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Market reviews in Oftel

Market reviews in Oftel. Elaine Axby 31 October 2002. Agenda. EU requirements defining markets assessing competition remedies for dominance current issues. Requirements of the new regime. review current SMP designations, licence conditions, obligations define appropriate markets

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Market reviews in Oftel

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  1. Market reviews in Oftel Elaine Axby 31 October 2002

  2. Agenda • EU requirements • defining markets • assessing competition • remedies for dominance • current issues

  3. Requirements of the new regime • review current SMP designations, licence conditions, obligations • define appropriate markets • decide whether SMP exists • specify appropriate obligations • obligations (generally) only where SMP exists • take “utmost account” of EU guidelines

  4. Defining markets • should be economic markets based on competition law principles • Commission “Recommendation on relevant product and service markets” is the key document • NRAs can define own markets • but the Commission has a veto

  5. Commission’s draft Recommendation • currently twelve “markets” - fixed retail access - wholesale leased lines - fixed retail services - retail leased lines - fixed call origination - broadcasting - fixed termination - mobile access & call - fixed transit origination - broadband Internet - mobile call termination access - mobile international roaming • further segmentation envisaged • Oftel also considering large business segment

  6. Oftel’s reviews (1) • fixed wholesale access, call origination and transit - Selina Chadha • fixed call termination - Mike Galvin • retail price control - Alan Pridmore • international direct dialling - Alex Shepherd • DQ - Alex Campbell

  7. Oftel’s markets (2) • wholesale narrowband Internet termination - Justin Moore • broadband market - Tim Cross • leased lines - Brian Malone • DSL - Naaz Rashid • local loop unbundling - Lawrence Knight

  8. Oftel’s markets (3) • mobile markets • access and call origination - Nic Green • international roaming - Chris Handley • call termination - Roberto Ercole • broadcasting markets • Margaret Doherty, Anil Patel

  9. Market definition - main issues • EU Recommendation likely to be broadly ‘liveable with’ • level of detail in market definition • eg international calls • timing of the final Recommendation • not likely until January?

  10. Definition of SMP • SMP = competition law concept of dominance • ‘an undertaking….either individually or jointly with others…..enjoys.…..the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers.’ • so dominance can be held by 1 firm (individual dominance) or more (collective dominance)

  11. Criteria for assessing SMP • based on Framework Directive & Commission Guidelines • Oftel document published August 2002 • should be consistent with standard competition analysis • a key part of EU harmonisation: NRAs must follow the Guidelines

  12. Some SMP criteria • EU defined: • market shares • barriers to entry • economies of scale & scope • countervailing buying power • technological advantages • financial advantages • Oftel defined • excess pricing, switching, non-price competition

  13. Key issues • interpreting the EU Guidelines • what is collective dominance? • getting good evidence • protects against challenges • need to take a forward look • judging the most important criteria and evidence

  14. Approach to remedies • use minimum regulation necessary • promote sustainable competition • stop promoting competition where competition is effective (no SMP) • use competition law if possible against anti-competitive behaviour • “evolution, not revolution”

  15. Potential AID remedies • Article 8 of the AID provides remedies that regulators can use following a finding of SMP in a particular market: • transparency (Art 9) • non-discrimination (Art 10) • accounting separation (Art 11) • access (Art 12) • price control and cost accounting (Art 13)

  16. Non-AID remedies • retail price controls • under the USD where wholesale controls are insufficient • informal action by providers/Oftel • eg for consumer information • competition law • can use instead of sectoral controls? • monitoring the market

  17. Remedies: approach to assessing options • Oftel ‘regulatory option appraisal’ • think of different ways to solve the problem - including no regulation • assess advantages/disadvantages • for different types of stakeholder • publish the analysis in consultation • “single stage approach • must cover full range of remedies

  18. Market review process Data gathering/analysis Consultation docs published 12 week consultation per review Statements published Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul

  19. Key issues • approach to remedies • high resource requirements • tight timescales • management co-ordination • to ensure consistent approach to reviews • consultation with the Commission and co-ordination with other NRAs • impact of delay to Recommendation

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