Discussion Papers

No. 419: Analysis of market structural criteria and discussion of regulatory options for the treatment of tight oligopolies

(Full version only available in German)

Author: Stefano Lucidi


Due to significant technological developments, such as the trend towards bundled services, the convergence of fixed and mobile services, broadband offerings of cable operators, the reverse development of the physical unbundling of copper duplexes due to the use of FTTC VDSL vectoring and the use of fibre optic networks by alternative operators, the structure of European telecommunications markets has changed in recent years. As a result of these developments former established operators are losing market shares in favour of other providers so that two or three operators have similar market shares.

This situation has regulatory implications for the EU's regulatory framework. The framework for electronic communications is based in particular on designation of operator(s) having significant market power. It does not provide any possibility for intervention in the case of so-called "tight" oligopolies, which may also lead to adverse competition effects due to the uncoordinated behaviour of market participants (unilateral effects). Based on a concrete case study the inadequacies of the existing legal framework for oligopolistic market structures is illustrated.

The purpose of this study is to identify the regulatory options for the treatment of tight oligopolies. Thereby the focus of investigation lies on the question as to whether the SIEC-test used in merger control can be adopted and transferred for the use in ex-ante regulation. The SIEC-test is a concept that goes beyond the strong dependence on structural parameters of a market because it also quantifies the possible anti-competitive effects of a merger, even if a market-dominant position cannot be identified based on high market shares. The present study deals with the individual aspects of the SIEC-test, its use in merger control and the question of whether the test can be applied in an ex-ante regulation environment for the treatment of tight oligopolies.

Discussion Paper is available for download.

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