D1.1.1 It is intended that licences issued under the Telecommunications Act 1984 will contain a general Condition ("the Condition"), in common form, which has the effect of prohibiting a Licensee from engaging, whether by act or omission, in certain anti-competitive practices.
D1.1.2 Because the Condition is in the form of a general prohibition and deals with the effects of any anti-competitive practice it does not have the effect of prohibiting particular types of behaviour under all circumstances. Whether a practice is prohibited will involve some assessment of its economic effects. Nevertheless, the treatment of many types of practice will be relatively clear, since the condition tracks existing competition law principles, in particular those contained in the EC Treaty.
D1.1.3 However, Oftel recognises that on its own the Condition does not provide certainty as to what is, and what
is not, allowed. Therefore, licensees require guidance about circumstances and types of behaviour which are likely to be prohibited. The purpose of these Guidelines is to set out in some detail the approach the Director General will take to the practical application of the Condition. This includes descriptions of the general types of behaviour that are likely to be caught and the market conditions under which these behaviours are likely to result in an anti-competitive effect and hence, are likely to result in enforcement action.
D1.1.4 The Guidelines also set out details of the procedures that Oftel will adopt in applying this Condition. For the sake of completeness this description also includes the more general procedures set out in the Telecommunications Act 1984 for the enforcement of any licence condition.
D1.1.5 These Guidelines do not form part of the Condition, and they do not affect its legal scope. They are, therefore, not 4
legally binding on the Director General and each case will have to be treated on its merits. The Director General will, however, seek to apply the Condition consistently, and in accordance with these Guidelines.
D1.1.6 However, the telecommunications market and its structure is changing rapidly. This will mean that the potential for particular behaviour to have anti-competitive effects changes over time as the market changes. In addition, competition in telecommunications markets is relatively new. Whether particular behaviour is anti-competitive and/or an abuse of a dominant position may only emerge over time. Hence, it is not possible to provide a complete description of all possible anti-competitive behaviours in all relevant market conditions that would lead to enforcement action by Oftel.
D1.1.7 Therefore, these Guidelines cannot, of necessity, be complete now and will be subject to review in the light of market developments. Oftel expects them to develop and change in the light of the experience of the enforcement of the Condition. It is Oftel s intention to keep these Guidelines as up to date as possible, following consultation with the industry. Users of these Guidelines are, however, recommended to check for themselves any further developments following their publication, by reference to the outcomes of Oftel enforcement activities which will be published on a regular basis. (Note: As at 18 December 1995, this procedure is not yet in place.)
D1.1.8 The Condition is not a "catch all" provision that allows the Director General to stop any sort of behaviour by a licensee, whether or not that licensee is in a dominant market position. The Condition is bounded in a number of significant ways, as follows.
D1.1.9 Paragraph 18A.1 (see Annex A for a copy of the Condition) limits the application of the Condition to an act or omission connected with the provision of a telecommunications service or the running of a telecommunication system. These classes of activity are defined in the Telecommunications Act as follows:
"In this Act "telecommunication system" means a system for the conveyance, through the agency of electric, magnetic, electro-magnetic, electro-chemical or electro-mechanical energy, of -
(a) speech, music and other sounds;
(b) visual images;
(c) signals serving for the impartation (whether as between persons and person, things and things,or persons and things) of any matter otherwise than in the form of sounds or visual images; or
(d) signals serving for the actuation or control of machinery or apparatus.
(Section 4(1) Telecommunications Act 1984)
"'telecommunication service means any of the following, that is to say-
(a) a service consisting in the conveyance by means of telecommunication system of anything falling within paragraphs (a) to (d) of subsection (1) above;
(b) a directory information service, that is to say, a service consisting in the provision by means of a telecommunication system of directory information for the purpose of a facilitating the use of a service falling within paragraph (a) above and provided by means of that system; and
(c) a service consisting in the installation, maintenance, adjustment, repair, alteration, moving, removal or replacement of apparatus which is or is to be connected to a telecommunications system."
(Section 4(3) Telecommunications Act.)
D1.1.10 Paragraph 18A.1 also limits the Condition to acts or omissions that have the object or the effect, of preventing, restricting, or distorting competition in relation to commercial activities connected with telecommunications. This term is defined in the Telecommunications Act 1984 and includes the provision of telecommunication services and networks but is also wider than that. It would, for example include markets such as telecommunications apparatus, directory information, billing services, subscriber management systems (where the services being managed are themselves telecommunication services) installation and repair of telecommunications apparatus.
D1.1.11 Similarly, acts or omissions which have the effect outlined above are only caught if they take the form of an abuse of a dominant position (paragraph 18A.1(i)) or where there is an agreement or concerted practices between undertakings(paragraph 18 A.1(ii)) which either restricts competition between the parties to the agreement or adversely affects the competitive position of a third party
D1.1.12 Paragraph 18A.2(a) reinforces the point that the Condition is concerned with economic effects by providing that any act or omission that has no appreciable effect on competition falls outside the scope of the Condition.
D1.1.13 Agreements between parties that are subject to the Restrictive Trade Practices Act are excluded by 18A.2(c)
D1.1.14 Mergers, including certain joint ventures, which would qualify for investigation under Section 64 of the Fair Trading Act or Council Regulation 4064/89, are also excluded, by 18A.2(d).
D1.1.15 The first limitation (paragraph 18A.1)means that a Licensee s activities outside the provision of telecommunication services or systems will only be subject to specific regulation under the Telecommunications Act by the Director General if there are other, specific, conditions covering the activity in the relevant Licence. The definitions in the Act (see above) are those the Director General must use when applying this Condition.
D1.1.16 So, for example, the provision of telecommunications apparatus is not, in itself, subject to this Condition. However, if the act or omission is in the provision of telecommunication services or networks and the effect on competition is in the provision of telecommunication apparatus then such acts or omission would be covered (eg in the case of BT, cross-subsidy from the systems business to the apparatus supply business). On the other hand, if both the act or omission and the effect, are within the telecommunication apparatus market this Condition would not apply (eg cross-subsidy within the apparatus supply business).
D1.1.17 Only licensees with market power will be subject to the application of this Condition. In recognition of this we set out in more detail below (in Section 4) how this restriction is likely to operate under current market and industry conditions.
D1.1.18 In addition to the limitations on the scope of the Condition paragraph 18A.2(b) provides a mechanism to allow an "act or omission" that would otherwise be prohibited by the Condition to be exempt if it:
(a) contributes to improving the provision of goods or services, or contributes to promoting technical and economic progress, and
(b) it is strictly necessary to achieve these benefits, and
(c) consumers get a fair share of the resulting benefit.
