For example, in its Communication on unbundling the local
loop50, the Commission stated that although alternatives to the PSTN for providing high speed
communications services to residential consumers exist (fibre optic networks, wireless local
loops or upgradable TV networks), none of these alternatives may be considered as a
loop infrastructure51.
substitute to the fixed local
Future innovative and technological
changes may, however, justify different conclusions52.

61.

From a demand-side point of view, access to mobile networks may also be
defined by reference to two potentially separate markets, one for call origination and another
for call termination.
In this respect, the question whether the access market to mobile
infrastructure relates to access to an individual mobile network or to all mobile networks, in
general, should be decided on a case-by-case basis53.

48 In assessing the conditions of network competition in the Irish market that would ensue following
full liberalisation, the Commission also relied on the existence of what, at that period of time, were
perceived as potential alternative infrastructure providers, namely, cable TV and electricity networks,
Telecom Eireann, cit., para.30. The Commission left open the question whether the provision of
transmission capacity by an undersea network infrastructure constitutes a distinct market from
terrestrial or satellite transmissions networks, Case No COMP/M.1926 - Telefonica/Tyco/JV, at par. 8.

49 In applying these criteria, the Commission has found that, as far as the fixed infrastructure is
concerned, demand for the lease of transmission capacity and the provision of related services to other
operators occurs at wholesale level (the market for carrier’s carrier services; see Case No IV/M.683 -
GTS-HERMES Inc./HIT Rail BV, par 14, M.1069 - WorldCom/MCI, OJ L 116, 4.5.1999, p. 1,
Unisource, OJ L 318, 1997, p. 1, Phoenix/Global One, OJ L 239, 1996, p. 57, JV.2, Enel/FT/DT

50 See footnote 25.

51 Fiber optics are currently competitive only on upstream transmission markets whereas wireless local
loops which are still to be deployed will target mainly professionals and individuals with particular
communications needs. With the exception of certain national markets, existing cable TV networks
need costly upgrades to support two ways broadband communications, and, compared with xDLS
technologies, they do not offer a guaranteed bandwidth since customers share the same cable channel.

52 See also Case No IV/JV.11 - @Home Benelux B.V.

53.If an undertaking wants to terminate calls to the subscribers of a particular network, in principle, it
will have no other choice but to call or interconnect with the network to which the called party has
subscribed. In that regard, it is worth mentioning that one NRA has already defined an indirect access
market for call origination on individual mobile networks.

17

3.

CALCULATING SIGNIFICANT MARKET POWER (DOMINANCE)

62.

According to Article 13 of the Framework Directive “an undertaking shall be
deemed to have significant market power if, either individually or jointly with others, it enjoys
a position of economic strength affording it the power to behave to an appreciable extent
independently of competitors customers and ultimately consumers”. This is the definition that
the Court of Justice case-law ascribes to the concept of dominant position in Article 82 of the
Treaty54. The legislator has decided to align the definition of SMP to the Court’s definition of
dominance within the meaning of Article 82 of the Treaty55. Consequently, in applying the
new definition of SMP, NRAs will have to ensure that their decisions are in line with the
Commission’s practice and in conformity with the relevant jurisprudence of the Court of
Justice and the Court of First Instance on dominance. However, the application of the new
definition of SMP, ex-ante, calls for certain methodological adjustments to be made regarding
the way market power is assessed. In particular, when assessing ex-ante whether one or more
undertakings are in a dominant position in the relevant market, NRAs are, in principle, relying
on different sets of assumptions and expectations than those relied upon by a competition
authority applying Article 82, ex post. Often, the lack of evidence or of records of past
behaviour or conduct will mean that the market analysis will have to be based on a purely
prospective assessment. The accuracy of the market analysis carried out by NRAs will thus
be conditioned by information and data existing at the time of the adoption of the relevant
decision.

63.

The fact that an NRA’s initial market predictions do not finally materialise in a
given case does not necessarily mean that its decision was inconsistent with the Directive. In
applying ex-ante the concept of dominance, NRAs must be accorded wide discretionary
powers correlative to the complex character of the economic, factual and legal situations that
will need to be assessed.
In accordance with the Framework Directive, market assessments
by NRAs will have to be undertaken on a regular basis, typically once a year. In this context,
therefore, NRAs will have the possibility to react at regular intervals to any market
developments and to take any measure deemed necessary.

3.1.

Criteria for assessing SMP

64.

As the Court has stressed, a finding of a dominant position does not preclude
some competition in the market. It only enables the undertaking that enjoys such a position, if
not to determine, at least to have an appreciable effect on the conditions under which that
competition will develop, and in any case to act in disregard of any such competitive
constraint so long as such conduct does not operate to its detriment56.

65.

In an ex-post analysis, a competition authority may be faced with a number of
different examples of market behaviour each indicative of market power within the meaning
of Article 82. However, in an ex ante environment, market power is essentially measured by
reference of the power of the undertaking concerned to raise prices by restricting output
without incurring a significant loss of sales or revenues..

66.

The market power of an undertaking can be constrained by the existence of

54 Case 27/76 United Brands v. Commission, [1978] ECR 207.

55 See also recital 20 of the Framework directive.

56 Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, par. 39.

18

potential competitors57. An NRA should thus 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 following a small but significant non-transitory price increase.
Undertakings which, in case of such 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.

67.

Other criteria could also be relied upon to measure market power. Market
shares are often used as a proxy for market power. Undertakings with market shares of no
more than 25% are not liable to enjoy a dominant position on the market concerned58. In the
Commission’s decision-making practice, dominance concerns normally arise only in the case
of undertakings with market shares of over 40%59. According to established case-law,
extremely large market shares - in excess of 50% - are in themselves, save in exceptional
circumstances, evidence of the existence of a dominant position60. An undertaking with a
large market share may be presumed to have SMP, that is, to be in a dominant position, only
if its market share has remained stable over time61. The fact that an undertaking with a
significant position on the market is gradually losing market share may well indicate that the
market is becoming more competitive, but it does not preclude a finding of significant market
power. On the other hand, fluctuating market shares over time may be indicative of a lack of
market power in the relevant market.

68.

As regards the methods used for measuring market size and market shares,
both volume sales and value sales provide useful information for market measurement62. In
the case of bulk products preference is given to volume whereas in the case of differentiated
products (i.e., branded products) sales in value and their associated market share will often be
considered to reflect better the relative position and strength of each provider.

69.

The criteria to be used to measure the market share of the undertaking(s)
concerned will depend on the characteristics of the relevant market. It is for NRAs to decide

57 The absence of any substitutable service or product may justify a finding of a situation of economic
dependence which is characteristic of the existence of a dominant position; See Commission decisions,
Decca Navigator System, OJ L 65, 1987, and Magill TV Guide:ITP, BBC, RTE, OJ L 78, 1989, p. 43.
See also, Case 22/78 Hugin v Commission 1979 [ECR] 1869, Case 226/84, British Leyland v
Commission 1986 [ECR] 3263.

58 See also recital 15 of Regulation No 4064/89

59 United Brands v Commission, cit. The greater the difference between the market share of the
undertaking in question and that of its competitors, the more likely will it be that the said undertaking
is in a dominant position.

60 Case C-62/86 AKZO v Commission, [1991] ECR I-3359, par. 60; Case T-228/97, Irish Sugar v
Commission, [1999] ECR II-2969, par. 70. However,
large market shares can become accurate
measurements 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.

61 Case Hoffmann-La Roche v Commission, cit., par. 41, Case C-62/86, Akzo v Commission
1991¨[ECR] I-3359, paras. 56, 59. In dynamics markets characterised by technological changes, any
period less than three years might be considered too short a period to assess the existence of a
dominant position. See also Case No IV/M.1027 – Deutsche Telekom/BetaResearch, OJ L 53,
27.2.1999, paras. 28 s.

