Criteria for assessing SMP

As in the previous market assessment, in assessing SMP, ICP-ANACOM takes utmost account of the Guidelines.

According to the Guidelines, ''NRAs will assess whether the competition is effective. A finding that effective competition exists on a relevant market is equivalent to a finding that no operator enjoys a single or joint dominant position on that market.'' ¹

In the same document the EC indicates that ''NRAs will conduct a forward looking, structural evaluation of the relevant market, based on existing market conditions. NRAs should determine whether the market is prospectively competitive, and thus whether any lack of effective competition is durable, by taking into account expected or foreseeable market developments over the course of a reasonable period. The actual period used should reflect the specific characteristics of the market and the expected timing for the next review of the relevant market by the NRA. NRAs should take past data into account in their analysis when such data are relevant to the developments in that market in the foreseeable future.'' ²

In the guidelines, the EC presents market share as an indicator of market power, whereas undertakings with market shares of no more than 25% are not likely to enjoy a dominant position on the market concerned.

In the Commission's decision-making practice, single dominance concerns normally arise in the case of undertakings with market shares of over 40 percent, whereas it is possible that there are situations of dominance even with lower market shares or cases where undertakings have higher market shares but are not regarded as dominant ³.

As the EC mentions in the Guidelines ⁴, the existence (or absence) of a dominant position cannot be established on the sole basis of large (or smaller) market shares, whereby the NRAs should make use of other criteria. The various criteria include the following:

• Overall size of the undertaking
• Control of infrastructure not easily duplicated
• Technological advantages or superiority
• Absence of or low countervailing buying power
• Easy or privileged access to capital markets/financial resources
• Product/services diversification
• Economies of scale
• Economies of scope
• Vertical integration
• A highly developed distribution and sales network
• Absence of potential competition
• Barriers to expansion

Also according to the guidelines issued by the EC, a dominant position can derive from a combination of these criteria, which taken separately may not necessarily be determinative.

On this question of the criteria for assessing SMP, the European Regulators Group (ERG) published a working paper on the Guidelines (''ERG SMP Position'') ⁵, where other criteria are developed for evaluating SMP:

• Excessive prices
• Ease of market entry
• Costs and barriers to switching
• Evidence of previous anti competitive behaviour
• Active competition on other parameters
• Existence of Standards/conventions
• Customers ability to access and use information
• Price trends and pricing behaviour
• International benchmarking