EFTA Surveillance Authority guidelines of  14 July 2004  on market analysis and the assessment of significant market power under the regulatory framework for electronic communications networks and services referred to in Annex XI of the Agreement on the European Economic Area
Date: 2004-07-14
Institutions: EFTA Surveillance Authority
Subjects: EFTA, European Economic Area, competition policy, market supervision, supervisory body, telecommunications industry, transmission network

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I

(Information)

EUROPEAN ECONOMIC AREA

EFTA SURVEILLANCE AUTHORITY

EFTA SURVEILLANCE AUTHORITY GUIDELINES

of 14 July 2004

on market analysis and the assessment of significant market power under the regulatory
framework for electronic communications networks and services referred to in Annex XI of the
Agreement on the European Economic Area

(2006/C 101/01)

A.

B.

C.

The present guidelines are issued by the EFTA Surveillance Authority (hereinafter the Authority)
pursuant to the Agreement on the European Economic Area (hereinafter the EEA Agreement) and
the Agreement between the EFTA States on the establishment of a Surveillance Authority and a
Court of Justice (hereinafter the Surveillance and Court Agreement).

The European Commission (hereinafter the Commission) has adopted guidelines on market analysis
and the assessment of significant market power under the Community regulatory framework for
electronic communications networks and services (1). This non-binding act provides guidance to the
national regulatory authorities (NRAs) in the EC Member States as to the application of the new
regulatory framework for electronic communications and in particular, as regards the definition of
relevant product and services markets, the finding of significant market power, as well as certain
aspects of cooperation and coordination at national and EU level.

In order to secure uniform surveillance and homogeneous application of the new rules throughout
the European Economic Area (hereinafter the EEA), the Authority adopts the present guidelines
under the power conferred upon it by Article 5(2)(b) of the Surveillance and Court Agreement and
Article 15(2) of Directive 2002/21/EC of the European Parliament and of the Council of 7 March
2002 on a common regulatory framework for electronic communications networks and services (2)
(hereinafter the Framework Directive).

(1) OJ C 165, 11.7.2002, p. 6.
(2) OJ L 108, 24.4.2002, p. 33, as referred to in point 5(cl) of Annex XI to the EEA Agreement, as adapted to the
Agreement by Protocol 1 thereto and by the sectoral adaptations contained in Annex XI to that Agreement.

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1.

INTRODUCTION

1.1. Scope and purpose of the guidelines

1.

2.

These guidelines set out the principles for use by NRAs in
the EFTA States in their analysis of markets and effective
competition under the new regulatory framework for
electronic communications networks and services (3).

the European Parliament and of

This new regulatory framework comprises five Direc-
tives: the Framework Directive; the Directive 2002/20/EC
of
the Council of
7 March 2002 on the authorisation of electronic
communications networks and services (4)
(hereinafter
the Authorisation Directive); the Directive 2002/19/EC of
the European Parliament and of the Council of 7 March
2002 on access to, and interconnection of, electronic
communications networks and associated facilities (5)
(hereinafter the Access Directive); the Directive 2002/22/
EC of the European Parliament and of the Council of
7 March 2002 on universal service and users' rights
relating to electronic communications networks and
services (6) (hereinafter the Universal Service Directive);
the Directive 2002/58/EC of the European Parliament
and of the Council of 12 July 2002 concerning the
processing of personal data and the protection of privacy
in the electronic communications (7)
(hereinafter the
privacy and electronic communications Directive).

3. Under the 1998 regulatory framework, the market areas
of the Telecommunications sector that were subject to ex
ante regulation were laid down in the relevant directives,
but were not markets defined in accordance with the
principles of competition law.
In these areas defined
under the 1998 regulatory framework, NRAs had the

(3)

Incorporated into the EEA Agreement by Decision No 11/2004
of the EEA Joint Committee of 6 February 2004 amending
Annex II (Technical regulations, standards and certification),
Annex X (Audiovisual services) and Annex XI (Telecommunica-
tions services) to the Agreement.

(4) OJ L 108, 24.4.2002, p. 21, as referred to in point 5(ck) of
Annex XI to the EEA Agreement, as adapted to the Agreement
by Protocol 1 thereto and by the sectoral adaptations contained
in Annex XI to that Agreement.

(5) OJ L 108, 24.4.2002, p. 7, as referred to in point 5(cj) of
Annex XI to the EEA Agreement, as adapted to the Agreement
by Protocol 1 thereto and by the sectoral adaptations contained
in Annex XI to that Agreement.

(6) OJ L 108, 24.4.2002, p. 51, as referred to in point 5(cm) of
Annex XI to the EEA Agreement, as adapted to the Agreement
by Protocol 1 thereto and by the sectoral adaptations contained
in Annex XI to that Agreement.

(7) OJ L 201, 31.7.2002, p. 37, as referred to in point 5(ha) of
Annex XI to the EEA Agreement, as adapted to the Agreement
by Protocol 1 thereto and by the sectoral adaptations contained
in Annex XI to that Agreement.

power to designate undertakings as having significant
market power (SMP) when they possessed 25 % market
share, with the possibility to deviate from this threshold
taking into account the undertaking's ability to influence
the market, its turnover relative to the size of the market,
its control of the means of access to end-users, its access
to financial resources and its experience in providing
products and services in the market.

in Articles 6 and 7 of

4. Under the new regulatory framework, the markets to be
regulated are defined in accordance with the principles of
EEA competition law. They are identified by the
Authority in its recommendation on relevant product
and service markets pursuant to Article 15(1) of the
Framework Directive (hereinafter the Recommendation).
When justified by national circumstances, other markets
can also be identified by the NRAs, in accordance with
the procedures set out
the
Framework Directive. In case of transnational markets
which are susceptible to ex ante
regulation, where
appropriate, they will be identified by the Authority in
a decision on relevant transnational markets pursuant to
Article 15(4) of the Framework Directive (hereinafter the
In case of a
Decision on transnational markets).
transnational market, which affects both an EFTA State
and an EC Member State,
the Authority and the
Commission shall cooperate with a view to adopting
identical decisions identifying cross-pillar transnational
markets (hereinafter the Decision on cross-pillar transna-
tional markets).

5. On all of these markets, NRAs will intervene to impose
obligations on undertakings only where the markets are
considered not to be effectively competitive (8) as a result
of such undertakings being in a position equivalent to
dominance within the meaning of Article 54 of the EEA
Agreement (9). Article 54 of
the EEA Agreement
corresponds to Article 82 of the EC Treaty. The notion
of dominance in Article 82 of the EC Treaty has been
defined in the case-law of the Court of Justice of the
European Communities as a position of economic
strength affording an undertaking the power to behave
to an appreciable extent independently of competitors,
customers and ultimately consumers. Therefore, under
the new regulatory framework, in contrast with the 1998
framework, the Authority and the NRAs will rely on EEA
competition law principles and methodologies to define
the markets to be regulated ex ante and to assess whether
undertakings have SMP on those markets.

(8)

(9)

Except where the new regulatory framework expressly permits
obligations to be imposed independently of the competitive
state of the market.
Article 14 of the Framework Directive.

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6.

7.

8.

These guidelines are intended to guide NRAs in the
exercise of their new responsibilities for defining markets
and assessing SMP. They have been adopted by the
Authority in accordance with Article 15(2) of
the
Framework Directive.

Under Article 15(3) of the Framework Directive, NRAs
should take the utmost account of these guidelines. This
will be an important factor in any assessment by the
Authority of the proportionality and legality of proposed
decisions by NRAs,
the policy
objectives laid down in Article 8 of the Framework
Directive.

taking into account

specifically address

These guidelines
following
subjects: 1. market definition, 2. assessment of SMP, 3.
SMP designation, and 4. procedural issues related to all of
these subjects.

the

9.

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

— to define the geographical dimension of

those
identified in the
product and service markets
Recommendation. NRAs will not define
the
geographic scope of any transnational markets, as
any Decision on transnational markets, be it
affecting two or more EFTA States or cross-pillar,
will define their geographic dimension,

— to carry out, using the methodology set out in
Section 3 of the guidelines, a market analysis of the
conditions of competition prevailing in the markets
identified in the Recommendation and Decision and
by NRAs,

— to identify relevant national or sub-national product
and service markets which are not listed in the
Recommendation when this is justified by national
circumstances and following the procedures set out
in Articles 6 and 7 of the Framework Directive,

— to designate, following the market analysis, under-
takings with SMP in the relevant market and to
impose proportionate ex ante measures consistent
the regulatory framework as
with the terms of
described in Sections 3 and 4 of the Guidelines,

— to assist the EFTA States and NRAs in applying
Article 11(1f) of the Authorisation Directive, and
Article 5(1) of the Framework Directive, and thus
ensure that undertakings comply with the obliga-
tion to provide information necessary for NRAs to
determine relevant markets and assess significant
market power thereon,

— to guide NRAs when dealing with confidential
information, which is likely to be provided by:

— undertakings under Article 11(1)(f) of

the
Authorisation Directive and Article 5(1) of
the Framework Directive,

— National Competition Authorities (NCAs) as
part of the cooperation foreseen in Article 3(5)
of the Framework Directive,

— the Authority and an NRA in another EFTA
State as part of the cooperation foreseen in
Article 5(2) of the Framework Directive,

— the NRAs of

the EFTA States through the
Authority and the Commission cross-pillar, as
stipulated in Article 7(3) of the Framework
Directive, and

— the NRAs of the EC Member States through
the Commission and the Authority cross-pillar,
as stipulated in Article 7(3) of the Framework
Directive.

10. The guidelines are structured in the following way:

Section 1 provides an introduction and overview of the
background, purpose, scope and content of the guide-
lines. Section 2 describes the methodology to be used by
NRAs to define the geographic scope of the markets
identified in the Recommendation as well as to define
relevant markets outside this Recommendation. Sec-
tion 3 describes the criteria for assessing SMP in a
relevant market. Section 4 outlines
the possible
conclusions that NRAs may reach in their market
analyses and describes the possible actions that may
result. Section 5 describes the powers of investigation of
NRAs, suggests procedures for coordination between
NRAs and between NRAs and NCAs, and describes
coordination and cooperation procedures between NRAs
and the Authority, as well as between the Authority and
the Commission and between the EFTA NRAs and the
NRAs in the EC Member States cross-pillar. Finally,
Section 6 describes procedures for public consultation
and publication of NRAs' proposed decisions.

11. The major objective of these guidelines is to ensure that
NRAs use a consistent approach in applying the new
regulatory framework, and especially when designating
undertakings with SMP in application of the provisions
of the regulatory framework.

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12. By issuing these guidelines, the Authority also intends to
explain to interested parties and undertakings operating
in the electronic communications sector how NRAs
should undertake their assessments of SMP under the
Framework Directive, thereby maximising the transpar-
ency and legal certainty of the application of the sector-
specific legislation.

17. These regulatory obligations should only be imposed on
those electronic communications markets whose char-
acteristics may be such as to justify sector-specific
regulation and in which the relevant NRA has deter-
mined that one or more operators have SMP.

13. The Authority will amend these guidelines, whenever
appropriate, taking into account experience with the
application of
the regulatory framework and future
developments in the jurisprudence of the EFTA Court
and the Court of Justice of the European Communities,
as well as the approach taken by the Commission.

14. These guidelines do not in any way restrict the rights
conferred by EEA law on individuals or undertakings.
They are entirely without prejudice to the application of
EEA law, and in particular of the EEA competition rules,
the Commission and the relevant
by the Authority,
national authorities, and to its interpretation by the EFTA
Court and the Court of
the European
Communities. These guidelines do not prejudice any
action the Authority may take or any guidelines the
Authority may issue in the future with regard to the
application of EEA competition law.

Justice of

1.2. Principles and policy objectives behind sector-

specific measures

15. NRAs must

seek to achieve the policy objectives
identified in Article 8(2), (3) and (4) of the Framework
Directive. These fall into three categories:

18. The product and service markets whose characteristics
may be such as to justify sector-specific regulation are
identified by the Authority in its Recommendation and,
when the definition of different relevant markets is
circumstances, by the NRAs
justified by national
following the procedures set out in Articles 6 and 7 of
the Framework Directive (10). In addition, certain other
markets are specifically identified in Article 6 of the
Access Directive and Articles 18 and 19 of the Universal
Service Directive.

19.

In respect of each of these relevant markets, NRAs will
assess whether the competition is effective. A finding that
is
effective competition exists on a relevant market
equivalent to a finding that no operator enjoys a single or
joint dominant position on that market. Therefore, for
the purposes of applying the new regulatory framework,
effective competition means that there is no undertaking
in the relevant market which holds alone or together
with other undertakings a single or collective dominant
position. When NRAs conclude that a relevant market is
not effectively competitive, they will designate under-
takings with SMP on that market, and will either impose
appropriate specific obligations, or maintain or amend
such obligations where they already exist, in accordance
with Article 16(4) of the Framework Directive.

— promotion of an open and competitive market for
electronic communications networks, services and
associated facilities,

20.

— development of the internal market, and

— promotion of the interests of European citizens.