D1.1.19 This formulation of the limitations and restrictions in the Condition are modelled on the operation of Articles 85 and 86 of the Treaty of Rome, but restricted to telecommunications and, clearly, without the restriction as to affecting trade between member states. Therefore, as a general rule, and in the absence of specific definitions elsewhere in the relevant Licence or the Telecommunications Act 1984, definitions which arise from rulings of the European Court of First Instance and the European Court of Justice on particular terms and concepts will give significant guidance on the meaning of those terms and formulations within this Condition. In a similar way, decisions of the European Commission in relation to the application of Articles 85 and 86 of the EC Treaty will give guidance on the scope and interpretation of this Condition.
D1.1.20 However, this alignment of the Condition with the scope of Articles 85 and 86 is subject to their adaptations to the circumstances surrounding the telecommunications industry and market structure in the UK - further details are given in Section 2 below.
D1.2.1 As stated above, this Condition is not a "catch all" condition, and is designed to operate in conjunction with other licence conditions, and the other powers available to the Director General under the Telecommunications Act, the Fair Trading Act and the Competition Act.
D1.2.2 In particular, the Condition is set out in such a way that it deals with a specific set, or class, of anti-competitive behaviours. Other anti-competitive behaviour would fall to be dealt with by other, existing, Licence conditions or, where these do not exist, by action taken by the Director General under the Telecommunications Act (ie to modify a licence) and/or under the Fair Trading and Competition Acts (eg to obtain undertakings or to make a reference to the MMC).
D1.2.3 Specifically, this Condition is subject to the requirement that behaviour must have a materially adverse effect on competition. This means that other licence conditions can have wider application and/or other action by the Director General could result in tighter restrictions on behaviour than are available under this Condition. In a number of licences (especially BT s) there are other conditions which are designed to control anti-competitive behaviour, but which do not necessarily require Oftel to show an effect on competition, or at least not to the same extent.
D1.2.4 In particular, in the case of BT, Condition 17 prohibits undue preference or undue discrimination under certain circumstances. When applying Condition 17 there will be a breach where there is a significant difference in the treatment of customers in a similar position. It is not necessary for Oftel to show the adverse effect of the discrimination on competitors.
D1.2.5 Similarly, Condition 20B.15 of BT s licence enables the Director General to issue a direction where unfair subsidy of part of a business is established and this has a material effect on competition. In contrast, in order to establish that a price, or price structure, was anti-competitive under the proposed Condition (which tracks the concepts of Article 86 of the EC Treaty) Oftel would probably have to go further than this and show predatory intent where prices lie above long run incremental costs. Yet pricing above this level could still be an unfair subsidy under Condition 20B.15 (see Part II, Section 4 for draft Guidelines on the application of 20B.15).
D1.2.6 In addition, Condition 20B.15 of BT s licence has a wider scope than this condition. It encompasses forms of subsidy and cross-subsidy that may not involve the supply of telecommunication services or systems (eg within apparatus supply). Therefore, Condition 20B.15 of BT s licence will remain an important means of controlling anti-competitive behaviour in the specific areas covered by that condition. Similar differences in scope may apply to other specific licence conditions in individual operators licences.
D1.2.7 The Director General s concurrent powers with the Director General of Fair Trading under both the Competition Act and the Fair Trading Act also have a wider scope than this Condition. Both these Acts can potentially subject a far wider category of behaviour to examination by the MMC than is caught by this Condition. Similarly, the licence modification procedure under the Telecommunications Act entitles the Director General to propose licence modifications which have a wider scope than this Condition. There are, therefore, circumstances where anti-competitive behaviour will be dealt with under these concurrent powers, rather than under this Condition.
D1.2.8 For example, the concept of "abuse of a dominant position" in the Condition is more limited in scope than an anti-competitive course of conduct within Section 2 of the Competition Act. A refusal to allow co-location of equipment based only on the exercise of property rights is unlikely to be an abuse of a dominant position (so would fall outside the scope of the Condition)but could be an anti-competitive course of conduct.
D1.2.9 The Fair Trading Act provides that potentially anti-competitive practice can be examined where it is carried out by either a single company with a market share of above 25% or a small group of companies behaving as a group. The latter is termed a "complex monopoly situation" under the Fair Trading Act and could encompass behaviour by undertakings no one of whom was "dominant." In particular this is likely to arise where a small number of large, established, undertakings all behave in a similar way (but without collusion) producing an "industry norm" that makes new entry more difficult than necessary (ie distorts competition). The "industry norm" behaviour could be examined under the Fair Trading Act (or even the Competition Act), but the following of this norm by an individual non-dominant licensee may not be caught under this Condition.
D1.2.10 Although the Condition is modelled on the concepts and terminology used in Articles 85 and 86 of the EU Treaty, there are differences. In particular the Condition will apply to activities which do not necessarily have an impact on trade between Member States (but it would encompass the UK end of any activity which did impact on trade between Member States.)
D1.2.11 Another example is joint dominance. Until recently the EC Commission has only sought to treat one undertaking (ie one company plus its interconnected subsidiaries or associate companies) as capable of being dominant in a particular market. The extent to which two (or indeed more) unconnected undertakings (ie corporate groups) may be jointly dominant has not yet been fully clarified by the European Court. Oftel will treat an undertaking as dominant where it enjoys dominance jointly with another independent undertaking (ie a duopoly) as a result of the enjoyment of exclusive rights which constitute the means of access to essential facilities which a third party must have in order to provide other services.
D1.2.12 The condition will not apply to a joint venture which involves bringing together two separate businesses of the participants so that those parts of the participant's business "cease to be distinct enterprises" for the purposes of Section 64, Fair Trading Act 1973. However the condition may apply to looser co-ordination between competitors (for example taking the form of a joint venture) where relevant businesses do not "cease to be distinct" or which involve the setting up of a joint venture business "de novo", in both of which cases Section 64 of the 1973 Fair Trading Act does not apply
D1.2.13 Another very important difference is that the enforcement structure within which this Condition operates is considerably weaker than that in which the Commission enforces Articles 85 and 86. In particular, this Condition does not come with the powers of information seizure available to the Commission and, more importantly still, the potential financial penalties for breach of Articles 85 and 86 (ie up to 10% of worldwide turnover) do not arise under this Condition. Similarly, third parties have no right to damages for a breach of the Condition, even though they do for a breach of Articles 85 and 86.
