The European Commission has opened an in-depth investigation into the Dutch telecoms regulator's (ACM's) analysis. While ACM finds that the fibre lines in the market in question are competitive, it concludes that KPN has Significant Market Power (SMP) and its copper lines in the same market need to be regulated.

In its draft decision, ACM analysed the wholesale market for high-quality broadband services provided at a fixed location in the Netherlands. ACM concluded that a number of regulatory remedies (including access) should be imposed on the copper network of Dutch fixed and mobile telecommunications company KPN. On the contrary, its fibre network would be left completely unregulated. The Commission has serious doubts that ACM's SMP finding and market definition are compatible with EU law.

Under the EU Framework and Access Directives, Telecoms regulators shall define relevant markets and determine whether those are effectively competitive. Where a Telecom regulator determines that a relevant market is not effectively competitive, it shall identify undertakings which individually or jointly have SMP on that market. The Telecom regulator can then decide to impose specific remedies on operators with SMP to allow alternative operators to compete more effectively, so that consumers may get the best choice. These remedies typically include the obligation to provide access for alternative operators to specific elements of the network.

In the present case, ACM concludes that KPN has significant market power, but is not giving due consideration to the competitive pressure that fibre lines (included in the relevant market) exert over copper lines. ACM expects the number of fibre lines in the high-quality access market to double the number of copper lines during the next three years. In addition, ACM puts forward that there are no competitive problems in the fibre segment of the market under review given that the upstream fibre market is effectively competitive. As regards copper, access seekers can get (both physical and virtual) access to upstream regulated products in order to provide high-quality services. On that basis, the Commission has serious doubts regarding ACM's finding of SMP in the overall market for wholesale high-quality access provided at a fixed location.

Even if KPN were to be deemed to hold SMP, the Commission considers at this stage, in the light of the argumentation provided by ACM, that KPN would probably only be dominant in a segment of the market. This would point towards the definition of at least two separate markets for high-quality access. On that basis, the Commission has serious doubts regarding ACM's market definition.

Therefore, the Commission has serious doubts that ACM's proposed measure is contrary to the provisions of EU telecoms rules. The Commission now has two months to either lift its reservations or issue a veto decision under Article 7 of the Framework Directive, which will require ACM to amend or withdraw its draft measure within six months of the date of the Commission's decision. The Commission shall take utmost account of the opinion of the body of European regulators (BEREC) before issuing a decision.

Find more information on article 7 procedures.

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