In carrying out the market analysis under the terms of
Article 16 of
the Framework Directive, NRAs will
conduct a forward looking, structural evaluation of the
relevant market, based on existing market conditions.
NRAs' should determine whether the market is prospec-
tively competitive, and thus whether any lack of effective
competition is durable (11), by taking into account
expected or foreseeable market developments over the
course of a reasonable period. The actual period used
should reflect the specific characteristics of the market
and the expected timing for the next review of the
relevant market by the NRA. NRAs should take past data
into account in their analysis when such data are relevant

16. The purpose of imposing ex ante obligations on under-
takings designated as having SMP is to ensure that
undertakings cannot use their market power either to
restrict or distort competition on the relevant market, or
to leverage such market power onto adjacent markets.

(10)

In addition, transnational markets whose characteristics may be
such as to justify sector-specific regulation may be identified by
the Commission in a Decision on transnational markets.

(11) Recital 27 of the Framework Directive.

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to the developments in that market in the foreseeable
future.

21.

If NRAs designate undertakings as having SMP, they must
impose on them one or more regulatory obligations, in
accordance with the relevant Directives and taking into
account the principle of proportionality. Exceptionally,
NRAs may impose obligations for access and intercon-
nection that go beyond those specified in the Access
Directive, provided this is done with the prior agreement
of the Authority, as provided by Article 8(3) of that
Directive.

22.

In the exercise of their regulatory tasks under Article 15
and 16 of
the Framework Directive, NRAs enjoy
discretionary powers which reflect the complexity of all
the relevant factors that must be assessed (economic,
factual and legal) when identifying the relevant market
and determining the existence of undertakings with SMP.
These discretionary powers remain subject, however, to
the procedures provided for in Article 6 and 7 of the
Framework Directive.

23. Regulatory decisions adopted by NRAs pursuant to the
Directives will have an impact on the development of the
EEA. In order to prevent any adverse effects on the
functioning of the EEA Agreement, NRAs must ensure
that
the provisions to which these
guidelines apply in a consistent manner. Such consis-
tency can only be achieved by close coordination and
cooperation with other NRAs, with NCAs and with the
Authority, as provided in the Framework Directive and as
recommended in Section 5.3 of these guidelines.

they implement

1.3. Relationship with EEA competition law

24. Under the regulatory framework, markets will be defined
and SMP will be assessed using the same methodologies
as under EEA competition law. Therefore the definition
of the geographic scope of markets identified in the
the definition where necessary of
Recommendation,
relevant product/services markets outside the Recom-
mendation, and the assessment of effective competition
by NRAs should be consistent with EEA competition
case-law and practice. To ensure such consistency, these
guidelines are based on 1. existing case-law of the EFTA
the European
Court and of

the Court of

Justice of

Communities concerning market definition and the
notion of dominant position within the meaning of
Article 82 of the EC Treaty and the merger control
rules (12), 2. the Authority's ‘Guidelines on the applica-
tion of EEA competition rules in the Telecommunica-
tions sector’ (13), 3.
the Authority's ‘Notice on the
definition of
the purposes of
competition law within the EEA’ (14), hereinafter ‘the
Notice on market definition’, and 4. the Commission's
‘Notice on the application of competition rules to access
agreements in the Telecommunications sector’ (15), here-
inafter ‘the Access Notice’.

relevant markets for

the EEA Agreement corresponds
the EC Treaty. Article 6 of

to
25. Article 54 of
Article 82 of
the EEA
Agreement provides that the provisions of the Agree-
in substance to
ment,
insofar as they are identical
in their
corresponding rules of Community law, shall
implementation and application be
interpreted in
conformity with the relevant rulings of the Court of
Justice given prior to the date of signature of
the
Agreement. Moreover, Article 3(2) of the Surveillance
and Court Agreement provides that the EFTA Court and
the EFTA Surveillance Authority shall pay due account to
the principles laid down by the relevant rulings by the
Court of Justice given after the date of signature of the
EEA Agreement, when interpreting and applying the
provisions of the Agreement.

26. The use of the same methodologies ensures that the
relevant market defined for the purpose of sector-specific
regulation will in most cases correspond to the market
definitions that would apply under competition law. In
some cases, and for the reasons set out in Section 2 of
these guidelines, markets defined by the Authority and

(12) Case-law developed in application of Article 2 of Council
Regulation (EEC) No 4064/89 on the control of concentrations
between undertakings (OJ L 395, 30.12.1989, p. 1), as last
amended by Regulation (EC) No 1310/97 of 30 June 1997 (OJ
L 180, 9.7.1997, p. 1), as incorporated into the EEA Agreement,
Annex XIV, Chapter A, point 1, as amended by EEA Joint
Committee Decision No 27/98 (OJ L 310, 19.11.1998, p. 9), and
EEA Supplement No 48, p. 190. Regulation (EEC) No 4064/89
has been superseded by Council Regulation (EC) No 139/2004
of 20 January 2004 on the control of concentrations between
undertakings (the EC Merger Regulation) (OJ L 24, 29.1.2004,
p. 1), as referred to at point 1 of Annex XIV to the EEA
Agreement and as adapted to the Agreement by Protocol 1
thereto and by the sectoral adaptations contained in Annex XIV
to that Agreement.
‘Guidelines on the application of EEA competition rules in the
Telecommunications sector’ (OJ L 153, 18.6.1994, p. 35 and
EEA Supplement to the OJ No 15, 18.6.1994, p. 34).
‘Notice of the EFTA Surveillance Authority's on the definition
of relevant market for the purposes of competition law within
the European Economic Area (EEA)’ (OJ L 200, 16.7.1998, p. 48
and EEA Supplement to the OJ No 28, 16.7.1998, p. 3).
‘Notice on the application of the competition rules to access
agreements in the Telecommunications sector’
(OJ C 265,
22.8.1998, p. 2).

(13)

(15)

(14)

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competition authorities in competition cases may differ
from those identified in the Recommendation and
Decision, and/or from markets defined by NRAs under
Article 15(3) of the Framework Directive. Article 15(1) of
the Framework Directive makes clear that the markets to
be defined by NRAs for the purpose of ex ante regulation
are without prejudice to those defined by NCAs and by
the Authority in the exercise of their respective powers
under competition law in specific cases.

opportunity to conduct a periodic review of its decision
in the light of market developments, whereas NRAs are
bound to review their decisions periodically under
Article 16(1) of the Framework Directive. This factor
can influence the scope and breadth of
the market
analysis and the competitive assessment carried out by
NRAs, and for this reason, market definitions under the
new regulatory framework, even in similar areas, may in
some cases be different from those markets defined by
competition authorities.

27. For the purposes of the application of EEA competition
law, the Authority's notice on market definition explains
that the concept of the relevant market is closely linked
to the objectives pursued under EEA policies. Markets
defined under Articles 53 and 54 of the EEA Agreement
are generally defined on an ex post basis. In these cases,
the analysis will consider events that have already taken
place in the market and will not be influenced by
possible future developments. Conversely, under
the
merger control provisions of EEA competition law,
markets are generally defined on a forward-looking
basis.

the Framework Directive is not

28. On the other hand, relevant markets defined for the
purposes of sector-specific regulation will always be
assessed on a forward-looking basis, as the NRA will
include in its assessment an appreciation of the future
development of
the market. However, NRAs' market
analyses should not ignore, where relevant, past evidence
when assessing the future prospects of
the relevant
market (see also Section 2, below). The starting point for
the purpose of
carrying out a market analysis for
Article 15 of
the
existence of an agreement or concerted practice within
the scope of Article 53 of the EEA Agreement, nor a
concentration within the scope of the merger Regulation,
nor an alleged abuse of dominance within the scope of
Article 54 of the EEA Agreement, but is based on an
overall forward-looking assessment of the structure and
the functioning of
the market under examination.
Although NRAs and competition authorities, when
examining the same issues in the same circumstances
and with the same objectives, should in principle reach
the same conclusions, it cannot be excluded that, given
the differences outlined above, and in particular the
broader focus of the NRAs' assessment, markets defined
for the purposes of competition law and markets defined
for the purpose of sector-specific regulation may not
always be identical.

30.

It is considered that markets which are not identified in
the Recommendation will not warrant ex ante sector-
specific regulation, except where the NRA is able to
justify such regulation of an additional or different
relevant market in accordance with the procedure in
Article 7 of the Framework Directive.

31. The designation of an undertaking as having SMP in a
market identified for the purpose of ex ante regulation
does not automatically imply that this undertaking is also
dominant for the purpose of Article 54 of the EEA
Agreement or similar national provisions. Moreover, the
SMP designation has no bearing on whether
that
undertaking has committed an abuse of a dominant
position within the meaning of Article 54 of the EEA
It merely
Agreement or national competition laws.
implies that, from a structural perspective, and in the
short to medium term, the operator has and will have, on
the relevant market identified, sufficient market power to
independently of
behave to an appreciable extent
competitors, customers, and ultimately consumers, and
this, solely for purposes of Article 14 of the Framework
Directive.

32.

In practice, it cannot be excluded that parallel procedures
under ex ante regulation and competition law may arise
with respect to different kinds of problems in relevant
markets (16). Competition authorities may therefore carry
out their own market analysis and impose appropriate
competition law remedies alongside any sector-specific
measures applied by NRAs. However, it must be noted
that
remedies by
different regulators would address different problems in
such markets. Ex ante obligations imposed by NRAs on
the specific
undertakings with SMP aim to fulfil
objectives set out in the relevant directives, whereas
competition law remedies aim to sanction agreements or
abusive behaviour which restrict or distort competition
in the relevant market.

such simultaneous application of

29. Although merger analysis is also applied ex ante, it is not
carried out periodically as is the case with the analysis of
the new regulatory framework. A
the NRAs under
competition authority does not, in principle, have the

(16)

It is expected that effective cooperation between NRAs and
NCAs would prevent the duplication of procedures concerning
identical market issues.

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ex

ante

regulation. This

33. As far as emerging markets are concerned, recital 27 of
the Framework Directive notes that emerging markets,
where de facto the market leader is likely to have a
to
substantial market share, should not be subject
inappropriate
is because
premature imposition of ex ante regulation may unduly
influence the competitive conditions taking shape within
a new and emerging market. At
the same time,
foreclosure of such emerging markets by the leading
undertaking should be prevented. Without prejudice to
the appropriateness of intervention by the competition
authorities in individual cases, NRAs should ensure that
they can fully justify any form of early,
ex ante
intervention in an emerging market, in particular since
they retain the ability to intervene at a later stage, in the
context of the periodic re-assessment of the relevant
markets.

2. MARKET DEFINITION

2.1 Introduction

34.

35.

those guidelines,

In the competition guidelines issued in 1994 (17), the
Authority 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, since
the publication of
the Authority,
alongside the Commission, has gained experience in
applying the EEA competition rules in a dynamic sector
shaped by constant technological changes and innova-
tion, as a result of its role in managing the transition
from monopoly to competition in this sector. It should
however be recalled that the present guidelines do not
purport to explain how the EEA competition rules apply,
generally, in the electronic communications sector, but
focus only on issues related to (i) market definition and
(ii)
the assessment of SMP within the meaning of
Article 14 of the Framework Directive.

In assessing whether an undertaking has SMP, that is
‘enjoys a position of economic strength
whether it
affording it the power to behave to an appreciable extent
independently of its competitors, customers and ulti-
mately consumers’ (18),
the relevant
market
importance since effective
is of
competition can only be assessed by reference to the
market thus defined (19). The use of the term ‘relevant
market’
the products or
services that make up the market and the assessment
of the geographical scope of that market (the terms

implies the description of

the definition of

fundamental

(17) Guidelines on the application of EEA competition rules in the

Telecommunications sector.

(18) Article 14 (2) of the Framework Directive.
(19) Case C-209/98, Entreprenørforeningens Affalds

[2000] ECR
I-3743, paragraph 57, and Case C-242/95 GT-Link [1997] ECR
I-4449, paragraph 36. It should be recognised that the objective
of market definition is not an end in itself, but part of a process,
namely assessing the degree of a firm's market power.

(21)

and ‘services’

‘products’
are used interchangeably
throughout this text). In that regard, it should be recalled
that relevant markets defined under the 1998 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 analysis (20).

36. 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 analy-
sis (21). In this respect, any experience gained by NRAs,
NCAs, the Authority and the Commission through the
application of EEA competition rules to the Telecommu-
nications sector clearly will be of particular relevance in
applying Article 15 of the Framework Directive. Thus,
any information gathered, any findings made and any
studies or reports commissioned or relied upon by NRAs
(or NCAs) 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 15 of the

(20)

See Directive 97/33/EC of the European Parliament and of the
Council of 30 June 1997 on interconnection in Telecommu-
nications with regard to ensuring universal
service and
interoperability through application of the principles of Open
Network Provision (ONP) (OJ L 199, 26.7.1997, p. 32) (the
Interconnection Directive), Directive as amended by Directive
98/61/EC (OJ L 268, 3.10.1998, p. 37), as referred to at point 5
(cb) of Annex XI to the EEA Agreement; Council Directive 90/
387/EEC of 28 June 1990 on the establishment of the internal
market for Telecommunications services through the imple-
mentation of open network provision (OJ L 192, 24.7.1990,
p. 1) (the ONP Framework Directive), Directive as amended by
Directive 97/51/EC of the European Parliament and of the
Council (OJ L 295, 29.10.1997, p. 23), as referred to at point 2
of Annex XI to the EEA Agreement; Council Directive 92/44/
EEC of 5 June 1992 on the application of open network
provision to leased lines (OJ L 165, 19.6.1992, p. 27) (the
Leased Lines Directive), Directive as last amended by Commis-
sion Decision 98/80/EC (OJ L 14, 20.1.1998, p. 27), as referred
to at point 5b of Annex XI to the EEA Agreement; Directive 95/
the Council of
62/EC of
13 December 1995 on the application of open network
provision (ONP) to voice telephony (OJ L 321, 30.12.1995,
p. 6),
the European
Parliament and of the Council of 26 February 1998 on the
to voice
application of open network provision (ONP)
telephony and on universal service for Telecommunications
in a competitive environment (OJ L 101, 1.4.1998, p. 24) (the
ONP Voice Telephony Directive) as referred to at point 5(c) of
Annex XI to the EEA Agreement. Those Directives belonging to
the regulatory package of 1998 will be repealed with the entry
into force of the Framework Directive as incorporated into the
EEA Agreement.
Joined Cases C-68/94 and C-30/95, France and Others v
Commission [1998] ECR I-1375. See also ‘Notice on market
definition’, paragraph 12.

replaced by Directive 98/10/EC of

the European Parliament and of

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Framework Directive and carrying out a prospective
market analysis (22).

