Review of the Significant Market Power (SMP) Guidelines
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FR Review of the Significant Market Power (SMP) Guidelines ANNEX FINAL REPORT A study prepared for the European Commission DG Communications Networks, Content & Technology by: Digital Single Market This study was carried out for the European Commission by Authors: Ilsa Godlovitch, Ulrich Stumpf, Bernd Sörries, Stefano Lucidi, Tseveen Gantumur (WIK-Consult); Peter Alexiadis, Matteo Negro, Rakhal Zaman (Gibson, Dunn & Crutcher); Alexandre de Streel (University of Namur) Contributor: Rolf Schwab (WIK) Internal identification Contract number: 30-CE-0864739/00-38 SMART 2016/0015 DISCLAIMER By the European Commission, Directorate-General for Communications Networks, Content & Technology. The information and views set out in this publication are those of the author(s) and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use which may be made of the information contained therein. ISBN 978-92-79-76440-0 doi:10.2759/356251 © European Union, 2017. All rights reserved. Certain parts are licensed under conditions to the EU. Reproduction is authorised provided the source is acknowledged. Annex to the Final report – SMART 2016/0015 I Contents 1 CASE STUDY: BELGIUM 1 1.1 Belgium 1 1.1.1 NRA proposal 1 1.1.2 Commission comments 2 1.1.3 Relevant decisions made by the competition authority 3 1.1.4 The reaction of the national courts 3 1.1.5 The future market analysis 4 1.2 Case summary indicators at the time of the decision and the present 5 1.2.1 Trends in competition 6 1.2.2 Trends in profitability 11 1.2.3 Wholesale market situation 12 1.2.4 Retail market outcomes 13 2 CASE STUDY: FRANCE 19 2.1 France M15 (2005) 19 2.1.1 NRA proposal 19 2.1.2 Commission comments 22 2.1.3 Subsequent analyses 22 2.1.4 Relevant opinions/decisions of the competition authority 22 2.1.5 The reaction of the national courts 22 2.2 Case summary indicators at the time of the decision and the present 22 2.2.1 Trends in competition 22 2.2.2 Trends in profitability and investment 24 2.2.3 Wholesale market situation 26 2.2.4 Retail market outcomes 26 2.2.4.1 Price transparency and switching 26 2.2.4.2 Prices 27 2.2.4.3 Quality 29 3 CASE STUDY: IRELAND 30 3.1 Ireland 30 3.1.1 Summary 30 II Annex to the Final report – SMART 2016/0015 3.1.2 NRA proposal to the EU Commission of the draft measure 30 3.1.3 Commission comments 32 3.1.4 Consultation with the Competition Authority 32 3.1.5 The reaction of the national court 33 3.1.6 Subsequent NRA decisions 33 3.1.7 Summary indicators from the time of the initial SMP decision to the present 34 3.1.7.1 Trends in Market Shares 34 3.1.7.2 Trends in prices, profitability and investment 36 3.1.7.3 Wholesale market situation 38 3.1.7.4 Retail market outcomes 39 3.1.7.5 Prices 40 3.1.7.6 Quality 44 4 CASE STUDY: ITALY 46 4.1 Italy market 18 46 4.2 NRA proposal 46 4.3 Commission comments 48 4.4 Relevant decisions made by the competition authority 49 4.5 The reaction of the national courts 49 4.6 Summary indicators from the time of the decision to the present 49 4.6.1 Trends in competition 49 4.6.2 Trends in profitability and investment 51 4.6.3 Wholesale market situation 52 4.6.4 Retail market outcomes 53 5 CASE STUDY: MALTA 56 5.1 Malta wholesale broadband access (2006) 56 5.1.1 NRA proposal 56 5.1.2 Commission comments 57 5.1.3 Subsequent analyses 58 5.1.4 Relevant opinions/decisions of the competition authority 59 5.1.5 The reaction of the national courts 59 5.2 Case summary indicators at the time of the decision and the present 59 5.2.1 Trends in competition 59 Annex to the Final report – SMART 2016/0015 III 5.2.2 Trends in profitability and investment 61 5.2.3 Wholesale market situation 61 5.2.4 Retail market outcomes 62 5.2.4.1 Price transparency and switching 62 5.2.4.2 Prices 62 5.2.4.3 Quality 64 6 CASE STUDY: THE NETHERLANDS 66 6.1 Netherlands market 3a 66 6.1.1 Initial NRA proposal (Case NL/2015/1727) 66 6.1.2 Commission Phase II assessment 67 6.1.3 Reviewed NRA proposal (Case NL/2015/1794) 68 6.1.4 Commission comments 70 6.1.5 Relevant decisions/opinion made by the competition authority 70 6.2 The reaction of the national courts 70 6.2.1 Summary indicators from the time of the decision to the present 70 6.2.1.1 Trends in competition 70 6.2.1.2 Trends in profitability and