62 Notice on market definition, cit., at p. 5

19

which are the criteria most appropriate for measuring market presence. For instance, leased
lines revenues, leased capacity or numbers of leased line termination points are possible
criteria for measuring an undertaking’s relative strength on leased lines markets. As the
Commission has indicated, the mere number of leased line termination points does not take
into account the different types of leased lines that are available on the market – ranging from
analogue voice-quality to high-speed digital leased lines, short distance to long distance
international leased lines. Of the two, leased lines revenues may be more transparent and less
complicated to measure. Likewise, retail revenues, call minutes or numbers of fixed
telephone lines or subscribers of public telephone network operators are possible criteria for
measuring the market shares of undertakings operating in these markets63. Where the market
defined is that of interconnection, a more realistic measurement parameter would be the
revenues accrued for terminating calls to customers on fixed or mobile networks. This is so
because the use of revenues, rather than for example call minutes, takes account of the fact
that call minutes can have different values (i.e., local, long distance and international) and
provides a measure of market presence that reflects both the number of customers and
network coverage64. For the same reasons, the use of revenues for terminating calls to
customers of mobile networks may be the most appropriate means to measure the market
presence of mobile network operators65.

70.

Although market shares have been a prime surrogate for market power, other

criteria can also be used to measure market power. These criteria include

•

•

•

•

•

•

•

•

•

•

•

overall size of the undertaking

control of infrastructure not easily duplicated

technological advantages or superiority

absence of countervailing buying power

easy or privileged access to capital markets/financial resources

product/services diversification (e.g. bundled products or services)

economies of scale

economies of scope

vertical integration

a highly developed distribution and sales network

absence of potential competition

71.

A dominant position can derive from a combination of the above criteria,

which taken separately may not necessarily be determinative.

63 See, Determination of Organizations with Significant Power (SMP) for the implementation of the
ONP Directive, DG XIII, 1 March 1999, at
http://europa.eu.int/ISPO/infosoc/telecompolicy/en/SMPdeter.pdf, at par. 3.2..

64 Idem, at par. 5.2

65 With regard to the interconnection market of fixed and mobile networks, the termination traffic to be
measured should include own network traffic and interconnection traffic received from all other fixed
and mobile networks, national or international.

20

72.
In fact, the absence of barriers to entry deters,

A finding of dominance also depends on an assessment of ease of market
independent anti-
entry.
competitive behaviour by an undertaking with a significant market share.
In the
telecommunications sector, barriers to entry are often high because of existing legislative and
the number of available licences or the
other regulatory requirements which may limit
provision of certain services (i.e., GSM/DCS or 3G mobile services). Furthermore, barriers to
entry exist where entry into the relevant market
requires large investments and the
programming of capacities over a long time in order to be profitable66.

in principle,

73.

As regards the notion of "essential facilities", there is for the moment no
jurisprudence in relation to the electronic communications sector. In other contexts, this
notion is only relevant with regard to the existence of an abuse of a dominant position under
Article 82 of the EC Treaty and has no bearing on the ex ante assessment of SMP within the
meaning of Article 13 of the Framework directive.

3.1.1.

Leverage of market power

74.

According to Article 13, paragraph three, of the Framework directive, “where
an undertaking has significant market power on a specific market, it may also be deemed to
have significant market power on a closely related market, where the links between the two
markets are such as to allow the market power held in one market to be leveraged into the
other market, thereby strengthening the market power of the undertaking”.

75.

This provision is intended to address a market situation comparable to the one
that gave rise to the Court’s judgement in Tetra Pak II67. In that case, the Court decided that
an undertaking that had a dominant position in one market, and enjoyed a leading position on
a distinct but closely associated market, was placed as a result in a situation comparable to
that of holding a dominant position on the markets in question taken as a whole. Thanks to its
dominant position on the first market, and its market presence on the associated, secondary
market, an undertaking may thus leverage the market power which it enjoys in the first market
and behave independently of its customers on the latter market. Close associative links,
within the meaning of the Court’s case-law, will most often be found in vertically integrated
markets.

76.

This is often the case in the telecommunications sector, where an operator
often has a dominant position on the infrastructure market and a significant presence on the
downstream, services market68. Under such circumstances, an NRA may consider
it
appropriate to find that such operator has SMP on both markets taken together69.

3.1.2. Collective dominance

77.

Under Article 82 of the EC Treaty, a dominant position can be held by one or
more undertakings (“collective dominance”). Article 13, paragraph two, of the Framework
directive also provides that an undertaking may enjoy significant market power, that is, it may

66 Hoffmann-La Roche v Commission, cit., at para. 48.

67 Case C-333/94 P, Tetra Pak v Commission [1996] ECR I-5951.

68 See Access Notice, par 65.
69 For instance, vertical integration is particularly prevalent in digital pay TV markets where content
providers usually also control the digital platform.

21

be in a dominant position, either individually or jointly with others.

78.

In the Access Notice, the Commission had stated that although at the time both
its own practice and the case-law of the Court were still developing, it would consider two or
more undertakings to be in a collective dominant position when they had substantially the
same position vis-à-vis their customers and competitors as a single company has if it is in a
dominant position, provided that no effective competition existed between them. The lack of
competition could be due,
to the existence of certain links between those
companies. The Commission had also stated, however, that the existence of such links was
not a prerequisite for a finding of joint dominance70.

in practice,

79.

Since the publication of the Access Notice, the concept of collective dominance
has been tested in a number of decisions taken by the Commission under Regulation 17 and
under Regulation 4064/89.
In addition, both the Court of First Instance and the Court of
Justice have given judgements which have contributed to further clarifying the exact scope of
this concept.

3.1.3.

The jurisprudence of the CFI/ECJ

80.

The expression “one or more undertakings” in Article 82 of the EC Treaty
implies that a dominant position may be held by two or more economic entities which are
legally and economically independent of each other71.

81.

Until the ruling of the Court of Justice in Compagnie Maritime Belge72 and the
ruling of the Court of First instance in Gencor73 (see below), it might have been argued that a
finding of collective dominance was based on the existence of economic links or other factors
which could give rise to a connection between the undertakings concerned74. The question of
whether collective dominance could also apply to an oligopolistic market, that is a market
comprised of few sellers, in the absence of any kind of links among the undertakings present
in such a market, was first raised in Gencor. The case concerned the legality of a decision
adopted by the Commission under Regulation 4064/89 prohibiting the notified transaction on
the grounds that it would lead to the creation of a duopoly market conducive to a situation of
oligopolistic dominance 75. Before the CFI, the parties argued that the Commission had failed
to prove the existence of “links” between the members of the duopoly within the meaning of
the existing case-law.

82.

The CFI dismissed the application by stating, inter alia, that there was no legal

70 Access Notice, par. 79.

71 Joined cases C-395/96 P and C-396/96 P, Compagnie maritime Belge and others v Commission
[2000] ECR I-1365.

72 Idem, at para.39.

73 Case T102/96, Gencor v Commission [1996] ECR II-753.

74 See Joined Cases T-68/89, T-77/89 and T-78/89, SIV and Others v Commission [1992] ECR II-
1403, par 358, Case C-393/92 Almelo [1994] ECR I-1477, par. 43, Case C-96/94, Centro Servizi
Spediporto [1995] ECR I-2883, par. 33, Joined Cases C-140/94, 141/94, and C-142/94, DIP, [1995]
ECR I-3257, par. 62, Case C-70/95, Sodemare [1997] ECR I-3395, par. 46, and Joined Cases C-68/94
and C-30/95 France and Others v Commission [1998] ECR I-1375, par. 221.