37. The main product and service markets whose character-
istics may be such as to justify the imposition of ex ante
regulatory obligations are identified in the Recommenda-
tion which the Authority is required to adopt pursuant to
Article 15(1) of the Framework Directive, as well as any
Decision on transnational markets which the Authority
decides to adopt pursuant
the
Framework Directive. Therefore, in practice the task of
NRAs will normally be to define the geographical scope
of
the relevant market, although NRAs have the
the Framework
possibility under Article 15(3) of
Directive to define markets other than those listed in
the Recommendation in accordance with Article 7 of the
Framework Directive (see below, Section 6).

to Article 15(4) of

38. 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
behaviour (23), NRAs should nonetheless seek to pre-
serve, where possible, consistency in the methodology
adopted between, on the one hand, market definitions
developed for the purposes of ex ante regulation, and on
the other hand, market definitions developed for the
purposes of the application of the competition rules.
Nevertheless, as stated in Article 15(1) of the Framework
Directive and Section 1 of the guidelines, markets defined
under sector-specific regulation are defined without
prejudice to markets that may be defined in specific
cases under competition law.

2.2. Main criteria for defining the relevant market

39. 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,
(i) demand-side and, (ii) supply-side substitution. A third
source of competitive constraint on an operator's
behaviour exists, namely potential competition. The
difference between potential competition and supply-
substitution lies in the fact that supply-side substitution
responds promptly to a price increase whereas potential
entrants may need more time before starting to supply
the market. Supply substitution involves no additional
significant costs whereas potential entry occurs at

(22) 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.
‘Notice on market definition’, paragraph 12.

(23)

significant sunk costs (24). The existence of potential
competition should thus be examined for the purpose of
assessing whether a market is effectively competitive
within the meaning of the Framework Directive, that is
whether there exist undertakings with SMP (25).

40. 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 (26), whereas supply-side substitutability indi-
cates whether suppliers other than those offering the
product or services in question would switch in the
immediate to short term their line of production or offer
the relevant products or services without
incurring
significant additional costs.

41. One possible way of assessing the existence of any
demand and supply-side substitution is to apply the so-
called ‘hypothetical monopolist test’ (27). 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 customers' (consumers
or undertakings) reactions to a permanent price increase

(24)

(25)

(26)

(27)

See also Notice on market definition, paragraphs 20 to 23, and
Commission Decision 1999/641/EC of 25 November 1998
declaring a concentration to be compatible with the common
market and the functioning of the EEA Agreement (Case No IV/
M.1225 — Enso/Stora) (OJ L 254, 29.9.1999, p. 9), recital 40.
See ‘Notice on market definition’, paragraph 24. Distinguishing
between supply-side substitution and potential competition in
electronic communications markets may be more complicated
than in other markets given the dynamic character of the
former. What matters however is that potential entry from
other suppliers is taken into consideration at some stage of the
relevant market analysis, that is, either at the initial market
definition stage or at the subsequent stage of the assessment of
market power (SMP).
It is not necessary that all consumers switch to a competing
product; it suffices that enough or sufficient switching takes
place so that a relative price increase is not profitable. This
requirement corresponds to the principle of ‘sufficient inter-
changeability’ laid down in the case law of the Court of Justice;
see below, footnote 32.
See also, Access Notice, paragraph 46, and Case T-83/91, Tetra
Pak v Commission, [1994] ECR II-755, recital 68. This test is also
known as SSNIP (small but significant non-transitory increase
in price). Although the SSNIP test is but one example of
methods used for defining the relevant market and notwith-
standing its formal econometric nature, or its margins for
errors (the so-called ‘cellophane fallacy’, see following),
its
importance lies primarily in its use as a conceptual tool for
assessing evidence of competition between different products
or services.

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of between 5 to 10 % (28). The responses by consumers
or undertakings concerned will aid in determining
whether substitutable products do exist and, if so, where
the boundaries of the relevant product market should be
delineated (29).

so,

and having done

42. 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,
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. Since a
relative price increase of a set of products (30) is likely to
lead to some sales being lost, the key issue is to determine
whether the loss of sales would be sufficient to offset the
increased profits which would otherwise be made from
sales made following the price increase. Assessing the
demand-side and supply-side substitution provides a way
of measuring the quantity of the sales likely to be lost
and consequently of determining the scope of
the
relevant market.

monopolist test’ (31). 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 (32). Any assessment of market definition must
therefore take into account
this potential difficulty.
However, NRAs should proceed on the basis that the
prevailing price levels provide a reasonable basis from
which to start
the relevant analysis unless there is
evidence that this is not in fact the case.

44.

If an NRA chooses to have recourse to the hypothetical
monopolist test, it should then apply this test up to the
point where it can be established that a relative price
increase within the geographic and product markets
defined will not lead consumers to switch to readily
available substitutes or to suppliers located in other areas.

43.

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

2.2.1. The relevant product/service market

45. 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

(28)
(29)

See ‘Notice on market definition’, paragraphs 17 and 18.
In other words, where the cross-price elasticity of demand
between two products
is high, one may conclude that
consumers view these products as close substitutes. Where
consumer choice is influenced by considerations other than
price increases,
the SSNIP test may not be an adequate
measurement of product substitutability; see Case T-25/99,
Colin Arthur Roberts and Valerie Ann Roberts v Commission,
[2001] ECR II-1881.

(30) Within the context of market definition under Article 54 of the
EEA Agreement, a competition authority or a court would
estimate the ‘starting price’ for applying the SSNIP on the basis
of the price charged by the alleged monopolist. Likewise, under
the prospective assessment of the effects which a merger may
have on competition, the starting price would be based on the
prevailing prices of the merging parties. However, where an
NRA carries out a market analysis for the purposes of applying
Article 14 of the Framework Directive the service or product in
question may be offered by several firms. In such a case, the
starting price should be the industry ‘average price’.

(31)

(32)

It is worth noting that prices which result from price regulation
which does not aim at ensuring that prices are cost-based, but
rather at ensuring an affordable offer within the context of the
provision of universal services, may not be presumed to be set
at a competitive level, nor should they serve as a starting point
for applying the SSNIP test.
Indeed, one of the drawbacks of the application of the SSNIP
test is that in some cases, a high-demand cross-price elasticity
may mean that a firm has already exercised market power, a
situation known in competition law and practice as the
‘cellophane fallacy’. In such cases, the prevailing price does not
correspond to a competitive price. Determining whether the
prevailing price is set above the competitive level is admittedly
one of the most difficult aspects of the SSNIP test. NRAs faced
with such difficulties could rely on other criteria for assessing
demand and supply substitution such as functionality of
services, technical characteristics, etc. Clearly, if evidence exists
to show that in the past a firm has engaged in anti-competitive
behaviour (price-fixing) or has enjoyed market power, then this
may serve as an indication that
its prices are not under
competitive constraint and accordingly are set above the
competitive level.

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their prices or

their
constant needs of consumers,
intended use, but also in terms of the conditions of
competition and/or the structure of supply and demand
on the market in question (33). Products or services which
are only to a small, or relative degree interchangeable
with each other do not form part of the same market (34).
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).

46. 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.

47. 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 separate markets for business and residential
customers for essentially the same service. For instance,
the ability of operators engaged in providing interna-
tional
to
discriminate between residential and business customers,
by applying different sets of prices and discounts, has led
the Authority, alongside the Commission, to decide that
these two groups form separate markets as far as such
services are concerned (see following). However, in order

retail electronic communications

services

for products to be viewed as demand-side substitutes it is
not necessary that they are offered at the same price. A
low quality product or service sold at a low price could
well be an effective substitute to a higher quality product
sold at higher prices. What matters in this case is the
likely responses of consumers following a relative price
increase (35).

48. Furthermore, product substitutability between different
electronic communications services will arise increas-
ingly 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
digitalised voice signals in competition with traditional
voice telephony services (36).

49.

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. D e m a n d - s i d e s u b s t i t u t i o n

50. 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 price
In determining the existence of demand
increase.
substitutability, NRAs should make 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
In such
movements, and relevant

information.

tariff

(33) Case C-333/94 P Tetra Pak v Commission [1996] ECR I-5951,
paragraph 13, Case 31/80 L'Oréal [1980] ECR 3775, para-
graph 25, Case 322/81 Michelin v Commission [1983] ECR
3461, paragraph 37, Case C-62/86 AkzoChemie v Commission
[1991] ECR I-3359, Case T-504/93 Tiercé Ladbroke v Commission
[1997] ECR II-923, paragraph 81, T-65/96, Kish Glass v
Commission [2000] ECR II-1885, paragraph 62, Case C-475/99,
Ambulanz Glöckner and Landkreis Südwestpfalz, [2001] ECR I-
0000, paragraph 33. The test of sufficient substitutability or
interchangeability was first laid down by the Court of Justice in
Case 6/72, Europemballage and Continental Can v Commission,
[1973] ECR 215, paragraph 32 and Case 85/76, Hoffmann La-
Roche v Commission [1979] ECR 461, paragraph 23.

(34) Case C-333/94 P Tetra Pak v Commission [1996] ECR I-5951,
paragraph 13, Case 66/86, Ahmed Saeed [1989] ECR 803,
paragraphs 39 and 40, Case United Brands v Commission [1978]
ECR 207, paragraphs 22 and 29 and 12; Case T-229/94,
Deutsche Bahn v Commission [1997] ECR II-1689, paragraph 54.
In Tetra Pak, the Court confirmed that the fact that demand for
aseptic and non-aseptic cartons used for packaging fruit juice
was marginal and stable over time relative to the demand for
cartons used for packaging milk was evidence of a very little
interchangeability between the milk and the non-milk packa-
ging sector, idem, paragraphs 13 and 15.

(35)

For example, in the case of a relative price increase, consumers
of a lower quality/price service may switch to a higher quality/
price service if the cost of doing so (the premium paid) is offset
by the price increase. Conversely, consumers of a higher quality
product may no longer accept a higher premium and switch to
a lower quality service. In such cases, low and high quality
products would appear to be effective substitutes.

(36) 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). Likewise, it cannot be
excluded that in the future, xDSL technology and Multipoint
video distribution services based on wireless local loops may be
used for the transmission of TV materials in direct competition
with other existing TV delivery systems based on cable systems,
direct-to-home satellite transmission and terrestrial analogue or
digital transmission platforms.

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circumstances 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.
such
records, and where necessary, NRAs will have to seek
and assess the likely response of consumers and suppliers
to a relative price increase of the service in question.

In the absence of

51. 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,
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 (37).

in a situation where end users

52. 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.

2.2.1.2. S u p p l y - s i d e s u b s t i t u t i o n

53.

(37)

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
frame (38), following a relative price increase, that is, a
small but significant, lasting price increase. In circum-
stances where the overall costs of switching production
to the product in question are relatively negligible, then
that product may be incorporated into the product
market definition. The fact that a rival firm possesses
some of the assets required to provide a given service is
immaterial if significant additional investment is needed

rather

than from exogenous

Switching costs which stem from strategic choices by under-
takings
should be
considered, together with some other form of entry barriers,
at the subsequent stage of SMP assessment. Where a market is
total switching costs for already ‘captured’
still growing,
consumers may not be significant and may not thus deter
demand or supply-side substitution.

factors

(38) 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.

to market and offer profitably the services in ques-
tion (39). Furthermore, 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 agree-
ments, etc.). Mere hypothetical supply-side substitution is
not sufficient for the purposes of market definition.

54. 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 interconnec-
tion or co-location agreements, negotiating any other
form of network access, or obtaining rights of ways for
network expansion (40), may render unlikely in the short
term the provision of new services and the deployment
of new networks by potential competitors.

55. 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

56. Once the relevant product market is identified, the next
step to be undertaken is
the
geographical dimension of the market. It is only when
the geographical dimension of the product or service
market has been defined that an NRA may properly
assess whether or not there are market players with SMP
on the relevant market.

the definition of

57. According to established case-law,

the relevant geo-
graphic market comprises an area in which the under-
takings 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 distin-
guished from neighbouring areas in which the prevailing
conditions of competition are appreciably different (41).
The definition of the geographic market does not require
the conditions of competition between traders or
providers of services to be perfectly homogeneous. It is
sufficient that they are similar or sufficiently homo-
geneous, and accordingly, only those areas in which the
conditions of competition are ‘heterogeneous’ may not
be considered to constitute a uniform market (42).