D1.2.14 As the Treaty is also directly applicable in UK courts there may be situations where action can be taken to enforce this Condition and/or to apply the EC Treaty. Because financial compensation is not available under this Condition,third parties will need to consider which route would provide them with the most effective and timely remedy. The use of this Condition by Oftel does not foreclose the option of third parties seeking to enforce the EC Competition Rules before the UK Courts.
D1.2.15 Legally the condition must be interpreted and enforced in the same way as any of the other licence conditions. However, in drafting the Condition Oftel has deliberately echoed the wording of Articles 85 and 86 of the Treaty of Rome in order to give licensees as much certainty as possible in relation to the interpretation of the Condition. The words and phrases used in the Treaty are subject to interpretation and,in relation to individual cases, definition by the European Courts. It is Oftel s expectation that the Director General will have to have regard to such developments and take into account the rulings of the European Courts when applying this Condition in the UK.
D1.2.16 In practice, at least for the next few years, the number of relevant cases dealt with at an European level is likely to be limited. There will, therefore, be significant areas of the telecommunications market where direct guidance from Europe will be lacking. Under these circumstances the Director General will, of necessity, need to interpret the Condition solely in accordance with his duties as set out in the Telecommunication Act. But in doing so, the Director General will not be operating in a vacuum.
D1.2.17 Where his attention is brought to similar cases which have been dealt with by other UK competition authorities (eg the MMC or the OFT) he will clearly need to take these findings into consideration. He may also (as indeed the EC Commission itself has done) look to the treatment of analogous situations by enforcement authorities outside the European Union. The European Commission itself has recognised that markets in which newly liberalised or privatised utilities operate require special consideration, and special behaviour by the utility.
D1.2.18 Similar considerations apply to previous decisions of the Director General. Although they are not binding precedents previous decisions do provide a basis for reasonable expectation on the part of a licensee. In addition, the stability of the regulatory system is itself a desirable objective in that it is likely to lead to less uncertainty, which in turn is likely to increase investment and improve the range and quality of services offered to customers. Sound reasons will have to be given when previous decisions have been departed from. This must be part of the regulatory structure of telecommunications, even if decisions are not, strictly speaking, precedents.
D1.2.19 Furthermore, the Condition requires the Director General to give reasons and, where decisions of other competition bodies (to which his attention has been drawn)have not been followed the reasoning in the decision would need to cover this.
D1.2.20 The Condition contains a direct prohibition. Therefore, behaviour in breach of the prohibition is a direct breach of the licence. When the Director General becomes aware of a breach of a licence he is under a duty to take enforcement action. Sections 16 and 17 of the Telecommunications Act set out the evidential tests and procedures required before the Director can take enforcement action. In brief, where the Director General believes that a breach is taking place, or has taken place and is likely to occur again, he must issue an Order setting out what the Licensee should, or should not, do to restore compliance.
D1.2.21 Two types of Order are available. A Provisional Order can come into effect immediately, and only requires that it appears to the Director General that a breach has occurred and is likely to recur. However, it can only be issued where there is a risk of immediate loss to a third party, and it can only last for a limited time (three months). In order to issue a Final Order (the second type of order) the Director General has to meet a higher evidential test - he has to be satisfied that there is or has been a licence breach. The Director must give a minimum period of 28 days notice and hear representations from the Licensee before a Final Order can come into effect. However, a Final Order is permanent until revoked.
D1.2.22 Breach of a Licence Condition does not result in any financial or other penalty against a licensee; nor does it expose the licensee to the possibility of an action for damages by any person damaged by such a breach. The risk of damages from a third party injured by a breach only becomes a possibility if the licensee breaches an Order (Provisional or Final) after it has been issued. The risk of financial penalties may occur if the Director General seeks enforcement of his order by a court order and the licensee then breaches the court order (and can be fined for contempt of court).
D1.2.23 In practice before Oftel can make a Provisional or Final Order it must collect information (often following on from a complaint), analyse that information, and come to a conclusion. It has usually been Oftel s practice to discuss the cases in detail and in advance with the relevant licensee. This dialogue ensures that the facts upon which the decision is to be based are sound, it gives the licensees the means to understand the complaint against it and to make effective representations. In practice failure to carry out such a process would be likely to expose Oftel to the possibility of judicial review of any decision.
D1.2.24 The Condition contains a formal procedure which formalises Oftel's usual practice for this process. In applying this Condition Oftel will follow the procedures as laid down in paragraph 18A.4 of the Condition before making an Order (Provisional or Final) under the terms of Sections 16 and 17 of the Telecommunications Act 1984(if this is necessary). Although the formalisation of Oftel s usual procedures appears to have introduced a further element of delay, in practice this is unlikely to be the case. If necessary a Provisional Order could be issued simultaneously with an Initial Determination made under paragraph 18A.4 and the minimum formal notice period required for an Initial Determination is no greater than, in practice, Oftel would give a licensee to respond to a draft Provisional Order.
D1.2.25 The procedures in paragraph 18A.4 will, however, serve to ensure that a licensee and other interested parties are aware of any potential action under this Condition with sufficient time to be able to make representations to the Director General (either written or oral). Paragraph 18A.4 requires the Director General to state the reasons why he considers the Condition to be breached, so that the licensee and other interested parties will have the information necessary to understand the complaint, and why the Director General proposes to pursue a particular course of action.
D1.2.26 As a further safeguard against the Director General making a determination on the basis of insufficient information the Condition also gives licensees the right, within 28 days of any Initial Determination being made, to ask for this Determination to be looked at again and reviewed. The effect of this is to raise the evidential test necessary in order for the Determination to continue (now as a Final Order).
D1.2.27 Again, the change in evidential test mirrors the existing tests in the Telecommunications Act in relation to Provisional and Final Orders. Initial Determinations can be made where it appears to the Director General that an act or omission has the object or the effect of preventing, restricting or distorting competition, a Final Determination can only be made if the Director General is satisfied that the act or omission is caught by the Condition.
D1.2.28 An additional feature of the procedures within the Condition is that they ensure that those other than a licensee who are affected by the relevant act or omission are given the appropriate opportunity to make representations.
D1.3.1 As indicated above the Condition is limited in its application to acts or omissions that prevent, restrict or distort competition, are carried out by an undertaking in a dominant position or result from agreements between parties, and that have an appreciable effect on competition. In general this will mean that only acts or omission by those Licensees who are dominant or whose restrictive agreements have a material effect on competition will be within the scope of the Condition.
D1.3.2 However, because telecommunications has special economic characteristics and a particular market structure, the definition of those with market power in specific markets is not straightforward. Conventional rules of thumb may not be appropriate or, if they are, they may require very careful application especially in relation to the definition of the relevant market within which market dominance and hence market power may be present.