75 Case No IV/M.619, - Gencor Lonhro (OJ 1997, L 11, p.30).

22

precedent suggesting that the notion of “economic links” was restricted to the notion of
structural links between the undertakings concerned: According to the CFI, “there is no
reason whatsoever in legal or economic terms to exclude from the notion of economic links
the relationship of interdependence existing between the parties to a tight oligopoly within
which, in a market with the appropriate characteristics, in particular in terms of market
concentration, transparency and product homogeneity, those parties are in a position to
anticipate one another's behaviour and are therefore strongly encouraged to align their
conduct in the market, in particular in such a way as to maximise their joint profits by
restricting production with a view to increasing prices. In such a context, each trader is
aware that highly competitive action on its part designed to increase its market share (for
example a price cut) would provoke identical action by the others, so that it would derive no
benefit from its initiative. All the traders would thus be affected by the reduction in price
levels”76. As the Court pointed out, market conditions may be such that “each undertaking
may become aware of common interests and, in particular, cause prices to increase without
having to enter into an agreement or resort to concerted practice”77.

it

83.

is necessary to consider whether

The CFI’s ruling in Gencor was later endorsed by the ECJ in Compagnie
Maritime Belge, where the Court of Justice gave further guidance as to how the term of
collective dominance should be understood and as to which conditions must be fulfilled
before such finding can be made. According to the Court, in order to show that two or more
undertakings hold a joint dominant position,
the
undertakings concerned together constitute a collective entity vis-à-vis their competitors, their
trading partners and their consumers on a particular market78. This will be the case when (i)
there is no effective competition among the undertakings in question; and (ii) the said
undertakings adopt a uniform conduct or common policy in the relevant market79. Only when
that question is answered in the affirmative,
is it appropriate to consider whether the
collective entity actually holds a dominant position80. In particular, it is necessary to ascertain
whether economic links exist between the undertakings concerned which enable them to act
independently of their competitors, customers and consumers. The Court recognised that an
implemented agreement, decision or concerted practice (whether or not covered by an
exemption under Article 81(3) of the Treaty) may undoubtedly result in the undertakings
concerned being linked in a such way that their conduct on a particular market on which they
are active results in them being perceived as a collective entity vis-à-vis their competitors,
their trading partners and consumers81.

84.

The mere fact, however, that two or more undertakings are linked by an
agreement, a decision of associations of undertakings or a concerted practice within the
meaning of Article 81(1) of the Treaty does not, of itself, constitute a necessary basis for such
a finding. As the Court stated, “a finding of a collective dominant position may also be based
on other connecting factors and would depend on an economic assessment and, in particular,

76 Gencor v Commission, cit., at par 276.

77 Idem, at par. 277

78 Compagnie Maritime Belge transports and Others, cit., at par 39.

79 See in particular, France and Others v Commission, cit., par 221.

80 Compagnie Maritime Belge, at par 39.

81 Idem at par. 44.

23

on an assessment of the structure of the market in question”82.

85.

It follows from Gencor and Compagnie Maritime Belge judgements that
although the existence of structural links can be relied upon to support a finding of a
collective dominant position, such a finding can also be made in relation to an oligopolistic or
highly concentrated market whose structure alone is conducive to co-ordinated effects on the
relevant market83.

3.1.3.1. The Commission’s decision-making practice

86.

The Commission has applied the concept of collective dominance in relation to
oligopolistic markets the structure of which was considered conducive to co-ordinated effects
in a number of decisions adopted under the Merger Control
on the relevant market,
Regulation84. In doing so, the Commission has relied upon a certain number of criteria which
can be summarised as follows:

• few market players85

• mature market

• stagnant or moderate growth on the demand side86

• low elasticity of demand

• homogeneous product

• similar cost structures87

82 Idem at par. 45.
83 The use here of
from the term “parallel
anticompetitive behavior” also used in Commission’s decisions applying the concept of collective
(oligopolistic) dominance.

the term “co-ordinated effects” is no different

84 See in particular, Case No COMP/M. 1882 – Pirelli/BICC, Case No IV/M.1527 – OTTO
Versand/Freemans, Case No IV/M1225 – Enso/Stora (OJ L 254, 29.9.1999, p. 9), Case No IV/M.1524
– Airtours/First Choice (OJ L 93, 13.4.2000, p. 1), Case No IV/M.1517, Rhodia/Donau
Chemie/Albright & Wilson, Case No IV/M1016 – Price Waterhouse/Coopers & Lybrand ( OJ L 50,
26.2.1999, p. 27), Case No IV/M.619 – Gencor/Lonrho, cit., Case No IV/M.308, Kali +
Salz/MdK/Treuhand (OJ L 186, 21.7.1994, p. 38) and Case No IV/M.190 – Nestlé/Perrier (OJ, L 356,
5.12.1992, p. 1).

85 As the Commission noted in Price Waterhouse/Coopers & Lybrand, “collective dominance
involving more than three or four suppliers is too complex and unstable to persist over time, cit., at
paras103 and 113. In that decision the Commission dismissed the possibility that the so-called Big Six
accounting firms be considered collectively dominant. However, such an assessment will depend on
each market’s particular characteristics and indeed markets with more than three players may under
certain circumstances be considered as being conducive to oligopolistic dominance.

86 Enso/Stora, cit., at par.67.

87 Idem.

24

• similar market shares88

• transparent market conditions89

• lack of technical innovation, mature technology

• absence of excess capacity90

• high barriers to entry91

• lack of countervailing buying power92

• lack of potential competition93

• various kind of informal or other links between the undertakings concerned94

• retaliatory mechanisms

• lack or reduced scope for price competition95

87.

The above is not an exhaustive list, nor are the criteria cumulative. Rather, the

88 See in particular, France and Others v Commission, cit., at par. 226. Large imbalances of market
share between the undertakings concerned may render the existence or creation of a collective
dominant position highly unlikely, Rhodia/Donau Chemie/Albright & Wilson, at para.73. See also,
OTTO Versand/Freemans, cit., para.31, and Pirelli/BICC, cit., para.83. However, imbalances in
market share among the members of an oligopoly have not been an obstacle to a finding of collective
dominance in a number of cases; Case No IV/M.1313 – Danish Crown/Vestjyske Slagterier, OJ L 20,
25.1.2000, p. 1.

89 See also Case No IV/M.942 – VEBA/Degussa, OJ L 201, 17.7.1998, p. 102, at par. 44 (market
conditions were not found to be transparent).
In Enso/Stora the Commission also took into
consideration the absence of market transparency regarding such key parameters as supplies and prices
together with the existence of secret discounts, cit., at para.68. See also, Pirelli/BICC, cit., “the results
of market investigation indicate that price transparency for LV/MV products is rather low due to
absence of meaningful list prices and varying customer-defined specifications. Collusive strategies
are thus further complicated”, par. 91.

90 A finding of collective dominance may be negated if it can be established that
there exist
overcapacities distributed among the undertakings concerned “in a way that would allow for breaking
up of parallel anticompetitive behavior”, see in particular, Rhodia/Donau Chemie/Albright & Wilson,
at para.71.

91 See for instance, Enso/Stora, cit., at paras. 75-77.

92 See Case No IV/M.1313 – Danish Crown/Vestjyske Slagterier, OJ L 20, 25.1.2000, p. 1, paras. 171
to 174..

93 Idem, at par.174

94 In Price Waterhouse/Coopers & Lybrand, the Commission also took into account the fact that the
undertakings concerned (accounting firms) were represented in various industry organizations and
institutions responsible for matters of self-regulation and that their representatives met on a regular
basis to discuss issues crucial to their profession.

95 Danish Crown/Vestjyske Slagterier, cit., par.176.

25

list is intended to illustrate the sorts of evidence that could be used to support assertions
Indeed, as stated above,
concerning the existence of a collective (oligopolistic) dominance.
the existence of structural links among the undertakings concerned is not a prerequisite for
finding a collective dominant position.
It is however clear that where such links exist, they
can be relied upon to explain, together with any of the other above mentioned criteria, why in
a given oligopolistic market co-ordinated effects are likely to arise.

88.