(39)

(40)

See also, Case C-333/94, Tetra Pak v Commission, op. cit.,
paragraph 19. As mentioned above, the required investments
should also be undertaken within a reasonable time frame.
See, Case COMP/M.2574, Pirelli/Edizione/Olivetti/Télécom Italia,
paragraph 58.

(41) United Brands, op. cit., paragraph 44, Michelin, op. cit.,
paragraph 26, Case 247/86 Alsatel v Novasam [1988] ECR
5987, paragraph 15; Tiercé Ladbroke v Commission, op. cit.,
paragraph 102.

(42) Deutsche Bahn v Commission, op. cit., paragraph 92. Case T-139/

98 AAMS v Commission, [2001] ECR 2001-II, paragraph 39.

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58. 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.

59. 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.

60.

In the electronic communications sector, the geographi-
cal scope of the relevant market has traditionally been
determined by reference to two main criteria (43):

the question of whether indirect

wholesale electronic communications services, it may be
appropriate to treat paired countries or paired cities as
separate markets (47). Clearly, from the demand side, the
delivery of a call to one country is not a substitute for the
delivery of the same to another country. On the other
transmission
hand,
services, that is, re-routing or transit of the same call via a
third country, represent effective supply-side substitutes
depends on the specificities of the market and should be
decided on a case-by-case basis (48). However, a market
for the provision of services on a bilateral route would be
national in scope since supply and demand patterns in
both ends of the route would most likely correspond to
different market structures (49).

(a)

(b)

the area covered by a network (44); and

63.

the existence of legal and other regulatory instru-
ments (45).

61. On the basis of these two main criteria (46), geographic
markets can be considered to be local, regional, national
or covering territories of two or more countries (for
instance, pan-European, EEA-wide or global markets).

2.2.3. Other issues of market definition

In its notice on market definition the Authority drew
attention to certain cases where the boundaries of the
relevant market may be expanded to take into considera-
tion products or geographical areas which, although not
directly substitutable, should be included in the market
definition because of so-called ‘chain substitutability’ (50).
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

62. For

the purposes of

in certain
ex ante
exceptional cases, the relevant market may be defined
on a route-by-route basis. In particular, when considering
the dimension of markets for international retail or

regulation,

(43)

(44)

See for example, Case No IV/M.1025 — Mannesmann/Olivetti/
Infostrada, paragraph 17, and Case COMP/JV.23 — Telefónica
Portugal Télécom/Médi Télécom.
In practice, this area will correspond to the limits of the area in
which an operator is authorised to operate. In Case COMP/
M.1650 — ACEA/Telefónica, the Commission pointed out that
since the notified joint venture would have a licence limited to
the area of Rome, the geographical market could be defined as
local, paragraph 16.

(45) 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 communica-
tions 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.1439 — Telia/Telenor, paragraph 124, Case No IV/
M.1430 — Vodafone/Airtouch, paragraphs 13 to 17, Case COMP/
JV.17 — Mannesmann/Bell Atlantic/Omnitel, paragraph 15.
Physical interconnection agreements may also be taken into
consideration for defining the geographical scope of
the
market, Case No IV/M.570 — TBT/BT/TeleDanmark/Telenor,
paragraph 35.

(46)

(47) Case No IV/M.856 — British Télécom/MCI (II), paragraph 19(s),
Case No IV/JV.15 — BT/AT&T, paragraphs 84 and 92, Case
COMP/M.2257 — France Télécom/Equant, paragraph 32, It is
highly unlikely that the provision of electronic communications
services could be segmented on the basis of national (or local)
bilateral routes.

(48) 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.

(50)

(49) Where a market is defined on the basis of a bilateral route, its
geographical scope could be wider than national if suppliers are
present in both ends of the market and can satisfy demand
coming from both ends of the relevant route.
See ‘Notice on market definition’, paragraphs 57 and 58. For
instance, chain substitutability could occur where an under-
taking providing services at national level constraints the prices
charged by undertakings providing services
in separate
geographical markets. This may be the case where the prices
charged by undertakings providing cable networks in particular
areas are constrained by a dominant undertaking operating
nationally; see also, Case No COMP/M.1628 — TotalFina/Elf (OJ
L 143, 29.5.2001, p. 1), paragraph 188.

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widening the scope of the relevant market, findings of
chain substitutability should be adequately substan-
tiated (51).

in a sector characterised by
stated above, however,
constant
innovation and rapid technological conver-
gence, it is clear that any current market definition runs
the risk of becoming inaccurate or irrelevant in the near
future (53). Furthermore, markets defined under EEA
competition law are without prejudice to markets defined
under the new regulatory framework as the context and
the timeframe within which a market analysis
is
conducted may be different (54).

2.3. The Commission's practice

64. The Commission has adopted a number of decisions
under Regulation No 17 and the merger control
Regulation relating to the electronic communications
sector. These decisions may be of particular relevance for
NRAs with regard to the methodology applied by the
Commission in defining the relevant market (52). As

(51)

the
Evidence should show clear price interdependence at
extremes of the chain and the degree of substitutability between
the
should be
sufficiently strong.

relevant products or geographical areas

(52) The Commission has, inter alia, made references in its decisions
to the existence of the following markets: international voice-
telephony services (Case No IV/M.856, British Télécommunica-
tions/MCI (II) OJ L 336, 8.12.1997, p. 1), advanced Télécom-
munications services to corporate users (Case No IV/35.337
(Atlas OJ L 239, 19.9.1996 p. 23), paragraphs 5-7, Case No IV/
(OJ L 239, 19.9.1996, p. 57),
35617, Phoenix/Global/One
IV/34.857, BT-MCI
paragraph 6, Case
(OJ L 223,
(I)
27.8.1994, p. 36),
standardised low-level packet-switched
data-communications services, resale of international transmis-
sion capacity (Case No IV/M.975 — Albacom/BT/ENI, par 24)
audioconferencing (Albacom/BT/ENI, par 17), satellite services
(Case IV/350518, Iridium) (OJ L 16, 18.1.1997, p. 16), (enhanced)
global Télécommunications services (Case No IV/JV.15 — BT/
AT&T, Case COMP/M.1741 — MCI WorldCom/Sprint, para-
graph 84, Case COMP/M.2257, France Télécom/Equant, para-
graph 18), directory-assistance services (Case No IV/M.2468,
SEAT Pagine Gialle/ENIRO, paragraph 19, Case COMP/M.1957,
VIAG Interkom/Telenor Media, paragraph 8),
Internet-access
services to end users (Case No IV/M.1439, Telia/Telenor, Case
COMP/JV.46, Blackstone/CDPQ/Kabel Nordrhein/Westfalen, para-
graph 26, Case COMP/M.1838, BT/Esat, paragraph 7), top-level
or universal Internet connectivity (Case COMP/M.1741, MCI
WorldCom/Sprint, paragraph 52),
seamless pan-European
mobile Télécommunications services to internationally mobile
customers (Case COMP/M.1975, Vodafone Airtouch/Mannesmann,
Case COMP/M.2016, France Télécom/Orange, paragraph 15),
wholesale roaming services (Case COMP/M.1863, Vodafone/
Airtel, paragraph 17), and market
for connectivity to the
international signalling network (Case COMP/2598, TDC/
CMG/Migway JV, paragraphs 17 and 18).

least

65. As stated in the Access notice, there are in the electronic
communications sector at
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) (55).
Within these two broad market definitions further
market distinctions may be made depending on demand
and supply side patterns.

in its decision-making practice,

In particular,
the
Authority and the Commission will normally make a
distinction between the provision of services and the
provision of underlying network infrastructure. For
instance, as regards the provision of infrastructure, the
Commission has identified separate markets for the
provision of local loop, long distance and international
infrastructure (56). As regards fixed services, the Commis-
sion has distinguished between subscriber (retail) access
to switched voice telephony services (local, long distance
and international), operator (wholesale) access to net-
works
long distance and international) and
business data communications services (57). In the market
for fixed telephony retail services, the Commission has

(local,

66.

(53)

See also, Joined Cases T-125/97 and T-127/97 The Coca-Cola
Company and Others v Commission [2000] ECR II-1733, at
paragraphs 81 and 82.
See Article 15 of the Framework Directive.

(54)
(55) Access Notice, paragraph 45.
(56)
(57)

See Case No COMP/M.1439, Telia/Telenor.
See Telia/Telenor, BT/AT&T, France Télécom/Equant, op. cit. See
also Commission Decision of 20 May 1999, Cégétel + 4 (OJ
L 218, 18.8.1999, p. 14), recital 22. With regard to the emerging
market for ‘Global broadband data communications services —
GBDS’, the Commission has found that such services can be
supported by three main network architectures: (i) terrestrial
wireline systems,
systems and (iii)
satellite-based systems, and that from a demand side, satellite-
based GBDS can be considered as a separate market, Case
COMP/M.1564, Astrolink, paragraphs 20 to 23.

terrestrial wireless

(ii)

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also distinguished between the initial connection and the
monthly rental (58). Retail services are offered to two
distinct classes of consumers, namely, residential and
business users, the latter possibly being broken down
further into a market for professional, small and medium
sized business customers and another for large busi-
nesses (59). With regard to fixed telephony retail services
offered to residential users, demand and supply patterns
seem to indicate that two main types of services are
currently being offered,
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 (60).

traditional

the Commission has

67. As regards the provision of mobile communications
services,
from a
demand-side point of view, mobile telephony services
and fixed telephony services constitute separate mar-
kets (61). Within the mobile market, evidence gathered
from the Commission has indicated that the market for

found that,

to point 3.2,

(58) Comission Directive 96/19/EC (OJ L 74, 22.3.1996, p. 13),
‘Communication from the Commission,
recital 20. (See also,
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
‘While
C 272, 23.9.2000, p. 55). Pursuant
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’.
(59) The Commission has identified separate markets for services to
large multinational corporations (MNCs) given the significant
differences in the demand (and supply) of services to this group
of customers compared to other retail (business) customers, see
Case No IV/JV.15 — BT/AT&T, Case COMP/M.1741, MCI
WorldCom/Sprint, Case Comp/M.2257, France Télécom/Equant.
See ‘Communication on Unbundled access to the local loop’,
op. cit, point 3.2. The market for ‘high speed’ communications
services could possibly be further divided into distinct segments
depending on the nature of the services offered (i.e., internet
services, video-on-demand, etc.)

(60)

(61) Case COMP/M.2574, Pirelli/Edizione/Olivetti/Télécom Italia, para-
graph 33. 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 Telecommunica-
tions 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
COMP/M.1982, Telia/Oracle/Drutt, paragraph 15, and Case
COMP/JV.48 Vodafone/Vivendi/Canal+.

mobile communications services encompasses both GSM
900 and GSM 1800 and possibly analogue platforms (62).

the

the market

comprises all

68. The Commission has found that with regard to the
‘access’ market,
types of
latter
infrastructure that can be used for the provision of a
given service (63). Whether
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 sub-
stitutability among such (alternative) networks (64). 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) (65). At the retail level,
a further segmentation may take place between business
and residential customers (66).

(64)

(63)

infrastructure market

(62) Case COMP/M.2469, Vodafone/Airtel, paragraph 7, Case IV/M.1430,
Vodafone/Airtouch, Case No IV/M.1669, Deutsche Télécom/One2One,
paragraph 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 IV/M.1760 —
Mannesmann/Orange, paragraphs 8 to 10, and Case COMP/M.2053 —
Telenor/BellSouth/Sonofon, paragraphs 9 and 10.
For instance, in British Interactive Broadcasting/Open, the Commission
noted that for the provision of basic voice services to consumers, the
included not only the traditional
relevant
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, Case No IV/36.359 (OJ L 312,
6.12.1999, p. 1), paragraphs 33-38). In Case No IV/M.1113 — Nortel/
Norweb, the Commission recognised that electricity networks using
‘digital power line’ technology could provide an alternative to existing
traditional local Telecommunications access loop, paragraphs 28 and
29.
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., paragraph 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, paragraph 8.
(65) Case No COMP/M.1439, Telia/Telenor, paragraph 79. For instance, an
emerging pan-European market for wholesale access (SMS) to mobile
infrastructure has been identified by the Commission in Case COMP/
2598, TDC/CMG/Migway JV, paragraphs 28 and 29.
In applying these criteria, the Commission has found that, as far as
the lease of
the fixed infrastructure is concerned, demand for
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,
paragraph 14, Case No IV/M.1069 — WorldCom/MCI
(OJ L 116,
4.5.1999, p. 1), Case No IV/35.830 — Unisource
(OJ L 318,
20.11.1997, p. 1), Phoenix/GlobalOne, Case No IV/JV.2, Enel/FT/DT.
the Commission identified
In Case COMP/M.1439, Telia/Telenor,
distinct patterns of demand for wholesale and retail
(subscriber)
access to network infrastructure (provision or access to the local loop,
and provision or access to long distance and international network
infrastructure), paragraphs 75 to 83.

(66)

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69. 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 loop (67), the
Commission stated that although alternatives to the
PSTN for providing high speed communications services
(fibre optic networks,
to residential consumers exist
wireless local loops or upgradeable TV networks), none
of these alternatives may be considered as a substitute to
the fixed local loop infrastructure (68). Future innovative
and technological changes may, however, justify different
conclusions (69).

