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03.12.2019

No. 450: International comparative study on the application and implementation of the economic replicability test ERT

No. 450: International comparative study on the application and implementation of the economic replicability test ERT

Authors: Stefano Lucidi, Bernd Sörries

(full version only available in German)

Summary

The Economic Replicability Test (ERT) presented by the Commission in 2014 was introduced with the aim of achieving an appropriate balance between ensuring efficient access and sufficient investment incentives. In Germany, the introduction of ERT is being discussed against the background of the forthcoming regulatory decree for Market 3 a/b. The present study has examined how the ERT was conceived and implemented in selected European countries (Belgium, Spain, Sweden and Great Britain).

As a rule, not all end-customer products are tested in the countries examined, but only so-called flagship products, which limits the scope of the test. Flagship products are usually determined on the basis of sales and/or turnover figures. The treatment of bundled products is primarily concerned with the treatment of non-regulated components of a bundle. Here the approaches differ in the countries considered. The omission of non-regulated components, such as mobile services or TV content, in the context of a replicability test is related to the fact that national regulatory authorities often do not obtain the necessary (cost) information on the components concerned. The approaches also differ from country to country in terms of procedural aspects. For example, against the background of constant price changes, some countries carry out the ERT at regular intervals, while in other countries the ERT is activated after a certain trigger event (e.g. launch of a new product). It should be noted that ERT is interpreted differently in different countries. Different market structures as well as end customer and wholesale products and previous experience with regard to the use of price/cost margin squeeze tests lead to country-specific approaches.

Finally, the analysis shows that the existence of a copper anchor and/or competition with alternative infrastructures ensures that price levels do not rise disproportionately. The elimination of the copper anchor or infrastructure competition can lead to general price level increases. Accordingly, the ERT should be embedded in a suitable regulatory environment or infrastructure competition as a replicability approach to protect competition, in contrast to cost-oriented price regulation.

Discussion Paper (in German language) is available as pdf-file and can be ordered for a fee of 7 Euro incl. VAT.

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