In an oligopolistic market where most, if not all, of the above mentioned
criteria are met, what does need to be established is that market operators have a strong
incentive to converge to a co-ordinated market outcome and refrain from reliance on
competitive conduct. This will be the case where the long-term benefits of an anti-
competitive conduct
to a
competitive behaviour. Therefore, in tight oligopolistic markets, the so-called “retaliation”
condition corresponds to an undertaking’s consciousness of
the long-term negative
consequences that can result from departing from a co-ordinated outcome96.

far outweigh any short-term gains resulting from a resort

3.1.3.2. Collective dominance and the Telecommunications sector

89.

In applying the notion of collective dominance, NRAs may also take into
consideration decisions adopted under Regulation 4064/89 in the telecommunications sector,
in which the Commission has examined whether any of the notified transactions could give
rise to a finding of collective or oligopolistic dominance.

90.

In BT/Esat97, one of the issues examined by the Commission was whether
market conditions in the Irish market for dial-up Internet access lent themselves to the
emergence of a duopoly consisting of the incumbent operator, Eircom, and the merged entity.
The Commission concluded that this was not the case for the following reasons. First, market
shares were not stable; second, demand was doubling every six months; third, internet access
products were not considered homogeneous; and finally, technological developments were
one of the main characteristics of the market98.

91.

In Vodafone/Airtouch99, the Commission found that the merged entity would
have joint control of two of the four mobile operators present on the German mobile market
(namely D2 and E-Plus, the other two being T-Mobil and VIAG Interkom). Given that entry
into the market was highly regulated, in the sense that licences were limited by reference to
the amount of available radio frequencies, and that market conditions were transparent, it
could not be ruled out that such factors could lead to the emergence of a duopoly conducive to
co-ordinated effects100.

96 In other words, while in a “cartel”-type situation, compliance with an agreed conduct may well be
enforced by means of a retaliatory mechanism, in a situation of oligopolistic dominance retaliation
may for instance consist of reverting to the pre-price increase market equilibrium.

97 Case No COMP/M.1838 – BT/Esat.

98 Idem, paras 10 to 14.

99 Case No IV/M.1430 – Vodafone/Airtouch.

100 Idem, at par 28. The likely emergence of a duopolistic market concerned only the three largest
mobile operators, that is D2 and E-Plus, on the one hand, and T-Mobil on the other hand, given that
VIAG Interkom’s market share was below 5%. The Commission’s concerns were finally removed
after the parties proposed to divest Vodafone’s entire stake in E-Plus.

26

92.

In France Telecom/Orange the Commission found that, prior to the entry of
Orange into the Belgian mobile market, the two existing players, Proximus and Mobistar,
were in a position to exercise joint dominance. As the Commission noted, for the four years
preceding Orange’s entry, both operators had almost similar and transparent pricing, their
prices following exactly the same trends101.
In the same decision the Commission further
dismissed claims by third parties as to the risk of a collective dominant position of Vodafone
and France Telecom in the market for the provision of pan-European mobile services to
internationally mobile customers. Other than significant asymmetries between the market
shares of the two operators, the market was considered to be emerging, characterised by an
increasing demand and many types of different services on offer and on price102.

93.

Finally, the possibility that in certain Member States mobile operators may
enjoy a collective dominance in the market for the provision of wholesale roaming to foreign
mobile operators, has been examined by the Commission in relation to the recent “Roaming
Sector inquiry”103.

4.

IMPOSITION, AMENDMENT OR WITHDRAWAL OF OBLIGATIONS UNDER ARTICLE 14
OF THE FRAMEWORK DIRECTIVE

94.

Section 3 of the Guidelines deals with the analysis of effective competition that
NRAs must carry out under Article 14.2 and 14.3 of the Framework directive. This Section
aims to provide guidance for NRAs on the action to take following on from that analysis; in
practice, this will mean the imposition, maintenance, amendment or withdrawal of specific
regulatory obligations.

95.

This section deals first with the designation by NRAs of operators with
Significant Market Power. It then describes the process by which NRAs should decide
whether to impose, maintain, amend or withdraw sector-specific obligations.

4.1.

Designation of undertakings with Significant Market Power

96.

Article 14 of Directive [framework] sets out the procedure that must be
followed by NRAs in relation to a series of specific regulatory obligations. These obligations
relate to: transparency, non-discrimination, accounting separation, obligations for access to
and use of specific network facilities, price control and cost accounting (Articles 9-13 of the
Access directive); retail tariff regulation, carrier selection and pre-selection and availability of
leased lines (Articles 16, 25 and 27 of the Universal Service and Users’ Rights directive).

101 Case No COMP/M.2016 – France Telecom/Orange, at par. 26.

102 Idem, at paras 39-40.

103 In its Working Document “On the initial findings of the sector inquiry into mobile roaming
charges”, the Commission made reference to (i) the existence of a number of economic links that
existed between mobile operators, namely through their interconnection agreements, their membership
of the GSM Association, the WAP and the UMTS forum, the fact that terms and conditions of
roaming agreements were almost standardized, and (ii) the existence of high barriers to entry.
In its
assessment the Commission also stressed that the fact that the mobile market is, in general, technology
driven, did not seem to have affected the conditions of competition prevailing on the wholesale
international
see
http://europa.eu.int/comm/competition/antitrust/others/sector_inquiries/roaming/, at pages. 24 and 25.

roaming

market,

27

97.

NRAs may impose obligations only on operators with Significant Market
Power under Article 8 of the Access directive and Articles 16, 25 and 27 of the Universal
Service and Users Rights directive. The only exception to this requirement is Article 8(2) of
the Access directive, which provides for obligations to be imposed on non-SMP operators in
order to comply with the Community’s international commitments. This exception is dealt
with in paragraph 103 of this section.

98.

Article 14.4 and 14.5 of Directive [framework] require that NRAs only
maintain or impose obligations on operators in markets that are not subject to effective
competition. A finding that a market is effectively competitive is, in effect, a finding of an
absence of single or collective dominance on that market.

4.2.

Regulatory obligations

99.

If an NRA finds that a product market defined in the Article 14.1 Decision is
subject to effective competition in a specific geographical area within its territory, it will not
designate any undertaking as having significant market power. If there are existing regulatory
obligations104 on an undertaking in that territory, the NRA must withdraw such obligations
and may not impose any new obligation on that undertaking. Where the NRA proposes to
remove regulatory obligations, it must give parties affected a reasonable period of notice.
What is reasonable will depend on the obligation in question, but normally the period should
not be less than two months and may be considerably more.

100.

If an NRA finds that a product market defined in the Article 14.1 Decision is
not subject to effective competition in a specific geographical area within its territory, it
would normally designate one or more undertakings as having SMP and impose appropriate
regulatory obligations on the undertaking(s) concerned. If such undertaking is subject to pre-
the NRA must consider
existing obligations under the previous regulatory framework,
whether these obligations continue to be appropriate under the new regulatory framework.
The NRA may maintain, amend or remove certain obligations if it sees fit. The NRA may
decide to impose new or additional obligations on that undertaking. NRAs must impose at
least one regulatory obligation on an undertaking that has been designated as having SMP.
An NRA must have already designated an undertaking as having SMP as a pre-requisite to
imposing obligations. Conversely, NRAs should not designate undertakings as having SMP
without associated obligations being imposed.

4.3.

Trans-national markets: joint analysis by NRAs

the
101. Article 14.1 of Directive [framework] also makes provision for
Commission’s Decision on relevant product and service markets to identify product markets
that are transnational, covering the whole of the Community or a substantial part thereof.
Under the terms of Article 14.1 of Directive [framework], NRAs must conduct the market
analysis jointly. Any joint analysis of such markets will therefore involve most if not all
NRAs.
joint analysis would take place within the High Level
Communications Group105. In other respects, such analysis would be conducted as by a single
NRA.