investment 72 6.2.1.3 Wholesale market situation 73 6.2.1.4 Retail market outcomes 76 7 CASE STUDY: SLOVENIA 80 7.1 Slovenia 80 7.1.1 Summary 80 7.1.2 NRA joint SMP proposal 80 7.1.3 Commission comments 81 7.1.4 Subsequent market analyses 82 7.1.5 Relevant decisions made by the competition authority 83 7.1.6 The reaction of the national courts 83 7.1.7 Summary indicators from the time of the decision to the present 83 7.1.7.1 Trends in competition 83 7.1.7.2 Trends in profitability and investment 85 7.1.7.3 Wholesale market situation 86 7.1.7.4 Retail market outcomes 87 IV Annex to the Final report – SMART 2016/0015 8 CASE STUDY: SPAIN 90 8.1 Spain market 15 90 8.1.1 NRA proposal 90 8.1.2 Commission comments 91 8.1.3 Relevant decisions made by the competition authority 92 8.1.4 The reaction of the national courts 93 8.1.5 Summary indicators from the time of the decision to the present 93 8.1.5.1 Trends in competition 93 8.1.5.2 Trends in profitability and investment 95 8.1.5.3 Wholesale market situation 96 8.1.5.4 Retail market outcomes 97 9 Assessing proposed joint SMP criteria against hypothetical scenarios 99 9.1 Scenario 1: No MVNO offers: 99 8.2. Scenario 2: Fixed Incumbent cable duopoly 103 9.2 Scenario 3: Exclusive co-investment 106 9.3 Scenario 4: Local fibre networks 109 10 The Impala judgements 113 11 Market Definition in Competition Cases in the Telecommunications Sector 120 12 Cases relating to leveraging 136 12.1 Airports 136 12.2 Energy 137 12.3 Intellectual property 139 12.4 Postal 141 12.5 Railway infrastructure 143 12.6 Telecommunications 144 12.7 Online platform services 147 12.8 Waste services 149 Annex to the Final report – SMART 2016/0015 1 1 CASE STUDY: BELGIUM 1.1 Belgium In July 2011, the Conference of Electronic Communications Sector Regulators (CRC) which is composed on the four telecom and media regulators of Belgium adopted two related decisions for the fixed broadband markets1 and for the broadcast market.2 The second decision imposed the opening of the cable networks. This was implemented in 2013 when the wholesale tariffs were determined. Wholesale tariffs were further revised in 2016. In July 2017, the CRC submitted to national public consultation a new combined analysis of the broadband and broadcast markets. 1.1.1 NRA proposal In the 2011 broadband decision, the CRC defines: - One retail market for the broadband service provided over xDSL, radio (e.g. WiMAX), fibre and cable; - Two wholesale markets for (i) physical network infrastructure access and for (ii) broadband access. Those two markets do not include cable because of the lack of demand and supply side substitutability at the wholesale market as well as the insufficient indirect constraints at the retail level. The geographical scope of both markets is national because Proximus has a nationwide network and access seekers demand services with a nationwide coverage. The CRC designates Proximus (previously Belgacom) as having a single dominant position on both wholesale markets because the previous incumbent has 100% market share, the barriers to entry and expansion are high and the countervailing buying power is low. In the broadcast decision, the CRC defines one retail market for the delivery of analogue and digital broadcasting signals over cable (CATV) and DSL broadcasting signals delivered over copper (IPTV). The geographical scope of those markets corresponds to the areas of each of the five cable operators active in Belgium. Although neither the retail market for broadcasting transmission services nor the corresponding wholesale market was included in the Commission’s Recommendation on the relevant markets susceptible to ex-ante regulation, CRC finds that the three- criteria test for susceptibility to ex ante regulation is met in Belgium. 1 BE/2011/1227 and BE/2011/1228. 2 BE/2011/1229. 2 Annex to the Final report – SMART 2016/0015 The CRC designates each of the cable operators (Telenet (part of Liberty Global), Brutélé, Numéricable, Nethys (previously Tecteo) and AIESH) as having single SMP on their respective geographical markets because of their high market share and the high market concentration, the high barriers to entry, the important economies of scale and scope, the control of not easily duplicated infrastructures, the vertical integration and the low countervailing buying power.