D1.3.3 In order to establish whether an undertaking is abusing a dominant position or whether an agreement between undertakings has a material adverse effect on competition, it is first necessary to define the relevant product market and then to set the analysis against the background of the operation of competition in this market.
D1.3.4 Oftel's approach to defining relevant product markets for regulatory purposes follows the approach used by the main UK competition authorities (ie the Office of Fair Trading and the Monopolies and Mergers Commission). It does not differ fundamentally from the approach of the EU Commission. The approach focuses on the existence of constraints on the price-setting behaviour of firms (in the absence of price control). This requires that the definition of a market for a product, or group of products, takes into account not only whether substitution is possible on either the demand or the supply-side but also what the appropriate geographical scope of the market might be.
D1.3.5 The telecommunications market has certain features which means that market definition requires an additional degree of care. For example, there can be certain legal restrictions which apply to at least some of the providers of telecommunications services and/or systems. There can be restrictions on the number of possible entrants to a market achieved either through legal means or by the absolute scarcity of one or more necessary inputs (eg radio spectrum, international facilities licences).
D1.3.6 The standard test of whether a firm is dominant is whether it is able to act independently (in terms of pricing and output decisions) of other firms in the market. Dominance will also be assessed within the context of an analysis of the degree of competition within a market.
D1.3.7 When assessing the degree of competition in any given market Oftel will need to take into account a range of factors encompassing not just the structure of the market but also the conduct of firms in that market. There is no unique indicator of a competitive market: for instance, market share figures on their own are a poor indicator of market power. Oftel will need to examine a range of factors such as the changing pattern of market shares over time; the degree of concentration in the market; the price history of the market; the degree of excess capacity that competitors possess; barriers to entry (and exit) together with the history of entry into and exit from the market and the way in which firms compete in the market (eg whether they compete on the basis of price, after sales service or other factors).
D1.3.8 Although market shares are a poor measure of market power, it seems clear that without a significant share of the market, a firm is unlikely to have the market power to behave anti-competitively. A number of competition authorities, including those in the UK, use a market share threshhold. There is no presumption of dominance above this level, but it is unlikely that, below this level, a firm would have sufficient market power to act anti-competitively. A presumption can be made that a firm with less than 25% market share does not have market power, and could not, therefore, be dominant. The actions of such a firm would, therefore, not be caught by the abuse of dominance arm of the Condition. It is important to note, however, that this conclusion depends crucially on the market definition.
D1.3.9 It is, however, difficult to develop an equivalent market share threshold above which a firm would be presumed to be dominant. Dominance will depend on the structural and behavioural factors which influence competition in a market and Oftel will have to approach the analysis of market dominance on a case by case basis.
D1.3.10 Behavioural issues will focus on the conduct of firms within a market whereas structural factors will largely centre on barriers to entry (and exit) in the market and the degree to which competitors possess excess capacity.
D1.3.11 A basic idea behind the concept of a barrier to entry is that it is a cost which must be borne by a new entrant into a market but which is not borne by firms already in that market: there is thus the idea of a cost asymmetry between an incumbent and an entrant. Barriers to entry have the effect of making entry more difficult/costly and thus diminish the competitive effect that the threat of entry would otherwise be expected to have on the behaviour of firms in a market. If barriers to entry are low, a firm could have a large share of a market,perhaps achieved by greater efficiency, better innovation etc, but not be dominant and therefore not able to act anti-competitively. By contrast, where there are large entry barriers, a firm with a lower market share could still be dominant and thus act anti-competitively. For example, given the existence of economies of scale and scope in telecommunications networks, barriers to entry are considerable and play an important part in competition between network providers. However for competition between service providers barriers to entry are likely to be less severe because there are no substantial information costs and limited economies of scale and scope.
D1.3.12 The degree to which competitors possess spare capacity will determine their ability to serve the market instead of the "dominant" firm. If the ability of a firm to restrict output and raise prices is constrained by the fact that rivals possess substantial spare capacity, so that the firm cannot take the existing output of its rivals as given, then that firm is unlikely to be dominant.
D1.3.13 Vertical integration will be a significant aspect of the analysis of market structure and competition. The appropriate analysis of competitiveness is likely to take account of the competitiveness of upstream and downstream markets. In the telecommunications market this is likely to be extremely important. Upstream or downstream markets may have very different structures. This can lead to an apparent lack of market power (because of low market share) in final output markets while the same company enjoys significant market power through dominance in an upstream market which is a necessary input into the final product market. For instance, the duopoly in the provision of international facilities is an important consideration in the analysis of competition in the provision of international telecommunications services.
D1.3.14 In the case of BT there are already significant detailed licence conditions addressing these vertical relationships in certain well prescribed circumstances (for example, the conditions dealing with Accounting Separation and BT's internal transfer charging system.) This general Condition is likely to catch similar problems which currently fall outside the provisions of these detailed conditions.
D1.3.15 The Condition may still apply to licensees even if they do not have market dominance on their own, or even if market dominance is not achieved jointly with another undertaking. This is where a Licensee makes agreements with others (eg price fixing agreements) or participates in concerted practices with others in the absence of an explicit agreement. However, for the Condition to bite these agreements or practices have to have an appreciable effect on competition.
D1.3.16 As with market dominance, there is no simple rule that can be applied to all cases. It is unlikely that horizontal agreements between undertakings with small market shares (less than 5%-10% in total) would have an appreciable effect on competition. In addition, Oftel would need to look at the market structure within which any horizontal agreement took place. Given the current structure (one very dominant firm) it would seem unlikely that horizontal agreements between undertakings with less than 25% market share (in total) would raise concerns. However, similar considerations as described above in relation to dominance apply to agreement with undertakings which are vertically integrated, for the same reasons.
D1.4.1 The economic and legal concepts that have been developed in relation to anti-competitive practices and/or abuse of a dominant position in other sectors of the economy, in other market conditions and in other jurisdictions can be read across into the telecommunications market in the UK. In some cases this will not be straightforward. The telecommunications industry has characteristics which distinguish it from other industry sectors. In particular, the UK telecommunications industry has a highly unusual and dynamic industry structure, containing one very large, vertically integrated company, a significant number of quite large companies that are also vertically integrated, but which are limited in the geographic area, or product market, of their operations within the United Kingdom (for example, cable companies) as well as many, very small, niche players which compete with each other and with the large (and very large) companies.