In practice,

this

104 Obligations of a nature to substitute temporarily for the absence of competition in a relevant market.
105 See article 21 of the Framework Directive.

28

4.4.

Relationship to WTO commitments

102.

The EC has given commitments in the WTO in relation to undertakings that
are ‘major suppliers’ of basic telecommunications services106. Where undertakings have SMP
for the provision of such services in the European Community, such undertakings would also
fulfil the definition of ‘major supplier’ within the meaning of the Community’s commitments
in the WTO. Such undertakings must therefore be subject to all of the obligations set out in
the EC commitments in the WTOfor basic telecommunications services. NRAs would apply
all obligations to such an undertaking in accordance with the EU commitments in the WTO.

103.

In all other regulatory respects, NRAs are obliged by Article 7 of the directive
and by general Community law to ensure that the measures adopted under Article 14 are
effective, justified and proportionate. Proportionality will be a key criterion used by the
Commission to assess measures proposed by NRAs under the procedure of Article 6 of
Directive [framework]. Proportionality is a well-established legal principle of examining the
legitimacy of regulatory actions under Community law. Where a reasonable relationship
exists between the regulatory action and the aims sought to be achieved, in the sense that the
measure applied does not go beyond what is necessary to achieve the end result, the specific
regulatory measure will be deemed to be proportionate.

104.

The Commission will also check that any measure taken by the NRAs is in
conformity with the regulatory framework as a whole, and will also assess the impact of the
said measure on the single market.

5.

MARKET ANALYSIS, POWERS OF
PROCEDURES

INVESTIGATION

AND CO-OPERATION

5.1.

Overview

specific
105. NRAs will analyse effective competition and impose sector
obligations in three steps: firstly, NRAs will analyse the market, draw conclusions in relation
to the existence of effective competition and whether the market contains undertakings that
enjoy significant market power, and then propose to designate any such undertakings as
having SMP together with ex ante obligations (either newly imposed, maintained or
modified)., secondly, NRAs will conduct a public consultation; and finally, NRAs will adopt
a final decision.

106.

This section of the Guidelines covers procedures in respect of an NRA’s
powers to obtain the information necessary to conduct a market analysis. In that regard, it
should be recalled that Article 5.1 of the FW Directive provides that Member States shall
ensure that undertakings providing electronic communications networks and services provide
the information necessary for NRAs to ensure conformity with Community law.
all
Furthermore, Article 11 of Directive [Authorisation] provides that undertakings can be
required by the terms of their general authorisation to supply the information necessary for
NRAs to conduct a market analysis within the meaning of Article 14.2.

107.

These provisions thus enable NRAs to require undertakings that provide
electronic communications networks and services to supply all the information including
confidential information, as described in paragraph 108, necessary for NRAs to assess

106 GATS commitments taken by EC on telecommunications: http://gats-info.eu.int

29

competition and impose appropriate ex ante obligations and thus to ensure compliance with
the Framework and Specific Directives.

108.

This section of the Guidelines also includes measures to ensure effective co-
operation between various national authorities, as between NRAs and NCAs and with the
Commission. Under the terms of Article 3.5, NRAs and NCAs have the right to exchange
information; moreover, they are subject to the same rights and duties of confidentiality in
respect of exchange of information as a ‘competent authority’ for the purposes of Regulation
17/62. To facilitate the co-operation foreseen in Article 3.5, this section of the Guidelines
suggests procedures for sharing information between authorities.

109. Many electronic communication markets are fast-moving and their structures
are changing rapidly. NRAs should ensure that the assessment of effective competition, the
public consultation, and the designation of operators having SMP are all carried out within a
reasonable period. Any unnecessary delay in the decision could undermine the development
of the relevant market, as well as affect the incentives for investment and the interests of
consumers.

5.2.

Market analysis and power of investigation

110. Under Article 14.2 of the FW Directive, NRAs must carry out an analysis of
the markets identified in the Commission’s Decision within two months of the date of
adoption or revision by the Commission. The Directive therefore ensures that NRAs will
begin a substantive analysis of the relevant markets identified in the Decision without delay
but does not mandate that such analyses be completed within the two month period, although
NRAs should do their utmost to reach the final result by this time. Each market analysis of
the relevant markets and proposed regulatory action must be published and subjected to a
consultation procedure as described in Section 6.

111. Article 14.2 also requires NRAs to conduct their analyses in accordance with
the provisions of the Guidelines and associate NCAs to such analyses. NCAs will share any
relevant information they have, including confidential information. NRAs should invite NCAs
to advise as they consider useful. As the NRAs conduct their market analyses in accordance
with the methodologies of competition law, the views of NCAs in respect of the assessment of
competition are highly relevant.

112.

In preparing to carry out a market analysis, NRAs will collect all the necessary
information from the widest possible range of sources. From those undertakings that have
obtained a general authorisation under Article 3.2 of the Authorisations Directive, NRAs can
request any information that
is objectively justified and proportionate, provided this
requirement has been included in the conditions attached to the general authorisation in that
Member State.

113. When NRAs request information from an undertaking under the terms of
Article 11.1 (f) of the Authorisations Directive, they shall state the reasons justifying the
request, and the time limit within which the information is to be provided. NRAs are subject
to the same obligations of professional secrecy in respect of confidential information as NCAs
(see Article 3.5 of Directive [framework])..

114.

In accordance with Article 5.3 of Directive [framework], NRAs shall publish
all information that would contribute to an open and competitive market, subject to the rules
on commercial confidentiality. Pursuant to Article 5.4 of that Directive, NRAs should also

30

publish the terms of public access to information, including the procedure for obtaining such
access. Any decision to refuse access to information should be reasoned and made available
to interested parties. NRAs should ensure that up-to-date information is made publicly
available with regard to SMP operators in accordance with paragraph 131.

115. NRAs may not disclose information received in the exercise of their functions,
unless such information was in the public domain, or unless the public interest justifies such
disclosure. More particularly, NRAs may not disclose confidential information, notably
covering business secrets, as well as business relations and cost components. When
information has been received in confidence from another public authority, NRAs must
maintain this confidentiality (see Article 5.2 of Directive [framework]).

5.3.

Co-operation Procedures

Between NRAs and NCAs

116. NRAs should normally have access to all the information held by the NCAs,
obtained using the investigatory and enforcement powers of the NCAs, including confidential
information, as the NRAs are also subject to Community and national rules on professional
secrecy (Article 3.5 of Directive [framework]).

Between Commission and NRAs

117.

In accordance with Article 5.3 of Directive [framework], NRAs must supply
the Commission with information necessary for it to carry out its tasks under the Treaty. This
covers information relating to the regulatory framework (to be used in verifying compatibility
of NRA action with the legislation) but also covers information that the Commission might
require, for example, in considering compliance with WTO commitments. The Commission’s
requests for information must also respect the principle of proportionality .

118.

The Commission also acts as the mechanism for exchange of information
between NRAs. Directive [framework] does not foresee direct exchange of information
among NRAs (see Article 5.2 of Directive [framework]). Nonetheless, where one NRA
requests access to information held by an NRA in another Member State, the Commission
will supply that information, where it considers such exchange appropriate.

119.

The Commission and NRAs must maintain the confidentiality of information

received.

6.

PROCEDURES FOR PUBLIC CONSULTATION AND PUBLICATION OF PROPOSED NRA
DECISIONS

1.1. Consultation mechanism

120. Upon completion of their market analysis in accordance with Sections 2 and 3,
NRAs will publish their findings along with the regulatory measures they propose to adopt.
In particular, NRAs shall render public their findings concerning:

• market definition used and reasons therefor

• the assessment of competition on the relevant market

31

• evidence relating to the existence of undertakings with significant market power

• identification of any undertakings proposed to be designated as having SMP

• sector specific obligations that the NRA proposes to impose, maintain, modify or withdraw

on the above mentioned undertakings

• public policy objectives justifying the imposition of such obligations on the identified

undertakings and

• why the measures are proportionate to those objectives.