70. Access to mobile networks may also be defined by
reference to two potentially separate markets, one for call
In this
origination and another for call termination.
respect,
to
mobile infrastructure relates to access to an individual
mobile network or to all mobile networks, in general,
should be decided on the basis of an analysis of the
structure and functioning of the market (70).

the question whether

the access market

Justice of

the Court of

the Court of

Justice case-law
is the definition that
ascribes to the concept of dominant position in Article 82
of the Treaty (71). The new framework has aligned the
definition of SMP with the Court's definition of
dominance within the meaning of Article 82 of the
Treaty (72), respectively Article 54 of the EEA Agreement.
Consequently,
in applying the new definition of SMP,
NRAs will have to ensure that their decisions are in
accordance with the relevant jurisprudence of the EFTA
Court and of
the European
Communities on dominance (73) as well as bearing in
mind the Commission's practice. However, the applica-
tion of the new definition of SMP, ex ante, calls for certain
methodological adjustments to be made regarding the
way market power
In particular, when
is assessed.
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 of the Treaty and Article 54
of the EEA Agreement ex post, within a context of an
alleged committed abuse (74). Often, the lack of evidence
or of records of past behaviour or conduct will mean that
the market analysis will have to be based mainly on a
the market
prospective assessment. The accuracy of
analysis carried out by NRAs will thus be conditioned by
information and data existing at the time of the adoption
of the relevant decision.

3.

ASSESSING SIGNIFICANT MARKET POWER (DOMI-
NANCE)

71. According to Article 14 of the Framework Directive ‘an
undertaking shall be deemed to have significant market
it
power if, either individually or jointly with others,
enjoys a position equivalent to dominance, that is to say
a position of economic strength affording it the power to
behave to an appreciable extent
independently of
competitors, customers and ultimately consumers’. This

72. The fact that an NRA's initial market predictions do not
finally materialise in a given case does not necessarily
mean that its decision at the time of its adoption was
inconsistent with the Framework Directive. In applying
ex ante the concept of dominance, NRAs must be
accorded 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. 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.

(67)
(68)

(69)
(70)

to be deployed will

See footnote 58.
Fibre optics are currently competitive only on upstream
transmission markets whereas wireless local loops which are
still
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.
See also Case No IV/JV.11, @Home Benelux BV.
For example, if a fixed operator 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. For instance, in light of
the ‘calling party pays’ principle, mobile operators have no
incentives to compete on prices for terminating traffic to their
own network.
in
the Secretariat’,
Telecommunications-Background Note for
DAFFE/CLP/WP2(2001)3, and Commission's Press release IP/
02/483.

‘Competition issues

also, OECD,

see

3.1. Criteria for assessing SMP

73. As the Court of Justice of the European Communities 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

(71) Case 27/76 United Brands v Commission [1978] ECR 207, Case
No 85/76 Hoffmann-La Roche [1979] ECR 461, confirmed in
subsequent judgments.
See recital 25 of the Framework Directive.
See Article 14(2) and recital 28 of the Framework Directive
It should be noted that NRAs do not have to find an abuse of a
dominant position in order to designate an undertaking as
having SMP.

(72)
(73)
(74)

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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 detriment (75).

74.

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 of the Treaty and/or Article 54 of
the EEA Agreement. 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.

take into account

75. The market power of an undertaking can be constrained
by the existence of potential competitors (76). An NRA
the likelihood that
should thus
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.

76. As explained in the paragraphs below, a dominant
position is found by reference to a number of criteria and
its assessment is based, as stated above, on a forward-
looking market analysis based on existing market
conditions. Market shares are often used as a proxy for
market power. Although a high market share alone is not
sufficient
to establish the possession of SMP (dom-
inance), it is unlikely that a firm without a significant
share of the relevant market would be in a dominant
position. Thus, undertakings with market shares of no
likely to enjoy a (single)
more than 25 % are not

(75) Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461,
paragraph 39. It should be stressed here that for the purposes
of ex ante regulation,
if an undertaking has already been
imposed regulatory obligations, the fact that competition may
have been restored in the relevant market as a result precisely of
the obligations thus imposed, this does not mean that that
undertaking is no longer in a dominant position and that it
should no longer continue being designated as having SMP.

(76) 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 43,
15.2.1987, p. 27) and Magill TV Guide: ITP, BBC, RTE (OJ
L 78, 21.3.1989, p. 43). See also, Case 22/78 Hugin v
Commission 1979 [ECR] 1869, Case 226/84, British Leyland v
Commission 1986 [ECR] p. 3263.

dominant position on the market concerned (77). In the
Commission's decision-making practice, single domi-
nance concerns normally arise in the case of under-
takings with market shares of over 40 %, although the
Commission may in some cases have concerns about
shares (78), as
dominance even with lower market
dominance may occur without the existence of a large
market share. According to established case-law, very
large market shares, in excess of 50 %, are in themselves,
save in exceptional circumstances, evidence of
the
existence of a dominant position (79). An undertaking
with a large market share may be presumed to have SMP,
that is, to be in a dominant position, if its market share
has remained stable over time (80). 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 SMP. On the other hand, fluctuating
market shares over time may be indicative of a lack of
market power in the relevant market.

77. As regards the methods used for measuring market size
and market shares, both volume sales and value sales
provide useful information for market measurement (81).
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

See also recital 15 of Regulation (EEC) No 4064/89.

(77)
(78) United Brands v Commission, op. 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. For instance, in Case No
COMP/M.1741 — MCI WorldCom/Sprint it was found that the
merged entity would have in the market for the provision of
top-level internet connectivity an absolute combined market
share of more than [35-45] %, several times larger than its
closest competitor, enabling it to behave independently of its
competitors and customers (see paragraphs 114, 123, 126, 146,
155 and 196)

(79) Case C-62/86 AKZO v Commission,
[1991] ECR I-3359,
paragraph 60; Case T-228/97,
Irish Sugar v Commission,
[1999] ECR II-2969, paragraph 70, Case Hoffmann-La Roche v
Commission, op. cit, paragraph 41, Case T-139/98, AAMS and
Others v Commission [2001] ECR II-0000, paragraph 51.
However, large market shares can become accurate measure-
ments 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.

(80) Case Hoffmann-La Roche v Commission, op. cit., paragraph 41,
Case C-62/86, Akzo v Commission [1991] ECR I-3359,
paragraphs 56 and 59. ‘An undertaking which has a very large
market share and holds it for some time, by means of the
volume of production and the sale of the supply which it stands
for — without holders of much smaller market shares being
able to meet rapidly the demand from those who would like to
break away from the undertaking which has largest market
share — is by virtue of that share in a position of strength
which makes it an unavoidable trading partner and which,
because of this alone, secures for it, at the very least during
relatively long periods, that freedom of action which is the
special feature of a dominant position’, Case AAMS and Others
v Commission, op. cit., paragraph 51.
‘Notice on market definition’, op. cit., at p. 5.

(81)

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market share will often be considered to reflect better the
relative position and strength of each provider. In bidding
markets the number of bids won and lost may also be
used as approximation of market shares (82).

79.

It is important to stress that the existence of a dominant
position cannot be established on the sole basis of large
market shares. As mentioned above, the existence of high
market shares simply means that the operator concerned
might be in a dominant position. Therefore, NRAs
should undertake a thorough and overall analysis of the
economic characteristics of the relevant market before
coming to a conclusion as to the existence of SMP. In that
regard, the following criteria can also be used to measure
the power of an undertaking to behave to an appreciable
extent independently of its competitors, customers and
consumers. These criteria include amongst others:

— overall size of the undertaking,

— control of infrastructure not easily duplicated,

— technological advantages or superiority,

— absence of or low countervailing buying power,

— easy or privileged access to capital markets/financial

resources,

— product/services diversification (e.g. bundled pro-

ducts or services),

— economies of scale,

— economies of scope,

— vertical integration,

— a highly developed distribution and sales network,

— absence of potential competition,

— barriers to expansion.

80. A dominant position can derive from a combination of
the above criteria, which taken separately may not
necessarily be determinative.

81. A finding of dominance depends on an assessment of
ease of market entry. In fact, the absence of barriers to
entry deters, in principle, independent anti-competitive
behaviour by an undertaking with a significant market
share. In the electronic communications sector, barriers
to entry are often high because of existing legislative and
other
the
regulatory requirements which may limit
number of available licences or the provision of certain
services (i.e., GSM/DCS or 3G mobile services). Further-
more, barriers to entry exist where entry into the relevant

78. 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 which are the criteria most appropriate for
measuring market presence. For instance,
leased lines
leased line
leased capacity or numbers of
revenues,
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 criteria, 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 markets (83). 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
long distance and
international) and provides a measure of market presence
that reflects both the number of customers and network
coverage (84). 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 operators (85).

local,

(i.e.

(82)

(83)

(84)

See Case COMP/M.1741, MCI WorlCom/Sprint, paragraphs 239
and 240. In bidding markets, however, it is important not to
rely only on market shares as they in themselves may not be
representative of the undertakings actual position, for further
discussion, see also Case COMP/M.2201, MAN/Aüwarter.
See Determination of Organisations with Significant Power
(SMP) for the implementation of the ONP Directive, DG XIII,
1 March 1999, at
http://europa.eu.int/ISPO/infosoc/Télécompolicy/en/SMPdeter.
pdf, paragraph 3.2.
See Determination of Organisations with Significant Power
(SMP) for the implementation of the ONP Directive, DG XIII,
1 March 1999, at http://europa.eu.int/ISPO/infosoc/Télécompo-
licy/en/SMPdeter.pdf,, paragraph 5.2.

(85) 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.

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market requires large investments and the programming
of capacities over a long time in order to be profit-
able (86). However, high barriers to entry may become
less relevant with regard to markets characterised by on-
going technological progress. In electronic communica-
tions markets, competitive constraints may come from
innovative threats from potential competitors that are
not currently in the market.
the
competitive assessment should be based on a prospec-
tive, forward-looking approach.

In such markets,

82. As regards the relevance of

the notion of

‘essential
facilities’ for the purposes of applying the new definition
of SMP, there is for the moment no jurisprudence in
relation to the electronic communications sector. How-
ever, this notion, which is mainly relevant with regard to
the existence of an abuse of a dominant position under
Article 82 of the EC Treaty and/or Article 54 of the EEA
Agreement, is less relevant with regard to the ex ante
assessment of SMP within the meaning of Article 14 of
the Framework Directive. In particular, the doctrine of
‘essential facilities’ is complementary to existing general
obligations imposed on dominant undertaking, such as
the obligation not to discriminate among customers and
has been applied in cases under Article 82 of the EC
in
Treaty and Article 54 of
exceptional circumstances, such as where the refusal to
supply or to grant access to third parties would limit or
prevent the emergence of new markets, or new products,
contrary to Article 82(b) of the Treaty and Article 54(b)
of
It has thus primarily been
associated with access issues or cases involving a refusal
to supply or to deal under Article 82 of the Treaty and
Article 54 of the EEA Agreement, without the presence
of any discriminatory treatment. Under existing case-law,
a product or service cannot be considered ‘necessary’ or
‘essential’ unless there is no real or potential substitute.
Whilst
is true that an undertaking which is in
possession of an ‘essential facility’ is by definition in a
dominant position on any market for that facility, the
contrary is not always true. The fact that a given facility is
not ‘essential’ or ‘indispensable’ for an economic activity

the EEA Agreement

the EEA Agreement.

it

(86) Hoffmann-La Roche v Commission, op. cit., paragraph 48. One of
the most important types of entry barriers is sunk costs. Sunk
costs are particularly relevant to the electronic communications
sector in view of the fact that large investments are necessary to
create, for instance, an efficient electronic communications
network for the provision of access services and it is likely that
little could be recovered if a new entrant decides to exit the
market. Entry barriers are exacerbated by further economies of
scope and density which generally characterise such networks.
Thus, a large network is always likely to have lower costs than a
smaller one, with the result that an entrant in order to take a
large share of the market and be able to compete would have to
price below the incumbent, making it thus difficult to recover
sunk costs.

on some distinct market, within the meaning of the
existing case-law (87) does not mean that the owner of
this facility might not be in a dominant position. For
instance, a network operator can be in a dominant
position despite the existence of alternative competing
networks if the size or importance of its network affords
him the possibility to behave independently from other
network operators (88). In other words, what matters is to
establish whether a given facility affords its owner SMP in
the market without
thus being necessary to further
establish that the said facility can also be considered
‘essential’ or
‘indispensable’ within the meaning of
existing case-law.

83.

It follows from the foregoing that the doctrine of the
‘essential facilities’ is less relevant for the purposes of
applying ex ante Article 14 of the Framework Directive
than applying ex post Article 82 of the EC Treaty and
Article 54 of the EEA Agreement.

3.1.1. Leverage of market power

84. According to Article 14(3) 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’.

85. This provision is intended to address a market situation
comparable to the one that gave rise to the Court's
judgement in Tetra Pak II (89). 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 (90). Although in Tetra Pak the markets taken as a
whole in which Tetra Pak was found to be dominant were
horizontal, close associative links, within the meaning of

(87)

Joined Cases C-241/91 P and C-242/91 P, RTE and ITP v
Commission, [1995] ECR I-743, Case C-7/97, Oscar Bronner
[1998] ECR I-7791, and Joined Cases T-374/94, T-375/94,
T-384/94 and T-388/94, European Night Services and others v
Commission [1998] ECR II-3141.