D1.4.2 The purpose of the following descriptions is to give guidance on the application of the Condition where the telecommunications market is different, and to indicate the general approach which Oftel is likely to adopt when considering issues raised under the Condition. It constitutes a non-exhaustive list of the circumstances which the Director would be likely to consider when deciding whether certain practices will fall within the scope of the Condition.
Refusal to supply or connect: General
D1.4.3 The application of this concept in the retail telecommunications market is reasonably clear. In addition, Conditions 1 and 2 of BT's licence include a requirement to supply particular telecommunications services. Other licences (principally the cable TV licences) also contain a direct obligation to supply the retail market once certain other conditions are met. Therefore, unless these conditions are revoked, it is unlikely that the Condition will be used in this area. Other, more detailed conditions are, or will have been, activated.
D1.4.4 In addition, Condition 17 of BT's licence has already been interpreted by Oftel as, in general, prohibiting BT from attaching any restrictions on the resale of any of BT's tariffs, and hence, by extension, BT may not refuse to supply a customer which does this.
D1.4.5 However, the application of this concept raises more issues when applied to the wholesale market. There are a number of specific telecommunication related areas where these issues arise:
D1.4.6 The retail services supplied by a public telecommunications licensee may rely on a particular functionality being available in all the networks which that particular service is using (for example an end-to-end capability for any particular call). Under these circumstances the issue of refusal to supply is not a refusal to supply the service to a particular end customer, but a refusal to supply in the wholesale market (that is to other licensed operators) the functionality that allows the setting up of the end-to-end capability across network boundaries. For a dominant operator the lack of capability across network boundaries may be immaterial, as most of the calls originating on the dominant operator's network will remain entirely within that network. However, for a non-dominant operator this may well not be the case. Most calls originating on that network will need to cross onto the dominant operator's network, and will need the necessary interconnection functionality in order to do so. The lack of the necessary functionality for these types of call will mean that the service that can be offered is so poor that it is unlikely to be viable.
D1.4.7 The physical plant (including wires, cables etc.) that make up a particular telecommunications system may occupy scarce resources, or resources that are impossible, or difficult, to reproduce for other reasons (eg refusal by a third party owner of resource to allow "another" PTO occupy his or her land). Refusal to supply ("share") these resources can effectively lock out the new company from being able to supply one or more customers.
D1.4.8 In the cases above there is no absolute rule that refusal to supply in all circumstances would be anti-competitive. There may be an objective justification - for example that there is a genuine shortage of capacity. In addition, refusal to supply as described above could prevent, restrict, or distort competition without it being an abuse of a dominant position. However, nor is it the case that all refusals fall within the bounds of normal competitive behaviour and/or outside the scope of this Condition.
D1.4.9 In addition, outright refusal may not be the issue. There may be a significant, but necessary, delay between the specification of a functionality and the implementation of that functionality on any particular network. Given the ability of a dominant network to launch a viable service within its network, while non-dominant networks cannot, such a network could abuse its dominance by failing to give interconnecting networks information sufficiently far in advance to enable them to respond with their own offerings in a timely manner.
D1.4.10 Refusal to connect unless some specified test is performed or compatibility demonstrated could be a barrier to competition by those connecting or interconnecting with an operator's network. For CPE, the statutory approval testing should be sufficient to satisfy the need for network safety and integrity. For interconnecting systems, the Section 22 approval arrangements do not apply. It is expected that licensed operators will voluntarily cooperate in the compatibility testing of their respective networks and that it is only reasonable to decline interconnection if there is positive evidence that network harm will result.
D1.4.11 A Focus Group of the Interconnection Policy Forum is currently looking at requirements for interconnection of New Services. This guideline will be amended in the light of the Group's conclusions.
D1.4.12 Oftel's preliminary thinking is as follows
Refusal to supply an embedded network capability
D1.4.13 Where a service exists on the dominant operator's network outright refusal to provide the necessary functionality across the network interconnect is likely to be regarded as anti-competitive in most, if not all, circumstances. When carried out by a licensee, dominant in the relevant market, it is also likely to be an abuse of a dominant position. This could also apply where a service does not exist on the dominant operator's network but the capability is already embedded and the dominant operator seeks to delay interconnection to that functionality in advance of launching his own service.
D1.4.14 Where a service does not exist on the dominant operator's network, and the capability is not already embedded as a feature of the network, outright refusal to supply that capability is unlikely to be regarded as anti-competitive. It would, therefore, be likely to fall outside the scope of the Condition. (Although the obligation to supply may arise under another condition e.g.Condition 1 of BT's licence).
Refusal to share scarce physical resources
D1.4.15 Refusal to share (supply) where there are capacity constraints is unlikely to be found to be anti-competitive. However, it will be for Oftel to examine whether or not such a capacity constraint exists.
D1.4.16 Refusal to share (supply) where there is no genuine capacity constraint is likely to be considered anti-competitive.
D1.4.17 However refusal to supply or share capacity must be distinguished from refusal to allow co-location of equipment. Oftel's present policy on co-location is that to require this could be an infringement of a licensee's property rights, and would, therefore, fall outside the scope of this Condition as it would not be an abuse of a dominant position.
D1.4.18 In addition, it is Oftel's policy that interconnection should be accomplished by means of in-span interconnection, and not by co-location of equipment in one licensee's exchange building(s).
Refusal to interconnect
D1.4.19 Refusal to interconnect another licensed operator's system is likely to be deemed anti-competitive unless it can be shown that network harm will result. Since an operator is free to connect unapproved terminal equipment if it so wishes, refusal to interconnect a system for the purposes of testing, solely because the other operator has not yet been granted a licence would be deemed anti-competitive.
Refusal to supply licences of intellectual property rights, and withholding of technical information
D1.4.20 The markets in the telecommunications industry operate in such a way that there are technical linkages between, or within, many of them. These technical interfaces contain intellectual property rights which, if exercised in an exclusive manner, would enable a dominant operator to severely distort competition. However, the conditions under which such a practice would be an abuse of a dominant position are less clear cut. European thinking on this issue is at an early stage of development. At present, however, it is Oftel's view that the Condition will cover the refusal by a dominant operator to licence the use of any intellectual property rights it may have in interconnection interfaces.
D1.4.21 Where a service is introduced which requires novel CPE capability, a failure to declare and publish the technical requirements for that CPE within a reasonable time of the launch of that service would be likely to be seen as anti-competitive. "Reasonable" under these circumstances will depend on the complexity of the new CPE requirements, but is likely to be at least 12 months. In any event, it will not be less than the notice given to any CPE manufacturer controlled by the dominant network and/or supplying equipment through any company owned or effectively controlled by the licensee or its affiliates, or supplying equipment branded in the name of the network operator.