121. At the same time, in accordance with Article 6 of Directive [framework], the
NRA will communicate these measures, together with their reasoning, to the NRAs in other
Member States and to the Commission. During the consultation period, the NRA will give
interested parties, other NRAs and the Commission the chance to comment on the NRA’s
proposed conclusions and proposals, before adopting any final decision. NRAs shall take full
account of the comments they receive from all parties concerned and of the comments made
by NRAs from other Member States

122.

The period of the consultation should be reasonable. However, NRAs’
decisions should not be delayed excessively as this can impede the development of the
market. For decisions related to the existence and designation of undertaking with significant
market power, the Commission considers that a period of no more than two months would be
reasonable for the public consultation. After the public consultation period is over, the NRA
will,
the
if appropriate, adapt the proposed measures and communicate, without delay,
resulting draft measure to the Commission.

123. Under the terms of Article 6.4 of the Framework Directive, the measure will
take effect one month after the date of communication to the Commission, unless the
Commission notified the national regulatory authority that it has serious doubts as to the
compatibility of the measure with the Framework and Specific Directives, and in particular
with the policy objectives identified in Article 7 of Directive [framework].

124. Where the Commission so indicates, NRAs must observe a further two month
If the Commission does indicate that it has serious
period before taking a final decision.
doubts in this regard, it can request additional information, including confidential information,
from the NRA concerned, provided the information requested is necessary and proportionate
to a determination of the compatibility of the proposed decision with the Framework and
Specific Directives.

125. During the further two month period of review, the Commission will adopt a
final decision on the compatibility of the decision with the Framework and Specific
Directives. The Commission’s final decision can require the NRA to amend or withdraw the
draft measure.
If the Commission does not take a decision within that period, the draft
measure may be adopted by the NRA.

126.

In exceptional circumstances, Article 6.5 of Directive [framework] allows
NRAs to act urgently in order to safeguard competition and protect the interest of users. An
NRA may exceptionally therefore adopt decisions and impose specific obligations on
designated undertakings without consulting either the interested parties, the NRAs in other
Member States, or the Commission. Where an NRA has taken such urgent action, it must,
without delay, communicate these measures, with full reasons, to the Commission, and to the

32

other NRAs.
The Commission will verify the compatibility of those measures with
Community law and in particular will assess their proportionality in relation to the policy
objectives of Article 7 of Directive [framework].
If the Commission determines that the
NRA’s decision and the obligations imposed on specific undertakings cannot be considered
compatible with the Framework and Specific Directives, the Commission will require the
NRA to amend its decision. The Commission may require the NRA to remove or modify the
obligations the NRA has imposed on specific undertakings.

6.1.

Adoption of the final decision

127. Once an NRA’s decision has become final, NRAs should notify the
Commission of the names of the undertakings that have been designated as having SMP and
the obligations imposed on them, in accordance with the requirements of Article 32 of the
Universal Service and Users Directive and Article 16 of the Access and Interconnection
Directive. The Commission will thereafter make this information available in a readily
accessible form, and will transmit the information to the Communications Committee and the
High Level Communications Group as appropriate.

128.

Likewise, NRAs should publish the names of undertakings that they have
designated as having SMP and the obligations imposed on them. They should ensure that up-
to-date information is made publicly available in a manner that guarantees all interested
parties easy access to that information.

33

ANNEX OF RELEVANT PROVISIONS

The specific provisions of Directives [Framework, Access and Interconnection and Universal
Service and Users Rights] of which these Guidelines are intended to provide interpretative
guidance are the following:

Article 3 of Directive [….] on a common regulatory framework for electronic
communications networks and services

National Regulatory Authorities

Member States shall ensure that each of the tasks assigned to national regulatory
authorities in this Directive and the Specific Measures is undertaken by a competent
body.

Member States shall guarantee the independence of national regulatory authorities
from and
by ensuring that national regulatory authorities are legally distinct
functionally independent of all organisations providing electronic communications
networks, equipment or services. Member States that retain ownership or control of
undertakings providing electronic communications networks and/or services shall
the regulatory function from
ensure full and effective structural separation of
activities associated with ownership or control.

Member States shall ensure that national regulatory authorities exercise their
powers impartially and transparently.

Member States shall publish the tasks to be undertaken by national regulatory
authorities in an easily accessible manner, in particular where those tasks are
assigned to more than one body. Member States shall
in addition publish the
procedures for consultation and co-operation between those authorities, and
between those authorities and national authorities entrusted with the implementation
of competition law and national authorities entrusted with the implementation of
consumer law, on matters of common interest. Member States shall ensure that there
is no overlap between the tasks of those authorities.

National regulatory authorities and national competition authorities shall have the
right to exchange information. In order to facilitate co-operation and the mutual
exchange of information, national regulatory authorities shall have the same rights
and duties of confidentiality in respect of exchange of information as a ‘competent
authority’ as defined in Regulation No.17.

Member States shall notify to the Commission all national regulatory authorities
assigned tasks under this Directive and the Specific Measures, and their respective
responsibilities.

1.

2.

3.

4.

5.

6.

34

Article 5 of Directive […] on a common regulatory framework for electronic
communications networks and services

Exchange and provision of
Commission

information to national

regulatory authorities and the

1.

2.

3.

4.

1.

2.

Member States shall ensure that undertakings providing electronic communications
networks and services provide all the information necessary for national regulatory
authorities to ensure conformity with Community law. The information requested by
the national regulatory authority shall be proportionate to the performance of that
task. The national regulatory authority shall give the reasons justifying its request
for information.

Member States shall ensure that national regulatory authorities provide the
Commission on request with the information necessary for it to carry out its tasks
under the Treaty. The information requested by the Commission shall be
proportionate to the performance of those tasks. Where appropriate, the Commission
shall make information submitted to one national regulatory authority available to
another such authority in the same or another Member State. Where information has
the Commission and the national regulatory
been submitted in confidence,
authorities concerned shall maintain the confidentiality of the information provided.

Member States shall ensure that, acting in accordance with national rules on public
access to information and subject to Community and national rules on commercial
confidentiality, national regulatory authorities publish such information as would
contribute to an open and competitive market.

National regulatory authorities shall publish the terms of public access to
information as referred to in paragraph 3,
including detailed guidelines and
procedures for obtaining such access. Any decision to refuse access to information
shall give reasons and shall be made public.

Article 6 of Directive […] on a common regulatory framework for electronic
communications networks and services

Consultation and transparency mechanism

Except where provided for in paragraph 5, Member States shall ensure that where
national regulatory authorities intend to take measures in accordance with this
Directive or the Specific Measures,
they give interested parties the chance to
comment within a reasonable period. National regulatory authorities shall publish
their national consultation procedures.

Where a national regulatory authority intends to take measures under Article 8 or
Article 14(4) and (5) of this Directive or Article 8(2) of Directive [on access to and
interconnection of electronic communications networks and associated facilities], it
shall communicate the draft measure to the Commission and the national regulatory
authorities in other Member States,
together with the reasoning on which the
measure is based. National regulatory authorities may make comments to the
national
regulatory authority concerned within the period for consultation
determined in accordance with paragraph 1.

35

3.

4.

5.

6.

1.

2.

3.

The national regulatory authority concerned shall
take the utmost account of
comments of other national regulatory authorities, and shall communicate the
resulting draft measure to the Commission without delay.

The measure shall take effect one month after the date of the communication in
paragraph 3 unless the Commission notifies the national regulatory authority
concerned that it has serious doubts as to the compatibility of the measure with
Community law and in particular the provisions of Article 7. In such cases, the
measure shall not take effect for a further two months. Within that period the
Commission shall
take a final decision, and if necessary, require the national
regulatory authority concerned to amend or withdraw the draft measure. If the
Commission does not take a decision within this period, the draft measure may be
adopted by the national regulatory authority.