(88) Case COMP/M.1741, MCI WorldCom/Sprint, paragraph 196.
(89) Case C-333/94 P, Tetra Pak v Commission [1996] ECR I-5951.
See also Case COMP/M.2146 — Tetra Laval/Sidel, para-
(90)
graphs 325 to 389, sub judice, T-5/02.

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the Court's case-law, will most often be found in
vertically integrated markets. 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
market (91). Under such circumstances, an NRA may
consider it appropriate to find that such operator has
SMP on both markets taken together. However,
in
practice, if an undertaking has been designated as having
SMP on an upstream wholesale or access market, NRAs
will normally be in a position to prevent any likely spill-
over or leverage effects downstream into the retail or
services markets by imposing on that undertaking any of
the obligations provided for in the Access Directive
which may be appropriate to avoid such effects. There-
fore, it is only where the imposition of ex ante obligations
on an undertaking which is dominant in the (access)
upstream market would not result in effective competi-
tion on the (retail) downstream market that NRAs should
the Framework
examine whether Article 14(3) of
Directive may apply.

86. The foregoing considerations are also relevant in relation
to horizontal markets (92). Moreover,
irrespective of
whether the markets under consideration are vertical or
horizontal, both markets should be electronic commu-
nications markets within the meaning of Article 2 of the
Framework Directive and both should display such
characteristics as to justify the imposition of ex ante
regulatory obligations (93).

(91)
(92)

See Access Notice, paragraph 65.
In the case of horizontal markets, the market analysis should
focus on establishing the existence of close associative links
which will enable an undertaking dominant in one market to
behave independently of its competitors in a neighbouring
market. Such links may be found to exist by reference to the
type of conduct of suppliers and users in the markets under
consideration (same customers and/or
in both
markets, i.e., customers buying both retail voice calls and retail
internet access) or the fact that the input product or service is
essentially the same (i.e. provision by a fixed operator of
network infrastructure to ISPs for wholesale call origination
and wholesale call termination); see also Case T-83/91, Tetra Pak
v Commission, op. cit., paragraph 120 and Case COMP/M.2416
— Tetra Laval/Sidel.

suppliers

(93) Article 14 (3) of the Framework Directive is not intended to
apply in relation to market power leveraged from a ‘regulated’
market into an emerging, ‘non regulated’ market. In such cases,
any abusive conduct in the ‘emerging’ market would normally
be dealt with under Article 82 of the EC Treaty.

3.1.2. Collective dominance

87. Under Article 82 of the EC Treaty and Article 54 of the
EEA Agreement, a dominant position can be held by one
or more undertakings (‘collective dominance’). Article 14
(2) of the Framework Directive also provides that an
undertaking may enjoy SMP, that is,
it may be in a
dominant position, either individually or jointly with
others.

88.

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,
in practice, 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
dominance (94).

89. 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 the merger control Regulation. In addition,
both the Court of First Instance (CFI) and the Court of
Justice of the European Communities (ECJ) have given
judgements which have contributed to further clarifying
the exact scope of this concept.

3.1.2.1. T h e j u r i s p r u d e n c e o f t h e C F I / E C J

90. The expression ‘one or more undertakings’ in Article 82
of the EC Treaty and Article 54 of the EEA Agreement
implies that a dominant position may be held by two or
more economic entities which are legally and economic-
ally independent of each other (95).

91. Until

the ruling of

in Compagnie Maritime
Belge (96) and the ruling of the CFI in Gencor (97) (see
it might have been argued that a finding of
below),

the ECJ

(94) Access Notice, paragraph 79.
(95)

(96)

Joined cases C-395/96 P and C-396/96 P, Compagnie Maritime
Belge and Others v Commission [2000] ECR I-1365.
Joined cases C-395/96 P and C-396/96 P, Compagnie Maritime
Belge and Others v Commission [2000] ECR I-1365, para-
graph 39.

(97) Case T102/96, Gencor v Commission [1999] ECR II-753.

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collective dominance was based on the existence of
economic links, in the sense of structural links, or other
factors which could give rise to a connection between the
undertakings concerned (98). 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
the merger control Regulation
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 (99).
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.

92. The CFI dismissed the application by stating, inter alia,
that there was no legal precedent suggesting that the
notion of ‘economic links’ was restricted to the notion of
links between the undertakings concerned:
structural
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, transpar-
ency 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’ (100). 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’ (101).

93. The CFI's ruling in Gencor was later endorsed by the ECJ
in Compagnie Maritime Belge, where the Court gave

(98)

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

further guidance as to how the term of collective
dominance should be understood and as to which
conditions must be fulfilled before such a finding can be
made. According to the Court, in order to show that two
or more undertakings hold a joint dominant position, it
the undertakings
is necessary to consider whether
concerned together constitute a collective entity vis-à-
vis their competitors, their trading partners and their
consumers on a particular market (102). This will be the
case when 1. there is no effective competition among the
undertakings in question; and 2. the said undertakings
adopt a uniform conduct or common policy in the
relevant market (103). Only when that question is
answered in the affirmative, is it appropriate to consider
whether the collective entity actually holds a dominant
position (104). 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 or Article 53
(3) of the EEA Agreement) 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 consumers (105).

94. 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 or Article 53(1) of the EEA
Agreement 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, on an assessment of the
structure of the market in question’ (106).

95.

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 concen-
is
trated market whose structure alone,

in particular,

(102) Compagnie Maritime Belge

transports and Others, op cit.,
paragraph 39, see also, Case T-342/99 Airtours v Commission
[2002] ECR II-0000, paragraph 76.

(103) See in particular, France and Others v Commission, op cit.,

paragraph 221.

(99) Case No IV/M.619, Gencor Lonhro (OJ L 11, 14.1.1997, p. 30).
(100) Gencor v Commission, op. cit., paragraph 276.
(101) Gencor v Commission, op. cit., paragraph 277.

(104) Compagnie Maritime Belge, paragraph 39.
(105) Compagnie Maritime Belge, paragraph 44.
(106) Compagnie Maritime Belge, paragraph 45.

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conducive
market (107).

to coordinated effects on the

relevant

3.1.2.2. T h e

C o m m i s s i o n ' s

d e c i s i o n - m a k i n g
p r a c t i c e a n d A n n e x I I o f t h e F r a m e w o r k
D i r e c t i v e

96.

In a number of decisions adopted under the merger
control Regulation,
the Commission considered the
concept of collective dominance. It sought in those cases
to ascertain whether the structure of the oligopolistic
markets in question was conducive to coordinated effects
on those markets (108).

the merger

98. This analysis is facilitated by looking at a certain number
of criteria which are summarised in Annex II of the
Framework Directive, which have also been used by the
Commission in applying the notion of
collective
dominance under
control Regulation.
‘two or more undertakings
According to this Annex,
can be found to be in a joint dominant position within
the meaning of Article 14 if, even in the absence of
structural or other links between them, they operate in a
market,
the structure of which is considered to be
conducive to coordinate effects’ (110). Without prejudice
to the case-law of
Justice on joint
dominance, this is likely to be the case where the market
satisfies a number of appropriate characteristics,
in
particular in terms of market concentration, transpar-
ency and other characteristics mentioned below:

the Court of

97. When assessing ex ante the likely existence or emergence
of a market which is or could become conducive to
collective dominance in the form of tacit co-ordination,
NRAs, should analyse:

— mature market,

— stagnant or moderate growth on the demand side,

(a) whether the characteristics of the market makes it

conducive to tacit coordination; and

(b) whether such form of coordination is sustainable
that is, (i) whether any of the oligopolists have the
ability and incentive to deviate from the coordinated
outcome, considering the ability and incentives of
the non-deviators to retaliate and (ii) whether
buyers/fringe competitors/potential entrants have
the ability and incentive to challenge any anti-
competitive coordinated outcome (109).

(107) The use here of the term ‘coordinated effects’ is no different
from the term ‘parallel anticompetitive behaviour’ also used in
Commission's decisions applying the concept of collective
(oligopolistic) dominance.

(108) See in particular, Cases COMP/M.2498, UPM-Kymmene/Haindl
and COMP/M.2499, Norske Skog/Parenco/Walsum, Case COMP/
M.2201, MAN/Auwärter, Case COMP/M.2097, SCA/Matsä
Tissue, Case COMP/M.1882, Pirelli/BICC, Case COMP/M.1741,
MCI WorldCom/Sprint, sub judice, T-310/00, Case No IV/M.1524,
Airtours/First Choice (OJ L 93, 13.4.2000, p. 1), sub judice, T-342/
99, Case No IV/M.1383, Exxon/Mobil, Case No IV/M.1313,
Danish Crown/Vestjyske Slagterier (OJ L 20, 25.1.2000, p. 1), Case
No IV/M.1225, Enso/Stora (OJ L 254, 29.9.1999, p. 9), Case No
IV/M.1016, 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).

(109) This is in essence the type of analysis carried out by the
Commission in past decisions related to collective dominance,
see for instance, Case No IV/M.190 — Nestlé/Perrier, (OJ L 356,
5.12.1992, p. 1), Gencor/Lonrho, cit., Case No IV/M.1383 —
Exxon/Mobil, paragraph 259, Case No IV/M.1524 — Airtours/
First Choice (OJ L 93, 13.4.2000, p. 1), and Case No COMP/
M.2499 — Norske Skog/Parenco/Walsum, paragraph 76; see also,
Airtours v Commission, op. cit., paragraph 62.

— low elasticity of demand,

— homogeneous product,

— similar cost structures,

— similar market shares,

— lack of technical innovation, mature technology,

— absence of excess capacity,

— high barriers to entry,

— lack of countervailing buying power,

(110) See also recital 26 of the Framework Directive:

‘two or more
undertakings can be found to enjoy a joint dominant position not only
where there exist structural or other links between them but also where
the structure of the relevant market is conducive to coordinated effects,
that is, it encourages parallel or aligned anticompetitive behaviour on
the market’.

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— lack of potential competition,

101. It must be stressed that a mere finding that a market is
concentrated does not necessarily warrant a finding that
its structure is conducive to collective dominance in the
form of tacit coordination (113).

— various kind of informal or other links between the

undertakings concerned,

— retaliatory mechanisms,

— lack or reduced scope for price competition.

99. Annex II of the Framework Directive expressly states that
the above is not an exhaustive list, nor are the criteria
cumulative. Rather, the list is intended to illustrate the
sorts of evidence that could be used to support assertions
concerning the existence of a collective (oligopolistic)
dominance in the form of tacit coordination (111). As
stated above, the list also shows that 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
abovementioned criteria, why in a given oligopolistic
market coordinated effects are likely to arise.
In the
absence of such links, in order to establish whether a
market is conducive to collective dominance in the form
of tacit coordination, it is necessary to consider a number
of characteristics of the market. While these character-
istics are often presented in the form of the above-
mentioned list, it is necessary to examine all of them and
to make an overall assessment rather than mechan-
istically applying a ‘check list’. Depending on the
circumstances of the case, the fact that one or another
of
the structural elements usually associated with
collective dominance may not be clearly established is
not
in itself decisive to exclude the likelihood of a
coordinated outcome (112).

100. In an oligopolistic market where most, if not all, of the
abovementioned criteria are met, it should be examined
whether, in particular, the market operators have a strong
incentive to converge to a coordinated market outcome
and refrain from reliance on competitive conduct. This
will be the case where the long-term benefits of an anti-
competitive conduct outweigh any short-term gains
resulting from a resort to a competitive behaviour.

(111) See Case COMP/M.2498, UPM-Kymmene/Haindl and Case
COMP/M.2499, Norske Skog/Parenco/Walsum, paragraph 77.

(112) See, for example, Case COMP/M.2097, SCA/Metsä Tissue.

102. Ultimately,

in applying the notion of collective dom-
inance in the form of tacit coordination (114), the criteria
which will carry the most sway will be those which are
critical to a coordinated outcome in the specific market
in Case COMP/
under consideration. For example,
M.2499, Norske Skog/Parenco/Walsum, the Commission
came to the conclusion that even if the markets for
newsprint and wood-containing magazine paper were
concentrated, the products were homogeneous, demand
was highly inelastic, buyer power was limited and
barriers to entry were high, nonetheless the limited
stability of market shares, the lack of symmetry in costs
transparency of
structures and namely,

the lack of

that market,

joint dominance.

there was no risk of

(113) For instance, in Case COMP/M.2201, MAN/Auwärter, despite
the fact that two of the parties present in the German city-bus
market in Germany, MAN/Auwärter and EvoBus, would each
the Commission
supply just under half of
concluded that
In
particular, the Commission found that any tacit division of the
market between EvoBus and MAN/Auwärter was not likely as
there would be no viable coordination mechanism. Secondly,
significant disparities between EvoBus and MAN/Auwärter,
such as different cost structures, would make it likely that the
companies would compete rather than collude. Likewise, in the
Alcoa/British Aluminium case,
the Commission found that
despite the fact that two of the parties present in the relevant
market accounted for almost 80 % of the sales, the market
could not be said to be conducive to oligopolistic dominance
since 1. market shares were volatile and unstable, and 2.
demand was quite irregular making it difficult for the parties to
be able to respond to each other's action in order to tacitly
coordinate their behaviour. Furthermore, the market was not
transparent in relation to prices and purchasers had significant
countervailing power. The Commission's conclusions were
further reinforced by the absence of any credible retaliation
mechanism likely to sustain any tacit co-ordination and the fact
that competition in the market was not only based on prices
but depended to a large extent on technological innovation and
after-sales follow-up, Case COMP/M.2111, Alcoa/British Alumi-
nium.
(114) Likewise,

in Case COMP/M.2348, Outokumpu/Norzink,

the
Commission found that even if the zinc market was composed
of few players, entry barriers were high and demand growth
perspectives low, the likelihood of the emergence of a market
structure conducive to coordinated outcome was unlikely if it
could be shown that 1. parties could not manipulate the
formation of prices, and 2. producers had asymmetric cost
structures and there was no credible retaliation mechanism in
place.

