The Economic Analysis Team (EAT) within the Dutch regulatory authority has published a Policy Note entitled: “Strategic behaviour and foreclosure on telecommunications markets – A case study regarding new developments and the behaviour of parties with Significant Market Power“.
The analyses and conclusions expressed in Economic and Regulatory Policy Notes of the Economic Analysis Team (EAT) are always accompanied by a cautionary statement that they do not necessarily reflect the opinions of the Commission of OPTA. As such, the opinions of the EAT, do not have a binding legal status.
The Policy Note contains an overview of the notione of foreclosure in general. It further has chapters on foreclosure in the field of telephone directories, block of time tariffs, voice mail and on unbundling of the local loop and the introduction of xDSL.
The conclusions and recommendations of the policy note are as follows (direct quote from the Policy Note):
- In general, behaviour that restricts competition is undesirable. Regulation must focus on this, though other considerations could make a certain risk on foreclosure legitimate.
- If there is insufficient insight and cause, balancing between prevention of foreclosure and stimulation of innovation sometimes results in a temporarily restriction on innovations from a party with SMP. As insight grows, restrictions could be removed. Temporary restrictions on innovations of parties with SMP may very well result in significantly less permanent damage than the consequences of foreclosure.
- OPTA should substantiate any deviation from the logical choice between preventing foreclosure and stimulating innovations.
- The insight that behaviour with reference to innovations, as displayed by parties with SMP, shows a certain pattern can be used to accelerate certain processes.
- Bundling is often not damaging. Despite the fact that foreclosure theory gives us numerous examples that it could be, under the right circumstances bundling has positive effects.
- In its decisions, OPTA should always carefully consider whether other parties are able to provide the same service; if this is the case, there is usually no foreclosure.
- The risk of competition-restricting behaviour by parties with SMP is often present when new services are required on the basis of regulation, especially if it will bring (extra) competition for the party with SMP on a downstream market (RA-ULL).
- Competition-restricting behaviour involving new services initiated by parties with SMP without any legal obligations, is often limited. In these situations the party with SMP has a direct interest in the new service, which will motivate cooperation to have it approved of by OPTA.
The Policy Note also contains a framework which can be used as a future guideline by OPTA for future service introductions when considering foreclosure. The note specifies that this framework only addresses the issues which should be addressed, not the manner in which the identified issues can be remedied.
The framework can be found on page 21 of the policy note.
The full text of the EAT Policy Note can be accessed by clicking here.