In exceptional circumstances, where a national regulatory authority considers that
there is an urgent need to act, by way of derogation from the procedure set out in
paragraphs 1, 2, 3 and 4, in order to safeguard competition and protect the interests
of users, it may adopt measures immediately. It shall, without delay, communicate
to the Commission and the other national
those measures, with full reasons,
those
regulatory authorities. The Commission shall verify the compatibility of
measures with Community law and in particular the provisions of Article 7. If
necessary, the Commission shall require the national regulatory authority to amend
or abolish those measures.

Omission on the part of the Commission to take action under paragraphs 4 and 5
shall not prejudice or limit in any way its rights to act under Article 226 of the
Treaty in relation to any decision or measure of a national regulatory authority.

Article 13 of Directive [….] on a common regulatory framework for electronic
communications networks and services

Undertakings with significant market power

Where the Specific Measures require national regulatory authorities to determine
whether operators have significant market power, paragraphs 2 and 3 shall apply.

An undertaking shall be deemed to have significant market power if, either
individually or jointly with others, it enjoys a position of economic strength affording
it
independently of competitors,
customers and ultimately consumers.

the power to behave to an appreciable extent

Where an undertaking has significant market power on a specific market, it may also
be deemed to have significant market power on a closely related market, where the
links between the two markets are such as to allow the market power held in one
market to be leveraged into the other market, thereby strengthening the market
power of the undertaking.

Article 14 of Directive [….] on a common regulatory framework for electronic
communications networks and services

Market analysis procedure

36

1.

2.

3.

4.

5.

6.

After consultation with national regulatory authorities through the High Level
Communications Group, the Commission shall issue a Decision on Relevant Product
and Service Markets (hereinafter ‘the Decision’), addressed to Member States. The
Decision shall identify those product and service markets within the electronic
communications sector, the characteristics of which may be such as to justify the
imposition of regulatory obligations set out
in the Specific Measures, without
prejudice to markets that may be defined in specific cases under competition law.
The Commission shall also publish Guidelines on market analysis and the
calculation of significant market power (hereinafter ‘the Guidelines’).

The Commission may indicate in the Decision those markets which are trans-
national. In such markets, the national regulatory authorities concerned shall jointly
conduct the market analysis and decide on any imposition of regulatory obligations
in paragraphs 2, 4 and 5 in a concerted fashion.

National regulatory authorities shall seek and receive the prior agreement of the
Commission before using market definitions that are different from those identified
in the Decision or before imposing sector-specific regulatory obligations on markets
other than those identified in the Decision.

The Commission shall regularly review the Decision.

Within two months of the date of adoption of the Decision or any updating thereof,
national regulatory authorities shall carry out an analysis of the product and service
markets identified in the Decision, in accordance with the Guidelines. Member States
shall ensure that national competition authorities are fully associated with that
analysis. The national regulatory authority’s analysis of each market shall be
published.

[on universal

service and users

Where national regulatory authorities are required under Articles 16, 25 or 27 of
relating to electronic
Directive
communications networks and services], or Articles 7 or 8 of Directive [access to
and interconnection of electronic communications networks and associated
facilities] to determine whether to impose, maintain or withdraw obligations on
undertakings, it shall determine on the basis of its market analysis referred to in
paragraph 2 whether a market identified in the Decision is effectively competitive in
a specific geographic area in accordance with the Guidelines.

rights

is effectively
Where a national regulatory authority concludes that
competitive, it shall not impose or maintain sector specific regulatory obligations set
out in the Specific Measures. In cases where sector specific regulatory obligations
already exist, it shall withdraw such obligations placed on undertakings in that
specific market. An appropriate period of notice shall be given to parties affected by
such a withdrawal of obligations.

the market

Where a national regulatory authority determines that a market identified in the
Decision is not effectively competitive in a specific geographic area in accordance
with the Guidelines, it shall impose sector-specific regulatory obligations set out in
the Specific Measures, or maintain such obligations where they already exist.

Measures taken according to the provisions of paragraphs 4 and 5 shall be subject to
the procedure set out in Articles 6(2) to 6(5).

37

Article 8 of Directive […] on access to, and interconnection of electronic
communications networks and associated facilities

Imposition, amendment or withdrawal of obligations

Where an operator is deemed to have significant market power on a specific market as
a result of a market analysis carried out in accordance with Article 14 of Directive
[on a common regulatory framework for electronic communications networks and
services], national regulatory authorities shall impose one or more of the obligations
set out in Articles 9 to 13 of this Directive as appropriate, in order to avoid distortions
of competition. The specific obligation(s) imposed shall be based on the nature of
problem identified.

National regulatory authorities may, without prejudice to the provisions of Article 6,
impose on operators, including operators other than those with significant market
power, the obligations set out in Article 9 to 13 in relation to interconnection, in order
to comply with international commitments.

Exceptionally, with the prior agreement of
the Commission, national regulatory
authorities may impose on operators with significant market power obligations for
access or interconnection that go beyond those set out in Articles 9 to 13 of this
Directive, provided that all such obligations are justified in the light of the objectives
laid down in Article 1 of this Directive and in Article 7 of Directive [on a common
regulatory framework for electronic communications networks and services], and are
proportionate to the aim pursued.

In relation to the first subparagraph of paragraph 2, national regulatory authorities
shall notify decisions to impose, modify or withdraw obligations on market players to
the Commission, in accordance with the procedures in Article 6(2), (3) and (4) of
Directive on [a common regulatory framework for electronic communications
networks and services].

Article 9 of Directive […] on access to, and interconnection of electronic
communications networks and associated facilities

Obligation of transparency

National regulatory authorities may, in accordance with the provisions of Article 8,
impose obligations for transparency in relation to interconnection and/or network
access, requiring operators to make publicly available specified information, such as
technical specifications, network characteristics, terms and conditions for supply and
use, and prices.

In particular where an operator has obligations of non-discrimination, national
regulatory authorities may require that operator to publish a reference offer,
sufficiently unbundled, giving a description of the relevant offerings broken down into
components according to market needs, and the associated terms and conditions
including prices.

National regulatory authorities may specify the precise information to be made
available, the level of detail required and the manner of publication.

1.

2.

3.

1.

2.

3.

38

1.

2.

1.

Article 10 of Directive […] on access to, and interconnection of electronic
communications networks and associated facilities

Obligation of non-discrimination

A national regulatory authority may, in accordance with the provisions of Article 8,
impose obligations of non-discrimination,
in relation to interconnection and/or
network access.

Obligations of non-discrimination shall ensure, in particular, that the operator applies
similar conditions in similar circumstances to other undertakings providing similar
services, and provides services and information to others under the same conditions
and of the same quality as they provide for their own services, or those of their
subsidiaries or partners.

Article 11 of Directive […] on access to, and interconnection of electronic
communications networks and associated facilities

Obligation of accounting separation

A national regulatory authority may, in accordance with the provisions of Article 8,
impose obligations for accounting separation in relation to specified activities related
to interconnection and/or network access.

In particular, a national regulatory authority may require a vertically integrated
company to make transparent its wholesale prices and its internal transfer prices, in
situations where a market analysis indicates that the operator concerned provides
input facilities that are essential to other service providers, while competing itself on
the same downstream market.

39

2.

1.

To facilitate the verification of compliance with obligations of transparency, national
regulatory authorities shall have the power to require that accounting records,
including data on revenues received from third parties, are provided on request.
National regulatory authorities may publish such information as would contribute to
an open and competitive market, while respecting national and Community rules on
commercial confidentiality.