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investment decisions and the absence of a credible
retaliation mechanism rendered unlikely and unsustain-
able any possibility of tacit co-ordination among the
oligopolists.

3.1.2.3. C o l l e c t i v e d o m i n a n c e a n d t h e Te l e c o m -

m u n i c a t i o n s s e c t o r

103. In applying the notion of collective dominance, NRAs
may also take into consideration decisions adopted under
the merger control Regulation in the electronic commu-
nications sector, in which the Commission has examined
whether any of the notified transactions could give rise
to a finding of collective dominance.

104. In MCI WorldCom/Sprint,

the Commission examined
the merged entity together with Concert
whether
Alliance could be found to enjoy a collective dominant
position on the market for global Telecommunications
services (GTS). Given that operators on that market
competed on a bid basis where providers were selected
essentially in the first instances of the bidding process on
the basis of their ability to offer high quality, tailor-made
sophisticated services, and not on the basis of prices, the
Commission's investigation was focused on the incen-
to engage in parallel
tives for market participants
behaviour as to who wins what bid (and who had won
what bids) (115). After having examined in depth the
structure of
(homogenous product, high
barriers of entry, customers countervailing power, etc.)
the Commission concluded that it was not able to show
absence of competitive constraints from actual compe-
titors, a key factor
in examining whether parallel
behaviour can be sustained, and thus decided not to
pursue
in relation to that
market (116).

its objections

the market

further

105. In BT/Esat (117), 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 Commis-
sion concluded that
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 homo-
geneous; and finally, technological developments were
one of the main characteristics of the market (118).

this was not

106. In Vodafone/Airtouch (119), the Commission found that the
merged entity would have joint control of two of the
four mobile operators present on the German mobile

(115) Case COMP/M.1741, MCI WorldCom/Sprint, paragraph 263.
(116) Case COMP/M.1741, MCI WorldCom/Sprint, paragraphs 257 to

302.

(117) Case COMP/M.1838, BT/Esat.
(118) Case COMP/M.1838, BT/Esat, paragraphs 10 to 14.
(119) Case No IV/M.1430, Vodafone/Airtouch.

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
coordinated effects (120).

following

their prices

107. In France Télécom/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,
same
trends (121). 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
Télécom 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
price (122).

exactly

the

4.

IMPOSITION, MAINTENANCE, AMENDMENT OR
WITHDRAWAL OF OBLIGATIONS UNDER THE REG-
ULATORY FRAMEWORK

108. Section 3 of these guidelines dealt with the analysis of
relevant markets that NRAs must carry out under
Article 16 of
the Framework Directive to determine
whether a market is effectively competitive, i.e. whether
there are undertakings in that market who are in a
dominant position. This Section aims
to provide
guidance for NRAs on the action they should take
following that analysis, i.e. the imposition, maintenance,

(120) Case No IV/M.1430, Vodafone/Airtouch, paragraph 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.

(121) Case COMP/M.2016, France Télécom/Orange, paragraph 26.
(122) Case COMP/M.2016, France Télécom/Orange, paragraphs 39 and
40. In its Working Document ‘On the initial findings of the
sector inquiry into mobile roaming charges’, the Commission
made reference to (i)
likely the existence of a number of
economic links 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
standardised, and (ii) the likely existence of high barriers to
the Commission also
entry.
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
roaming market, see:
http://europa.eu.int/comm/competition/antitrust/others/
sector_inquiries/roaming/, pages 24 and 25.

In its preliminary assessment

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amendment or withdrawal, as appropriate, of specific
regulatory obligations on undertakings designated as
having SMP. This section also describes the circum-
stances in which similar obligations than those that can
be imposed on SMP operators may, exceptionally, be
imposed on undertakings who have not been designated
as having SMP.

109. The specific regulatory obligations which may be
imposed on SMP undertakings can apply both to
wholesale and retail markets. In principle, the obligations
related to wholesale markets are set out in Articles 9 to
13 of the Access Directive. The obligations related to
retail markets are set out in Articles 17 to 19 of the
Universal Service Directive.

110. The obligations set out

in the Access Directive are:
transparency (Article 9); non-discrimination (Article 10);
accounting separation (Article 11), obligations for access
to and use of specific network facilities (Article 12), and
price control and cost accounting obligations (Article 13).
In addition, Article 8 of the Access Directive provides
that NRAs may impose obligations outside this list. In
order to do so, they must submit a request to the
Authority, which will take a decision, after seeking the
advice of the EFTA Communications Committee, as to
whether the NRA concerned is permitted to impose such
obligations.

111. The obligations set out in the Universal Service Directive
are: regulatory controls on retail services (Article 17),
availability of the minimum set of leased lines (Article 18
and Annex VII) and carrier selection and pre-selection
(Article 19).

112. Under

the regulatory framework,

these obligations
should only be imposed on undertakings which have
been designated as having SMP in a relevant market,
except in certain defined cases, listed in section 4.3 of
these guidelines.

4.1. Imposition, maintenance, amendment or withdrawal

of obligations on SMP operators

113. As explained in Section 1,

the notion of effective
competition means that there is no undertaking with
dominance (SMP) on the relevant market. In other words,
a finding that a relevant market is effectively competitive
is, in effect, a determination that there is neither single
nor joint dominance on that market. Conversely, a
effectively
finding that
competitive is a determination that there is single or
joint dominance on that market.

relevant market

is not

a

that undertaking(s). As stipulated in Article 16(3) of the
Framework Directive, where the NRA proposes
to
remove existing regulatory obligations, it must give the
affected parties a reasonable period of notice.

in a dominant position,

115. If an NRA finds that competition in the relevant market
is not effective because of the existence of an undertaking
or undertakings
it must
the
designate in accordance with Article 16(4) of
Framework Directive the undertaking or undertakings
concerned as having SMP and impose appropriate
regulatory obligations on the undertaking(s) concerned.
However, merely designating an undertaking as having
SMP on a given market, without imposing any appro-
priate regulatory obligations,
is inconsistent with the
provisions of the new regulatory framework, notably
Article 16(4) of the Framework Directive. In other words,
NRAs must impose at least one regulatory obligation on
an undertaking that has been designated as having SMP.
Where an NRA determines the existence of more than
one undertaking with dominance,
that a joint
dominant position exists, it should also determine the
most appropriate regulatory obligations to be imposed,
based on the principle of proportionality.

i.e.

116. If an undertaking was previously subject to obligations
under the 1998 regulatory framework, the NRA must
consider whether similar obligations continue to be
appropriate under the new regulatory framework, based
on a new market analysis carried out in accordance with
Article 16 of
the Framework Directive and these
Guidelines. If the undertaking is found to have SMP in
a relevant market under the new framework, regulatory
obligations similar to those imposed under the 1998
regulatory framework may therefore be maintained.
Alternatively, such obligations could be amended, or
new obligations provided in the new framework might
also be imposed, as the NRA considers appropriate.

117. Except where the Directives prescribe particular remedies
as under Article 18 and 19 of the Universal Service
Directive, NRAs will have to choose between the range of
regulatory obligations set out in the Directives in order to
remedy a particular problem in a market found not to be
effectively competitive. Where NRAs intend to impose
other obligations for access and interconnection than
those listed in the Access Directive, they must submit a
request for the Authority's approval of their proposed
course of action. The Authority must seek the advice of
the EFTA Communications Committee before taking its
decision.

114. If an NRA finds that a relevant market is subject to
effective competition,
is not allowed to impose
it
obligations on any operator on that relevant market
under Article 16 of the Framework Directive. If the NRA
has previously imposed regulatory obligations on under-
taking(s) in that market, the NRA must withdraw such
obligations and may not impose any new obligation on

118. EEA law, and in particular Article 8 of the Framework
Directive, requires NRAs to ensure that the measures they
impose on SMP operators under Article 16 of
the
Framework Directive are justified in relation to the
objectives set out in Article 8 and are proportionate to
the achievement of those objectives. Thus any obligation
imposed by NRAs must be proportionate to the problem
to be remedied. Article 7 of the Framework Directive

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requires NRAs to set out the reasoning on which any
proposed measure is based when they communicate that
measure to other NRAs and to the Authority. Thus, in
addition to the market analysis supporting the finding of
SMP, NRAs need to include in their decisions a
justification of the proposed measure in relation to the
objectives of Article 8, as well as an explanation of why
their decision should be considered proportionate.

119. Respect for the principle of proportionality will be a key
criterion used by the Authority to assess measures
proposed by NRAs under the procedure of Article 7 of
Framework Directive. The principle of proportionality is
well-established in EEA law (123). In essence, the principle
of proportionality requires that the means used to attain
a given end should be no more than what is appropriate
and necessary to attain that end. In order to establish that
a proposed measure is compatible with the principle of
proportionality, the action to be taken must pursue a
legitimate aim, and the means employed to achieve the
aim must be both necessary and the least burdensome, i.
e. it must be the minimum necessary to achieve the aim.

120. However, particularly in the early stages of implementa-
tion of the new framework, the Authority would not
expect NRAs to withdraw existing regulatory obligations
on SMP operators which have been designed to address
legitimate regulatory needs which remain relevant,
without presenting clear evidence that those obligations
have achieved their purpose and are therefore no longer
required since competition is deemed to be effective on
the relevant market. Different remedies are available in
the new regulatory framework to address different
identified problems and remedies should be tailored to
these specified problems.

121. The Authority, when consulted as provided for

in
Article 7(3) of the Framework Directive, will also check
that any proposed measure taken by the NRAs is in
conformity with the regulatory framework as a whole,
and will assess the impact of the proposed measure on
the functioning of the EEA Agreement.

122. The Authority will assist NRAs to ensure that as far as
possible they adopt consistent approaches in their choice
of remedies where similar situations exist in different
EEA States. Moreover, as noted in Article 7(2) of the
Framework Directive, NRAs shall seek to agree on the
types of remedies best suited to address particular
situations in the marketplace.

4.2. Transnational markets: Decisions and joint analysis

by NRAs

123. Article 15(4) of

the Framework Directive gives the
Authority the power, after having consulted the NRAs
and the EFTA Communications Committee, to adopt a
Decision identifying transnational markets between two
or more EFTA States. Article 15(4) of the Framework
Directive as incorporated in the EEA Agreement (124)
further provides
transnational
markets which affect both an EFTA State and an EC
Member State.
In such cases, the Authority and the
Commission shall cooperate with a view to agreeing on
identical Decisions to identify a cross-pillar transnational
market, which affects both an EFTA State and an EC
Member State. The general cooperation rules under
Article 109 of the EEA Agreement shall apply mutatis
mutandis.

identification of

for

124. Under the terms of Article 16(5) of the Framework
Directive, the NRAs concerned must jointly conduct the
market analysis and decide whether obligations need to
be imposed. In practice, the European Regulators Group
is expected to provide a suitable forum for such a joint
analysis, but other multilateral meetings and cooperation
would also be deemed necessary.

(e.g.

for public consultation)

125. In general, joint analysis by NRAs would follow similar
procedures
to those
required when a single national regulatory authority is
conducting a market analysis. Precise arrangements for
collective analysis and decision-making will need to be
drawn up.

4.3. Imposition of certain specific regulatory obligations

on non-SMP operators

126. The preceding parts of this section set out the procedures
whereby certain specific obligations may be imposed on
SMP undertakings, under Articles 7 and 8 of the Access
Directive and Articles 16 to 19 of the Universal Service
Directive. Exceptionally,
similar obligations may be
imposed on operators other than those that have been
designated as having SMP, in the following cases, listed in
Article 8(3) of the Access Directive:

— obligations covering, inter alia, access to conditional
access
to
ensure end-to-end interoperability, and access to

systems, obligations

to interconnect

(123) See, for example, Case E-3/00, EFTA Surveillance Authority v
Kingdom of Norway [2001] EFTA Court Reports, page 73, at
paragraph 27ff.

(124) Article 1(1)(d) of EEA Joint Committee Decision No 11/2004 of
6 February 2004 amending Annex II (Technical regulations,
standards,
testing and certification), Annex X (Audiovisual
services) and Annex XI (Telecommunications services) to the
EEA Agreement.