D1.4.22 Where a new service requires the deployment of a new interface to, or functionality within, a connected system (whether a branch system or an interconnected public network system), failure to publish the proposed technical requirements for service operation within a reasonable time before the launch of the service is likely to be anti-competitive. "Reasonable" under these circumstances will depend both on the complexity of the new network requirements and the extent to which a reasonable opportunity has been given to other industry participants to consider and agree features of the service in cases where no existing international, European or UK standard or specification exists. Oftel is currently engaged in discussions with the industry and other interested parties to establish, in more detail, the required notice periods in order to avoid, inter alia, a potential abuse of a dominant position. These Guidelines will be up-dated once this process is completed.
Customer sited wiring
D1.4.23 Unreasonable failure to comply with the principles of the Oftel Wiring Code, especially with respect to shared or integrated wiring or the provision of network terminating and test apparatus would be likely to be found anti-competitive.
Introduction
D1.4.24 Oftel recognises that price is an important competitive instrument in any industry and that it has been particularly important in the UK telecommunications industry. Given BT's historical position as the UK Public Telecommunications Operator and its ubiquity, brand awareness etc new entrants have tended to compete by pricing at a discount to BT's tariff. Price competition therefore has been an important element of consumer choice in telecommunications in the UK to date.
D1.4.25 Oftel does not wish to constrain price competition and it wishes to encourage price flexibility in the telecommunications industry subject to existing regulatory constraints on BT such as geographic averaging of tariffs and floors for discounts and retail tariffs. Prices have an important economic signalling function: prices which are high in relation to costs can be a signal that profitable opportunities to provide lower cost alternatives exist for new entrants and they can also be an impetus for technical innovation. Oftel has chosen to define relevant markets for the purposes of assessing competition in terms of the constraints on the pricing behaviour of firms so that it is important that price signals are allowed to operate freely: i.e. so that firms and customers can alter their buying and selling decisions accordingly.
D1.4.26 A feature of a competitive market is that prices are generally closely related to costs and that no single firm is able to influence prices in the market. Conversely in a market where there is a dominant firm that firm is able to act independently of other firms and sustain prices above their 'competitive' level.
D1.4.27 The underlying aim of Oftel's approach to pricing policies is to expect that changes to existing price structures by a dominant operator should be related to the underlying cost structure or have the effect of allowing prices to better match costs. This basic cost-orientated approach should inform anti-competitive pricing issues such as discrimination and predation.
D1.4.28 Against this background Oftel gives the following guidance
Required Prices
D1.4.29 Prices which are required to be offered as a result of other licence conditions will not be caught by the Condition nor will prices that are required to be offered by law. In addition, where a Licensee gives a binding undertaking to offer particular prices in lieu of the Director General proposing a licence modification, those prices will not be caught.
Price Floor
D1.4.30 Unless a price is required (see above) Oftel will start from the presumption that any price below long run incremental costs is an abuse of a dominant position and will distort competition. Where there are costs common to a series of services this presumption will be tested against the increment of the individual service in question and also against combinations of those services. Thus if there are two services X and Y, service X could be priced at its long run incremental cost but the price of service Y would then have to cover not only its long run incremental cost but also the common costs of the two services. This would ensure that the prices are sustainable in the long run.
D1.4.31 Where the dominant operator wished to price below long run incremental costs the burden of proof would be on it to justify that it was not behaving anti-competitively. Where barriers to entry are significant, even prices above long run incremental costs could be considered to have an anti-competitive or entry deterrring effect(see below). As before, Oftel will consider the effect of pricing policies on competition in a market.
D1.4.32 Where one or more products or services are tied by joint consumption the presumption will be that the test will be applied to the combination of services and/or goods taken together (for example, mobile airtime time contracts and tied handsets taken together).
D1.4.33 Although the presumption will be that prices below the floor identified above would fall to be caught by the Condition it will not automatically follow that prices above this floor are to be regarded as acceptable. Prices above the floor could still be predatory (see below) which would make them an anti-competitive practice. In addition, any downward price change that resulted in a price above the long run incremental cost floor, but below fully allocated costs, would be unlikely to be found to be anti-competitive if it clearly passed a net revenue test, as long as passing the test was not dependent on a significant increase in market power, and were not part of a pattern of disruptive price changes (both up and down) across a range of outputs that shared some common costs. The other side of this test is that a downward price change that failed a similar net revenue test would be likely to be anti-competitive. These prices would be treated in the same way as prices that were below the long run incremental cost floor.
D1.4.34 In relation to BT there is an important caveat in the application of these principles outlined above. Where there is a removal of a requirement to price below a level that would be caught by the Condition (eg the removal of the RPI + 2% constraint on residential line rentals) Oftel would not expect BT immediately to raise prices above this floor. Some price stability is desirable for customers, and Oftel would only take action against such prices if subsequent price movements took the price further away from costs. There is also the possibility that price below the floor would still be allowable if the benefit to customers outweighed any anti-competitive effect.
Price Ceiling
D1.4.35 Although excessive pricing would generally constitute an abuse of a dominant position, Oftel would expect to deal directly with this problem using the price control mechanism. Prima facie evidence of excessive pricing for a service would be the fact that an operator earned a rate of return for the service in excess of its cost of capital over a period of time (assuming it did not possess superior efficiency).
D1.4.36 However, to the extent that excessive pricing was judged to have a detrimental effect on competition it would fall within the ambit of this Condition. This is most likely to be the case with new services where there is a presumption that they should not be subject to price controls. For example, suppose a firm that was dominant in the provision of a necessary input into a final product market charged a uniformly high price to all service providers ahead of its own entry into that down stream market, where upon it lowered the price for all participants (including itself). In this way the dominant supplier has potentially foreclosed the development of the final product market so that when it wants to enter it can do so without having to face already established suppliers. Oftel would take instances of large changes in prices by a dominant firm either in terms of lowering input prices upon entering a market or raising prices following exit by other firms as prima facie evidence of the firm abusing its dominant position and restricting competition.
D1.4.37 Like predatory pricing (see below) the anti-competitive practice arises because of behaviour through time. Oftel would, therefore, be likely to examine situations where there are large price changes. But, in addition, Oftel may need to examine a price before the potential price change takes place. After the event the damage would already have been done. There would obviously need to be an element of interpretation as to why the dominant firm might have chosen a particular course of action e.g. keeping prices well above cost. Evidence that Oftel would look for in coming to a decision on whether or not excessive prices were caught by this Condition would be where the supplier had set prices above theprofit maximising level. This would suggest that the firm was suppressing demand (and profits) now, in order to obtain a market advantage in the future. In practice, it is also likely that where excessive prices are being charged discrimination between the dominant suppliers own activities and third parties may be present. This discrimination may also be caught (see below).