Article 12 of Directive […] on access to, and interconnection of electronic
communications networks and associated facilities

Obligations of access to, and use of, specific network facilities

A national regulatory authority may, in accordance with the provisions of Article 8,
impose obligations on operators to grant access to, and use of, specific facilities
and/or associated services, inter alia in situations where the national regulatory
authority considers that denial of access would hinder the emergence of a sustainable
competitive market at the retail level, or would not be in the end-user’s interest.

Operators may be required inter alia:

(a)

to give third parties access to specified network elements and/or facilities;

(b)

not to withdraw access to facilities already granted;

(c)

to provide resale of specified services;

(d)

(e)

(f)

to grant open access to technical interfaces, protocols or other key technologies
that are indispensable for the interoperability of services;

to provide collocation or other forms of facility sharing, including duct, building
or mast sharing;

to provide specified services needed to ensure interoperability of end-to-end
services to users, including facilities for intelligent network services or roaming
on mobile networks;

(g)

to provide access to operational support systems or similar software systems
necessary to ensure fair competition in the provision of services;

(h)

to interconnect networks or network facilities.

National regulatory authorities may attach to those obligations conditions covering
fairness, reasonableness, timeliness, transparency and/or non discrimination.

2.

When imposing the obligations referred in paragraph 1, national regulatory
authorities shall take account in particular of:

(a)

(b)

the technical and economic viability of using or installing competing facilities,
in the light of the rate of market development;

the feasibility of providing the access proposed, in relation to the capacity
available;

40

(c)

the initial investment by the facility owner, bearing in mind the risks involved in
making the investment;

(d)

the need to safeguard competition in the long term;

(e) where appropriate, any relevant intellectual property rights.

Article 13 of Directive […] on access to, and interconnection of electronic
communications networks and associated facilities

Price control and cost accounting obligations

A national regulatory authority may, in accordance with the provisions of Article 8,
impose price controls,
including obligations for cost orientation of prices and
obligations concerning cost accounting systems, for the provision of specific types of
in situations where a market analysis
interconnection and/or network access,
indicates that a potential
the operator
concerned might be capable of sustaining prices at an excessively high level, or
to the detriment of end users. National regulatory
applying a price squeeze,
authorities shall take into account the investment made by the operator and the risks
involved.

lack of effective competition means that

National regulatory authorities shall ensure that any pricing methodology that is
mandated serves to promote efficiency and sustainable competition and maximise
consumer benefits.

Where an operator has an obligation regarding the cost orientation of its prices, the
burden of proof that charges are derived from costs including a reasonable rate of
return on investment shall
lie with the operator concerned. National regulatory
authorities may require an operator to provide full justification for its prices, and
may, where appropriate, require prices to be adjusted.

National regulatory authorities shall ensure that, where implementation of a cost
accounting system is mandated in order to support price controls, a description of the
cost accounting system is made publicly available, showing at
the main
categories under which costs are grouped and the rules used for the allocation of
costs. Compliance with the cost accounting system shall be verified by a qualified
independent body. A statement concerning compliance shall be published annually.

least

Article 16 of Directive […] on universal service and users rights relating to electronic
communications networks and services

Retail Tariff Regulation

access to and use of the public telephone network at fixed locations that were in
Member States shall maintain all obligations on retail tariffs for the provision of
force prior to the date of entry into force of this Directive under Article 17 of
Directive 98/10/EC, until a review has been carried out and a determination made
in accordance with paragraph 2 of this Article.

41

1.

2.

3.

4.

1.

2.

3.

4.

5.

6.

Member States shall ensure that, on the entry into force of this Directive, and
periodically thereafter, national regulatory authorities undertake a market analysis, in
accordance with the procedure set out in Article 14(3) of Directive [on a common
regulatory framework for electronic communications networks and services] to determine
whether to maintain, amend or withdraw the obligations referred to in paragraph 1 of
this Article. Measures taken shall be subject to the procedure set out in Article 6(2)
to (5)
Directive [on a common regulatory framework for electronic
communications networks and services].

of

Where as a result of a market analysis carried out in accordance with Article 14(3)
of the Directive [on a common regulatory framework for electronic communications
networks and services], national regulatory authorities determine that a market is not
effectively competitive, they shall ensure that undertakings with significant market
power in that market orient their tariffs towards costs, so as not to charge excessive
prices or inhibit market entry, or restrict competition by setting predatory prices,
showing undue preference to specific users or unreasonably bundling services.
National regulatory authorities may apply appropriate retail price cap measures to
such undertakings in order to protect user and consumer interests whilst promoting
effective competition.

National regulatory authorities shall notify to the Commission the names of
undertakings subject to retail tariff controls and, on request, submit information
concerning the retail tariff controls applied and the cost accounting systems used by
the undertakings concerned.

Member States shall ensure that, where an undertaking is subject to retail tariff
regulation, the necessary and appropriate cost accounting systems are implemented
and that the suitability of such systems is verified by a competent body which is
independent of the organisation. National regulatory authorities shall ensure that a
statement concerning compliance is published annually.

Without prejudice to Article 9(1) on special affordable tariff options and Article 10
on specific provisions to help users control expenditure, national
regulatory
authorities shall not apply retail tariff control mechanisms under paragraph 1 of this
Article to geographical or user markets where they are satisfied that there is effective
competition.

Article 25 of Directive […] on universal service and users rights relating to electronic
communications networks and services

Number portability, carrier selection and carrier pre-selection

1.

Member States shall ensure that all subscribers of publicly available telephone
including mobile services, who so request can retain their number(s)
services,
independently of the undertaking providing the service:

(a) in the case of geographic numbers, at a specific location, and

(b) in the case of numbers other than geographic numbers, at any location.

42

2.

National regulatory authorities shall require undertakings notified as having
significant market power for the provision of connection to and use of the public
telephone network at fixed locations to enable their subscribers to access the services
of any interconnected provider of publicly available telephone services,:

(a) on a call-by-call basis by dialling a short prefix, and

(b) by means of pre-selection, with a facility to override any pre-selected choice on a call-by-

call basis by dialling a short prefix.

User requirements for these facilities to be implemented on other networks or in other ways
shall be assessed in accordance with the market analysis procedure laid down in Article 14 of
Directive [on a common regulatory framework for electronic communications networks and
services].

3.

4.

1.

2.

3.

National regulatory authorities shall ensure that pricing for interconnection related to
the provision of number portability under paragraph 1, and the use of the facility in
paragraph 2, are cost oriented.

National regulatory authorities shall not impose tariffs for the porting of numbers in a
manner that would distort competition, such as by imposing a common tariff across all
undertakings.

Article 27 of Directive […] on universal service and users rights relating to electronic
communications networks and services

Availability of leased lines

Member States shall maintain all obligations on undertakings that were in force prior
to the date of entry into force of this Directive under Articles 3, 4, 6, 7, 8 and 10 of
Directive 92/44/EEC as amended by Directive 97/51/EC, until a review has been
carried out and a determination made in accordance with paragraph 2 of this Article.

Within one year after the entry into force of this Directive, and every two years
thereafter, national regulatory authorities shall conduct a market analysis,
in
accordance with the procedure set out in Article 14(3) of Directive [on a common
regulatory framework for electronic communications networks and services] , to
determine whether the provision of part or all of the minimum set of leased lines
services in their territory is subject to effective competition and to determine whether
to maintain, amend or withdraw obligations referred to in paragraph 1 of this Article.
Measures taken shall be subject to the procedure set out in Article 6(2) to (5) of
Directive [on a common regulatory framework for electronic communications
networks and services].

for

standards

the minimum set of

leased lines with harmonised
Technical
characteristics
the European
shall be published in the Official Journal of
Communities, as part of the List of Standards referred to in Article 15 of Directive [on
a common regulatory framework for electronic communications networks and
services]. The Commission may adopt amendments necessary to adapt the minimum
set of leased lines to new technical developments and to changes in market demand,

43

including the possible deletion of certain types of leased line from the minimum set,
acting in accordance with the procedure referred to in Article 33 of this Directive.

44