Fixed telecommunications markets have traditionally been characterised by the accumulation of significant market power ("SMP") by a single entity (usually a historic monopolist that has benefited from decades of state sponsorship). For this reason, the rules underpinning the 2002 EU Regulatory Framework for electronic communications in the European Union (the "EU Regulatory Framework") were largely developed on the premise that market failure (where established) is caused by the accumulation of SMP by a single dominant operator.

In recent years, however, fixed telecommunications markets have been evolving away from single market dominance towards an "oligopolistic" market structure. Oligopoly differs from monopoly (or single dominance) in that it refers to a highly concentrated market structure in which a number of firms dominate. This evolution is the result of a number of important new market dynamics, including: increased competition from alternative operators; an increase in competition based on bundled services; the deployment of next generation access ("NGA") networks; technological convergence; and increased market consolidation.

BEREC's Draft Report on Oligopoly Analysis and Regulation

Since 2014, the umbrella group for European national telecommunications regulatory authorities (or "NRAs"), the Body of European Regulators of Electronic Communications ("BEREC"), has highlighted the risk of oligopolistic telecommunications markets developing in a non-competitive manner. On 10 June 2015, BEREC published a draft report on oligopoly analysis and regulation for public consultation.

This draft report was aimed at providing initial assistance to NRAs in relation to the analysis and regulation of oligopolistic markets. It also discussed whether the EU Regulatory Framework is still fit for purpose in emerging oligopolistic markets, hinting at the need to equip NRAs with new regulatory tools to tackle such market structures.

Reaction to BEREC's Draft Report

The publication by BEREC of its draft report was a particular cause of concern for fixed line incumbents in the EU. These operators have been consistently caIling for the relaxation of existing ex-ante regulation to facilitate investment and permit sector consolidation. They are therefore adamant that the "toolbox" currently at the disposal of the NRAs is deep enough, and that there is no need to develop an additional (and ultimately superfluous) layer of regulation to address oligopolistic market structures in the absence of any real competition concerns.

There was also some trepidation among cable operators at the development of such regulatory rules. This is hardly surprising, considering that the move towards regulating oligopolies could seriously threaten those cable operators that have succeeded in eroding the single dominance of former fixed line state monopolies in the electronic communications markets in recent years, thereby themselves acquiring large market shares in certain countries.

It is worth noting that, in a similar manner, the regulation of oligopoly could also put mobile operators at risk. While wholesale mobile markets (with the exception of the market for mobile voice call termination) are generally no longer subject to ex-ante SMP regulation in the EU, such markets could once again be subject to regulation if oligopolies become an accepted regulatory concern on telecommunications markets.

BEREC's Final Report on Oligopoly Analysis and Regulation

On 16 December 2015, BEREC published a final version of its Report on Oligopoly Analysis and Regulation Background. Importantly, the final report acknowledges that not all oligopolies raise competition issues, and that such market structures are only a concern when they result in "significant consumer harm/welfare loss". BEREC also accepts that any shift in market competitive structures can adequately be dealt with by using the tools available under the existing EU Regulatory Framework and ex-post competition law.

The main conclusions of this report are summarised below.

1) Adequacy of the EU Regulatory Framework

BEREC now acknowledges that the EU Regulatory Framework provides NRAs "in general terms" with a tool box to assess and regulate non-competitive markets. BEREC does state, however, that, while the EU Regulatory Framework applies the concept of joint dominance, which covers tacit collusion in line with competition law, it does not explicitly address so-called “tight oligopolies” (this refers to ineffective oligopolistic competition in the absence of tacit collusion). The point is made that, in order to trigger ex-ante intervention, NRAs must first prove dominance (joint or otherwise) before imposing remedies on undertakings.

2) Criteria used to demonstrate joint dominance

BEREC's report also elaborates on the criteria used to demonstrate joint dominance. The report focuses on the so-called "Airtours criteria" established by the EU General Court,  and acknowledges that these should be the key reference for NRAs when assessing joint dominance on telecommunications markets. Drawing from existing cases (both from notifications made by NRAs to the Commission under Article 7 of the Framework Directive  and ex-post competition law), BEREC also provides guidance on the application of each criterion.

3) Standard of Proof Required

The report also concludes that the current standard of proof for ex-ante intervention in a case of tacit collusion should not be questioned. According to BEREC, in order to impose regulation, NRA's have to prove that the outcome with joint SMP is the outcome that is "most likely to occur" in the absence of regulation. This finding should be based on "convincing, consistent and cogent evidence". BEREC also considers the types of evidence to be used, both in the case of a regulated and unregulated environment. In this regard, it distinguishes between the hypothetical and factual analyses that may need to be undertaken by NRAs.

4) Remedies to be Imposed in Oligopolistic Markets 

BEREC is of the view that any regulatory obligation must be imposed by following an assessment on a case-by-case basis in accordance with the principle of proportionality; i.e., NRAs should impose only necessary and the least burdensome remedies on operators in a market raising competition concerns. It acknowledges that further work will be needed in the context of each market for guidance on the application of remedies in oligopolistic settings.

BEREC's Key findings

The main findings of the BEREC report are:

  1. to structure the criteria set out in Annex II to the Framework Directive  around the Airtours criteria;
  2. to develop in more detail these criteria, including in relation to standard of proof required and evidence to be relied upon; and
  3. to take into consideration the case for potential ex-ante intervention in relation to so-called "tight oligopolies".


While fixed line incumbents and cable operators will welcome the careful approach taken by BEREC in its final report, a number of questions remain unanswered in relation to the regulation of "tight oligopolies" in telecommunications markets. In this regard, BEREC acknowledges that "difficulties and uncertainties" remain in finding a solid benchmark when assessing the effectiveness of competition in tight oligopolies. It also expresses doubt as to whether a European regulatory framework that relies "primarily on the principle of dominance" will be effective in ensuring that the applicable "regulatory goals" are met.

Notwithstanding this, BEREC does not advocate the automatic development of a new set of regulatory tools to address tight oligopoly in telecommunications markets.

Instead, it has steered a more prudent course, calling in its final report for "more work" to establish detailed criteria for

  1. supporting the case for intervention; and
  2. determining the type of intervention that should be considered.

BEREC does not, at least at this stage, deem it necessary to depart from current ex-post competition law principles and define a sector-specific set of rules for joint dominance in telecommunications markets.

While this reflects a more restrained approach than had perhaps been anticipated, there may still be support at the national level for the taking of a more dogmatic line towards oligopoly regulation in EU telecommunications markets. For example, just a week before the final report's publication, the Belgium minister responsible for telecommunications regulation requested intervention powers for NRAs to tackle oligopolistic market structures. BEREC's report is therefore unlikely to mark the end of the discussion on how oligopolies should be addressed in the EU.