Predatory Pricing
D1.4.38 Low prices or price reductions are normally seen as a result, and a benefit, of the process of competition. However, predatory behaviour constitutes a class of anti-competitive behaviour where prices are too low, to the extent that the competitive process itself is damaged.
D1.4.39 Predation is generally defined as the deliberate sacrifice of short term profits by setting excessively low prices with the intention of eliminating or weakening competitors so that profits in the longer term will be enhanced.
D1.4.40 Oftel considers that there are three issues to be addressed in establishing predatory pricing by a dominant operator: the structure of the market and the characteristics of the alleged predator in order to establish whether predation is a feasible strategy; the effects of the alleged predatory action upon the profitability of the alleged predator; and, whether the alleged predator intends to drive a specific competitor out of the market.
D1.4.41 Two key features of feasibility are the ability of the predator to drive a competitor out of the market by being able to target a rival whilst being able to sustain the losses necessary and the ability to recoup the losses through future supra-normal profits. Thus if barriers to entry and exit are low then the predator may be able to drive a firm out of the market but the predator cannot then stop other firms entering the market once it has increased its prices: in this case predation would be an unprofitable strategy.
D1.4.42 In terms of assessing the impact on the profitability of the predator, it is necessary to take into account that certain price reductions are a legitimate competitive response. One way to use a test for predatory behaviour is to use a firm-based net revenue test. Such a test would require that any price reduction generated a net revenue ie that demand increased sufficiently to offset the price reduction and that the price remained sufficiently high to cover the incremental costs of the increase in output. The net revenue test also provides an indication of intent: if a firm had no realistic expectation that a profit would be made (or made no attempt to assess profitability) and, having incurred an incremental loss made no attempt to correct it, then there would prima facie evidence of intent.
Price Discrimination
D1.4.43 Price discrimination implies that two varieties of a commodity are sold by the same company to two buyers at different net prices i.e. prices which have been corrected for the cost of product differentiation. Price discrimination thus represents a departure from cost based pricing.
D1.4.44 There is no presumption that price discrimination itself is either good or bad: in certain situations allowing a company to price discriminate between two groups of customers results overall in a higher level of output than if the company were required to charge a uniform price to the two groups of customers. Thus, in order to analyse price discrimination by a dominant operator it is necessary to consider the effect of the discrimination on competition. For instance, one way to prevent the targeting of discounts in an anti-competitive manner i.e. targeting discounts only in areas where the firm faces competition, is to require that any discounts were available across a reasonably broad customer base.
Vertical Price Fixing
D1.4.45 As a basic principle, the imposition on customers of restrictions as to the persons to whom, or the terms on which, that customer can resell the product or service in question, would normally be an abuse of a dominant position.
D1.4.46 Applying that principle to telecommunications Oftel has already applied Condition 17 of BT's licence as, in general prohibiting BT from attaching any restrictions on the resale of any of BT's retail tariffs; this condition would similarly prohibit such practice.
Wholesale and retail prices
D1.4.47 Under a very restricted set of circumstances the Condition would find a pricing structure that, although cost related, did not allow a sufficient margin between wholesale and retail prices for an efficient, third party, retailer to cover its own costs, an abuse of a dominant position. These restricted conditions are where there is an absolute limit to the number of undertakings that can supply the wholesale market.
D1.4.48 For example, where there is a legal monopoly (or other strict limitations on number) on the provision of a particular type of network (eg international facilities, radio spectrum for mobile networks) and the firm with such a network is in a dominant position, it would be an abuse of that position to refuse to supply third party retailers of these services on rates that were not sufficiently below their own retail prices to enable an efficient third party retailer to survive. This would apply whatever the actual cost differential the dominant firm(s) experienced in supplying its own retail activities and the third party retailers.
Parallel Pricing
D1.4.49 Parallel pricing happens where firms' prices tend to increase or decrease at the same or similar time and by the same or similar amount so that there is little or no change in their relative prices. This can occur in competitive conditions where, for example, final prices are heavily influenced by input costs (e.g. raw material costs) and those costs form a significant part of that industry's total costs.
D1.4.50 Parallel pricing may also arise where there has been overt or tacit collusion. Where evidence of a collusive agreement exists, it would fall to be dealt with under the Restrictive Trade Practices Act. In certain cases, however, that Act will not apply - for example, where only one party to the agreement is carrying on business in the United Kingdom. In this case such behaviour may fall under the condition.
Loyalty (Fidelity) Rebates
D1.4.51 Loyalty rebates are rebates which are given in addition to any other standard volume discounts granted to a customer. They are often linked to the percentage of customer's total requirements and often paid retrospectively.
D1.4.52 Loyalty rebates can take a number of forms, but one of the simplest versions of a loyalty rebate would be a retrospective discount whereby a supplier might give a customer an additional discount based on the volumes/sales the customer had purchased over the preceding quarter. More complex loyalty rebates include schemes by which a customer is rewarded with discounted rates for repeat purchases: for instance, frequent flier programmes offered by airlines.
D1.4.53 Oftel recognises that pricing policy is an important competitive instrument. It encourages price flexibility in telecommunications: price flexibility should encourage a greater range of products/services and thus enhance consumer choice and competition. However, Oftel's approach to pricing policies of a dominant operator is that, in principle, any discounts should be cost related, unless some objective reason can be shown for the discount. As fidelity rebates are often not cost related they are likely to be caught by this Condition.
D1.4.54 In particular, Oftel is likely to take action on loyalty rebates offered by a dominant supplier that:
(i) are awarded to customers for not purchasing from a competing operator;
(ii) are calculated on the basis of total expenditure, but are then applied selectively to certain customers (these are also likely to be discriminatory);
(iii)calculate the rebate on the basis of total telecommunications expenditure across a range of competitive and regulated markets but then only applied the rebate to spending in a competitive market;
(iv) are based on relative changes in consumption, rather than absolute volumes.
D1.4.55 These are closely related concepts and will be dealt with together.
D1.4.56 Full line forcing arises where a purchaser wishing to buy one or more products from a range is required to purchase quantities of each product from the same range.
D1.4.57 Tie in sales arise where the supplier of a product (the tying product) insists that a customer must also purchase from him part or all of his requirements of a second product (the tied product). This may be overt or implied (i.e. where rebates are calculated on the overall purchases of goods belonging to different product markets) and the tie may operate in one market only or over several different markets.
