Ref: 50/02
Date: 5 August 2002

Guidelines for assessing whether telecoms companies have significant market power were published today by Oftel.

Under new EU Directives which entered into force earlier this year, significant market power (SMP) is the key consideration for assessing whether a market is effectively competitive.

If a company is found to have SMP in a specific market, Oftel will have the power to impose additional regulation to safeguard competition and protect consumers.

The new Directives require national regulators to carry out reviews of competition in electronic communications markets by 24 July 2003.

Oftel’s strategy already includes a programme of rolling market reviews, and Oftel is well placed to meet the EC’s demanding timetable.

Oftel’s guidelines, which complement guidelines published by the EC, set out key criteria for deciding whether a company has significant market power.

Indicators of SMP include the size of a company’s market share and possible barriers to market entry – how easy it is for competitors to enter the market.

Oftel’s guidelines state that it will also consider other factors that may provide extra detail about the level of competition – for example how easy it is for consumers to switch between suppliers.

The new guidelines update Oftel’s Effective competition review guidelines to take account of the new Directives.

David Edmonds, Director General of Telecommunications, said:

"Oftel’s guidelines ensure that stakeholders can see how Oftel will assess competition and how it will apply each of the criteria set by the EC.

"It is important that the process is transparent so that stakeholders can participate fully in the review process.

"Oftel is well placed to meet the demanding timetable set by the EC, and has already begun work to prepare for the reviews.

"As well as the criteria set out by the EC, Oftel will be considering additional indicators that it uses in conducting market reviews, for example whether there are any barriers to switching which might be impeding the development of competition."

Notes to editors

1 Oftel’s market review guidelines: criteria for the assessment of significant market power is published on Oftel’s website at: www.oftel.gov.uk/publications/about_oftel/2002/smpg0802.htm. Hard copies are available to the media from Oftel’s Press Office on 020 7634 8991 and to the public from Oftel’s Research and Information Unit on 020 7634 8761.

2 Other Oftel documents relating to the implementation of the EC Directives, including the EC Guidelines on market analysis and the calculation of significant market power are published on Oftel’s website at: www.oftel.gov.uk/ind_info/eu_directives/index.htm.