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and electronic
application program interfaces
programme guides
accessibility to
to ensure
specified digital TV and radio broadcasting services
(Articles 5(1), 5(2) and 6 of the Access Directive),

— obligations that NRAs may impose for co-location
where rules relating to environmental protection,
health, security or town and country planning
deprive other undertakings of viable alternatives to
co-location (Article 12 of the Framework Directive,

— obligations for accounting separation on under-
takings providing electronic communications ser-
vices who enjoy special or exclusive rights in other
sectors (Article 13 of the Framework Directive),

— obligations relating to commitments made by an
undertaking in the course of a competitive or
comparative selection procedure for a right of use
of radio frequency (Condition B7 of the Annex to
the Authorisation Directive, applied via Article 6(1)
of that Directive),

— obligations to handle calls to subscribers using
and obligations
specific numbering resources
necessary for
the implementation of number
portability (Articles 27, 28 and 30 of the Universal
Service Directive),

— obligations based on the relevant provisions of the
privacy and electronic communications Directive.

5.

POWERS OF INVESTIGATION AND COOPERATION
PROCEDURES FOR THE PURPOSE OF MARKET ANA-
LYSIS

5.1. Overview

127. This section of

the guidelines covers procedures in
respect of an NRA's powers to obtain the information
necessary to conduct a market analysis.

128. The regulatory framework contains provisions to enable
NRAs to require undertakings that provide electronic
communications networks and services to supply all the
information, including confidential information, neces-
sary for NRAs to assess the state of competition in the
relevant markets and impose appropriate
ex ante
obligations and thus to ensure compliance with the
regulatory framework.

129. This section of the guidelines also includes guidance as to
measures to ensure effective cooperation between NRAs
and NCAs at national
level, and among NRAs and
between NRAs and the Authority at EEA level, as well as
cross-pillar between NRAs in the EFTA States and NRAs
in the EC States
through the Authority and the
Commission. In particular, this section deals with the
exchange of information between those authorities.

130. 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 have
harmful effects on incentives for investment by under-
takings in the relevant market and therefore on the
interests of consumers.

5.2. Market analysis and powers of investigation

131. Under Article 16(1) of the Framework Directive, NRAs
must carry out an analysis of
the relevant markets
identified in the Recommendation and any Decision as
soon as possible after their adoption or subsequent
revision. The conclusions of the analysis of each of the
relevant markets, together with the proposed regulatory
action, must be published and a public consultation must
these
be conducted, as described in Section 6 of
guidelines.

132. In order to carry out their market analysis, NRAs will
first need to collect all the information they consider
necessary to assess market power in a given market. To
the extent that such information needs to be obtained
directly from undertakings, Article 11 of the Authorisa-
tion Directive provides that undertakings are 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 16(2) of
the
Framework Directive. This is reinforced by the more
general obligation in Article 5(1) of
the Framework
Directive which provides that EFTA States shall ensure
that undertakings providing electronic communications
networks and services provide all
the information
necessary for NRAs to ensure conformity with EEA law.

133. When NRAs request information from an undertaking,
they should state the reasons justifying the request and
the time limit within which the information is to be
provided. As provided for
the
Authorisation Directive, NRAs may be empowered to
impose financial penalties on undertakings for failure to
provide information.

in Article 10(4) of

134. In accordance with Article 5(4) of

the Framework
Directive, NRAs must publish all information that would
contribute to an open and competitive market, acting in
accordance with national rules on public access to
information and subject to EEA and national rules on
commercial confidentiality.

135. However, as regards information that is confidential in
nature, the provisions of Article 5(3) of the Framework
Directive require NRAs to ensure the confidentiality of

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such information in accordance with EEA and national
rules on business confidentiality. This confidentiality
obligation applies equally to information that has been
received in confidence from another public authority.

approach between different NRAs, in particular divergent
remedies to deal with the same problem (125).

5.3. Cooperation procedures

Between NRAs and NCAs

136. Article 16(1) of the Framework Directive requires NRAs
to associate NCAs with the market analyses as appro-
priate. EFTA States should put in place the necessary
procedures to guarantee that the analysis under Article 16
of the Framework Directive is carried out effectively. As
the NRAs conduct their market analyses in accordance
with the methodologies of EEA competition law, the
views of NCAs
the assessment of
competition are highly relevant. Cooperation between
NRAs and NCAs will be essential, but NRAs remain
legally responsible for conducting the relevant analysis.
Where under national
law the tasks assigned under
Article 16 of the Framework Directive are carried out by
two or more separate regulatory bodies, EFTA States
should ensure clear division of
tasks and set up
procedures for consultation and cooperation between
regulators in order to assure coherent analysis of the
relevant markets.

in respect of

137. Article 3(5) of the Framework Directive requires NRAs
and NCAs to provide each other with the information
necessary for the application of the regulatory frame-
work, and the receiving authority must ensure the same
level of confidentiality as the originating authority. NCAs
should therefore provide NRAs with all
relevant
information obtained using the former's investigatory
and enforcement powers, including confidential informa-
tion.

138. Information that is considered confidential by an NCA,
in accordance with EEA and national rules on business
confidentiality, should only be exchanged with NRAs
where such exchange is necessary for the application of
regulatory framework. The
the provisions of
information exchanged should be limited to that which
is relevant and proportionate to the purpose of such
exchange.

the

Between the Authority and NRAs

it

is vital

139. For the regulatory framework to operate efficiently and
effectively,
there is a high level of
that
cooperation between the Authority and the NRAs. It is
particularly important that effective informal coopera-
tion takes place. Cooperation is likely to be of mutual
benefit, by minimising the likelihood of divergences in

140. In accordance with Article 5(2) of

the Framework
Directive, NRAs must
supply the Authority with
information necessary for it to carry out its tasks under
the EEA Agreement. This covers information relating to
the regulatory framework (to be used in verifying
compatibility of NRA action with the legislation).

141. NRAs must ensure that, where they submit information
to the Authority which they have requested undertakings
to provide, they inform those undertakings that they
have submitted it to the Authority.

142. The Authority can also make such information available
to another NRA, unless the original NRA has made an
explicit and reasoned request to the contrary. Although
there is no legal requirement to do so, the Authority will
normally inform the undertaking which originally
provided the information that it has been passed on to
another NRA.

Between NRAs: between NRAs in the EFTA States and
cross-pillar within the EEA

143. It is of the utmost importance that NRAs develop a
common regulatory approach across the EEA that will
contribute to the development of the EEA in the field of
electronic communications. To this end, NRAs are
required under Article 7(2) of the Framework Directive
to cooperate with each other and with the Authority in a
transparent manner to ensure the consistent application,
in all EFTA States, of the new regulatory framework. The
Authority and the Commission shall cooperate closely in
order to secure information exchange cross-pillar and
homogeneous application of the new framework across
the EEA. The European Regulators' Group is expected to
serve as an important forum for cooperation.

144. Article 5(2) of the Framework Directive also foresees that
NRAs will exchange information directly between each
other, as long as there is a substantiated request. This will
be particularly necessary where a transnational market
needs to be analysed, but it will also be required within
the framework of cooperation in the European Regula-
tors' Group. In all exchanges of information, the NRAs
are required to maintain the confidentiality of informa-
tion received.

(125) The EFTA Communications Committee as provided for in the
Framework Directive also aims at ensuring effective coopera-
tion between the Authority and the EFTA States.

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6.

PROCEDURES FOR CONSULTATION AND PUBLICA-
TION OF PROPOSED NRA DECISIONS

6.2. Mechanisms to consolidate the EEA market for

electronic communications

6.1. Public consultation mechanism

145. Except in the urgent cases as explained below, an NRA
that intends to take a measure which would have a
significant impact on the relevant market should give the
interested parties the opportunity to comment on the
draft measure. To this effect, the NRA must hold a public
consultation on its proposed measure. Where the draft
measure concerns a decision relating to an SMP
designation or non-designation it should include the
following:

— the market definition used and reasons therefore,
is con-
with the exception of
fidential in accordance with EEA and national law
on business confidentiality,

information that

— evidence relating to the finding of dominance, with
the exception of information that is confidential in
accordance with EEA and national law on business
confidentiality together with the identification of
any undertakings proposed to be designated as
having SMP,

— full details of the sector-specific obligations that the
NRA proposes to impose, maintain, modify or
withdraw on the abovementioned undertakings
together with an assessment of the proportionality
of that proposed measure.

146. 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 undertakings with SMP, the Authority
two months would be
considers that a period of
reasonable for the public consultation. Different periods
could be used in some cases if justified. Conversely,
where a draft SMP decision is proposed on the basis of
the results of an earlier consultation,
the length of
consultation period for these decisions may well be
shorter than two months.

147. Where an NRAs intends to take a measure which falls
within the scope of the market definition or market
analysis procedures of Articles 15 and 16 of
the
Framework Directive, as well as when NRAs apply
certain other specific Articles in the regulatory frame-
work (126) and where the measures have an effect on
trade between the contracting parties
to the EEA
Agreement, the NRA must communicate the measures,
together with their reasoning, to NRAs in other EEA
EFTA States and to the Authority in accordance with
Article 7(3) of the Framework Directive. It should do this
at the same time as it begins its public consultation. The
NRA must then give other NRAs and the Authority the
chance to comment on the NRA's proposed measures,
before adopting any final decision. The time available for
other NRAs and the Authority to comment should be the
same time period as that set by the NRA for its national
public consultation, unless the latter is shorter than the
minimum period of one month provided for in Article 7
(3) of the Framework Directive.

148. With regard to measures that could affect trade between
the contracting parties to the EEA Agreement,
this
should be understood as meaning measures that may
have an influence, direct or indirect, actual or potential,
on the pattern of trade between the contracting parties
to the EEA Agreement in a manner which might create a
barrier to the functioning of the EEA Agreement (127).
Therefore, the notion of an effect on trade between the
contracting parties to the EEA Agreement is likely to
cover a broad range of measures (128).

149. NRAs must make public the results of

the public
consultation, except in the case of information that is
confidential in accordance with EEA and national law on
business confidentiality.

150. With the exception of two specific cases, explained in the
following paragraph, the NRA concerned may adopt the
final measure after having taken account of views

(126) The specific Articles covered are as follows: Articles 15 and 16
the Framework Directive (the latter of which refers to
of
Articles 16 to 19 of
the Universal Service Directive and
Articles 7 and 8 of the Access Directive), Articles 5 and 8 of the
Access Directive (the latter of which refers to the obligations
provided for in Articles 9 to 13 of the Access Directive) and
Article 16 of the Universal Service Directive (which refers to
Articles 17 to 19 of Universal Service Directive). In addition,
the Access Directive, although not explicitly
Article 6 of
referenced in Article 7 of
itself
contains cross-reference to Article 7 of
the Framework
Directive and is therefore covered by the procedures therein.

the Framework Directive,

(127) Recital 38 of the Framework Directive.
(128) See for example Case E-7/01, Hegelstad [2002] EFTA Court

Reports, page 322, paragraph 40.

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expressed during the mandatory consultation. The final
measure must then be communicated to the Authority
without delay.

6.3. Authority's power to require the withdrawal of

NRAs' draft measures

151. Under the terms of Article 7(4) of

the Framework
Directive, there are two specific situations where the
Authority has the possibility to require an NRA to
withdraw a draft measure which falls within the scope of
Article 7(3) of the Framework Directive:

— the draft measure concerns the definition of a
relevant market which differs from that identified in
the Recommendation, or

— the draft measure concerns a decision as to whether
to designate, or not to designate, an undertaking as
having SMP, either
jointly with
others.

individually or

152. In respect of

the above two situations, where the
Authority has indicated to the NRA in the course of the
consultation process that
the draft
measure would create a barrier to the functioning of the
EEA Agreement or where the Authority has serious
doubts as to the compatibility of the draft measure with
EEA law, the adoption of the measure must be delayed by
a maximum of an additional two months.

it considers that

153. During this two-month period, the Authority may, after
consulting the EFTA Communications committee follow-
ing the respective advisory procedure, take a decision
requiring the NRA to withdraw the draft measure. The
Authority's decision will be accompanied by a detailed
and objective analysis of why it considers that the draft
measure should not be adopted together with specific
proposals
the
Authority does not take a decision within that period,
the draft measure may be adopted by the NRA.

for amending the draft measure.

If

6.4. Urgent cases

154. In exceptional circumstances, NRAs may act urgently in
order to safeguard competition and protect the interest
of users. An NRA may therefore, exceptionally, adopt
proportionate and provisional measures without con-
sulting either interested parties, the NRAs in other EFTA
States, or the Authority. Where an NRA has taken such
urgent action, it must, without delay, communicate these
measures, with full reasons, to the Authority, and to the
other NRAs. The Authority will verify the compatibility
of those measures with EEA law and in particular will
assess their proportionality in relation to the policy
objectives of Article 8 of the Framework Directive.

155. If the NRA wishes to make the provisional measures
permanent, or extends the time for which it is applicable,
the NRA must go through the normal consultation
procedure set out above. It is difficult to foresee any
circumstances that would justify urgent action to define a
market or designate an SMP operator, as such measure
are not those that can be carried out immediately. The
Authority therefore does not expect NRAs to use the
exceptional procedures in such cases.

6.5. Adoption of the final decision

156. Once an NRA's decision has become final, NRAs should
notify the Authority 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 36(2) of the Universal Service
Directive and Articles 15(2) and 16(2) of the Access
Directive. The Authority will
thereafter make this
information available in a readily accessible form, and
will transmit the information to the EFTA Communica-
tions Committee as appropriate.

157. Likewise, NRAs should publish the names of under-
takings 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.