D1.4.58 Bundling arises where the supplier refuses to supply the constituent parts of a service individually or in a comparable way.
D1.4.59 Oftel will be likely to examine carefully arrangements wher a dominant operator refuses to sell the constituent parts of services. Although there are clearly practical limits to the degree of disaggregation that are possible and/or economic, there are certain forms of bundling that are, prima facie, not objectively justifiable and are likely to result in the distortion of competition. In particular:
(i) where a dominant operator ties the sale of a service where it has market dominance to one where it faces competition. For example the tieing of "own brand" equipment to the supply of the local access loop;
(ii) where the services that are tied are partially in a price regulated market and partially in an unregulated market.
(iii)where the inputs required to provide services in a competitive market are bundled so that inputs for which the operator has a dominant (or monopoly) position are combined with those inputs that can be supplied by third parties;
D1.4.60 Oftel is likely to take action under this Condition to require the individual constituent parts to be sold separately, on non discriminatory conditions.
D1.4.61 Oftel is less likely to be concerned about tying agreements or full-line forcing which are necessary: to maintain the reputation of the product; to improve technical efficiency and for considerations of product liability and consumer safety/health. Under these circumstances the tying or bundling behaviour is unlikely to be an abuse of a dominant position.
D1.4.62 Long term supply arrangements are a feature of some segments of the telecommunications market, for example value added services. Whether or not a contract for the supply of services is unduly long (and hence within the condition) would depend on the impact of it on competition in that segment of the market. A contract of longer than three years would normally be regarded by Oftel as "prima facie" long term and at least subject to examination under the Condition. Long term contracts with customers would be within the Condition whether they were entered into by a non-dominant undertaking with some market power or by a dominant operator.
D1.4.63 In all cases Oftel's starting point will be to see whether the effect of that long term contract was to unfairly exclude competitors from supplying a significant part of the market or meeting demand for that particular service. Where such contracts were offered by a dominant operator they might also be an abuse of its dominant position. The two arms of the Condition therefore overlap. Long term contracts by a dominant supplier will be looked at especially carefully.
D1.4.64 In reviewing the application of the Condition to such contracts, Oftel would take into account the following factors:
(i) whether or not a customer had been forced into such a contract by the supplier or whether the length of the period had been freely accepted by it;
(ii) whether or not short term contracts were also available;
iii) what was the industry norm for that type of contract, not only in the United Kingdom but in other markets displaying similar characteristics to the United Kingdom;
(iv) whether or not the price difference (if any) between the long term contracts and the short term contracts truly reflected the difference between the costs of operation of those contracts. Failure to show a cost relationship, especially if the long term contracts were too "cheap", would be seen as evidence that the long term contracts were being used as a means of distorting competition. (This may also raise questions about price related discrimination);
(v) the cost structure for the supply of the product or service (eg the fixed costs of setting up that contract - designing the configuration, marketing costs, installation costs) and the relationship between this cost structure and the term structure of the contract. Lack of concordance between the cost structure and the term structure of the contract would again be seen as evidence that long term contracts were being used to foreclose the market.
D1.4.65 Where a licensee is under an obligation under a licence condition to do, or not do, specific things (for example to provide service, to connect other operators to declare interfaces or to publish tariffs) Oftel believes it is a necessary requirement,among other things, to do so in a reasonable and timely manner. Oftel will therefore include in its consideration of whether a firm is abusing a dominant position such aspects of its behaviour in the market place. Thus unreasonable delay, (including unreasonable delay in providing information) and unreasonable negotiating tactics are likely to influence the Director General's assessment. In particular, systematic unreasonableness in fulfilling other licence obligations is likely to result in action under this condition whether or not it amounts to a breach of the other specific condition.
D1.4.66 Public statements (eg advertising, speeches) by a dominant operator about its competitors will be covered by the general laws and rules on such activity (eg Advertising Standards, law of libel and slander etc). This Condition is unlikely to be applied to those situations.
D1.4.67 However, the employees of a dominant firm will necessarily interact with the customers (and potential customers) of its competitors. This interaction can come about because, for instance, the dominant operator is the supplier of a necessary input, or because in order to exercise choice the customer must first "disconnect" from the dominant supplier. The behaviour of a dominant operator evidenced by the operators policies, and/or its staff behaviour in relation to such interaction, will be subject to this Condition. Unreasonable statements about competitors' behaviour, services or products (eg that customers of Cable TV companies will not have their telephone number listed in the telephone directory) is likely to be a breach of the Condition. The Condition will also cover unjustified statements by a dominant operator about its own services or products where they have an anti-competitive effect (eg statements that price falls are "just around the corner", or that a product launch is imminent, when it is not).
D1.4.68 One or more instances of such behaviour, having a material effect on competition, are likely to be the subject of action under this Condition. In addition, the lack of adequate management control over such behaviour would also be taken as a breach of the Condition once any such behaviour had been identified.
D1.4.69 BT's licence contains detailed rules to deal with cross subsidy in certain specific cases (in particular Conditions 18 and 20B.15). Oftel will continue to rely on these (in relation to BT) where it is appropriate. Guidance on where the general licence Condition will be used can be found above in the section on pricing. Guidelines on Condition 20B.15 will be found below in Part II of this Annex.
D1.4.70 The above guidance describes how Oftel is likely to deal with questions of anti-competitive behaviour. In order for Oftel to do this it is obvious that information to underpin the analysis will need to be available from a dominant operator's accounting system and from other sources available to the licensee. The information requirements implicit in the analysis and approach outlined above will be an intergral part of the application of this Condition. Oftel would expect a dominant operator to have available to it information that would demonstrate that the tests outlined above would be satisfied in order to assure itself that it was compliant. Therefore, Oftel would also expect such an operator to be able to meet such an information request in relation to this Condition in a timely manner (within two weeks for most requests) as part of its complicance with its licence.
D1.5.1 Further guidelines on what other conduct is covered by the condition and how the Director General would approach it will be issued as Oftel develops its enforcement process using the Condition, and as precedents under the Condition are established. Over time there are likely to be further guidelines on specific practices. The Director General will also amplify (or modify) these guidelines over time in line with determinations in individual cases, developments in the application of Articles 85 and 86 within the European Union, and developments within UK competition law and practice. His normal practice will be to consult on proposals for such amplification (or modification) before bringing into effect any change to the Guidelines. The latest version of these Guidelines will be kept in the Oftel library and will be available on Oftel's web pages on the internet address given in the inside front cover of this document.
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