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Author Topic: Ordinance of the Operators with Significant Market Power  (Read 5053 times)

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Ordinance of the Operators with Significant Market Power
« on: January 09, 2010, 03:12:07 PM »
Ordinance on Principles and Procedures for Determination of the Operators with Significant Market Power


PART ONE

Purpose, Scope, Legal Basis and Definitions
   Purpose
   Article 1 – (1) Purpose of this Ordinance is to prescribe principles and procedures for market analysis in the relevant markets in order to ensure effective competition environment in the telecommunications sector for determining operators having significant market power that may be the subject to the regulations and obligations.
 
   Scope
   Article 2 – (1) This Ordinance applies to the operators acting in telecommunications sector.

      
   Legal Basis
Article 3 – (1) This Ordinance has been developed pursuant to provisions of the Telegram and Telephony Law No. 406 and Wireless Law No. 2813.

   Definitions
Article 4 – (1) The following terms shall denote the corresponding meanings within the context of this Ordinance:

a) Significant Market Power: Within the relevant telecommunication market, operator, whether individually or jointly with other operators, enjoys a position which is equivalent to dominant position of economic strength affording it the power to behave to an appreciable extent, independently of competitors, users, and consumers,

b) Relevant Geographic Market: The Area in which supply and demand of products or services of related operators are occurred, the conditions of competition are sufficiently homogeneous and distinguished from neighboring areas because the conditions of competition are appreciably different to those areas,

   c)    Relevant Market: A market consisting of a telecommunication service that is provided all over or in some regions of the country and other telecommunication services that can largely substitute that service,


   ç) Relevant Product/Service Market: The products or services that is sufficiently interchangeable or substitutable, in terms of their functional characteristics, their prices or their intended use and the conditions of competition and/or the structure of supply and demand,

   d) Operator: Any stock corporation including Turk Telekom, that performs telecommunication services and/or operates telecommunication infrastructure in accordance with an authorization contract, concession agreement entered into with the Telecommunications Authority and/or a telecommunication license or general authorization received from the Telecommunications Authority,

   e) Board: Telecommunications Board,
 
   f) Authority: Telecommunications Authority.

   
PART TWO
Market Analyses
   Principles
   Article 5: (1) The principles below are considered in the market analyses.
   a) Technological neutrality
   b) Transparency
   c) Non discrimination
   ç) Ensuring effective competitive environment.

    Market Analyses Process
   Article 6 – (1) Authority can do market analyses on it’s own initiative or upon justifiable request from operator(s) so as to determine operator with significant market power in relevant market. Market analyses related with relevant market defined by Authority shall be done again at the latest within 3 years.

   (2) Market analyses process consists of the below steps:
   a) Definition of relevant market,
   b) Analyses of competitive level in relevant market,
   c) Definition of operator(s) with significant market power.

   (3) On doing market analyses, Authority:
   a) may demand all information from operator(s) and can use customer public survey, studies and examinations as well as international benchmarking carried out  by third parties,
   b) may prepare questionnaires and publish these documents on the Authority’s web site,
   c) shall apply Competition Authority and relevant parties for their thought in a defined period which is not  fewer than 15 days and may publish all these ideas on the Authority’s web site.
   
   Definition of relevant market
   Article 7- (1) While defining relevant market, both relevant product market and/or services and relevant geographical market should be considered.

(2) During the definition of relevant market, the below items are considered as much as possible while examining demand and supply substitutability:

   a) Possibility of product and/or services usage by users in terms of functionality 
   b) Substitutability of product and/or services in terms of tariffs/price,   
   c) Quantities and attributes of cost of transition when users pass from one product and/or service to another.
   ç) Existing data about users’ behavior.
   d) Subsidiary services which have to be provided with product and/or services being bundled and supplied with other products and/or services, because of demand characteristics.
e) Tariff/price developments and tariff conditions of products and/or services being predicted to potentially compete, which were seen in the past.
f) Predictions about possible reactions of users and operators for a small but significant increase in prices of products and/or services.
g) Probability of potential operators’ entrance to related market in an appropriate time interval in case of a small but significant increase which is not temporary, and structural and legal barriers for market entrance.
h) In case of potential and existing operators having some of the properties needed for supplying products and services in the related market, the probability of supplying services efficiently by the operators.


(3) Related geographic market; can be defined as local, regional or national. While analysing demand and supply side substitution for definition of related geographic market, the below items might be considered:

a)The area for which operator is authorized to give services,
b)The area in which operator is supplying services, coverage of operator network and opportunity of operator to potentially supply services in other areas,
c)Similarities between supply conditions of products and services with respect to geographic coverage.

      
   Analysis of Competition Level

   Article 8- (1) If one or more undertakings are assessed to have significant market power in a relevant market, it is accepted that there is lack of competition in that market.

(2)When determining operator with significant market power in a relevant market, market shares of the operators are considered as primary criteria. While determining market shares of the operators, upon characteristic properties of the relevant market; data like income, subscriber number, user number, traffic volume, transmission capacity and transmission line number are used as long as they are appropriate and available.

(3)When assessing significant market power in related market, below criteria may be used in addition to market shares of the operators.

a) control of infrastructure not easily duplicated,
b) technological advantages or superiority,
c) lack of countervailing buying power,
ç) easy or privileged access to capital markets/financial resources,
d) product and/or services diversification,
e) Economies of scale,
f) Economies of scope,
g) Vertical integration,
h) Highly developed distribution and sales network,
ı) Lack of potential competition,
i) Barriers to expansion.

(4) The below criteria may be used when assessing whether an operator is in a joint dominant position with other operators.

a) Maturity of the market
b) Stagnant or moderate growth on the demand side,
c) Low elasticity of demand,
ç) Homogenous products/services,
d) Similar cost structures,
e) Similar market shares,
f) Lack of technical innovation and mature technology,
g) Absence of excess capacity,
h) High barriers to entry,
ı) Lack of countervailing buying power,
i) Lack of potential competition,
j) Informal or formal links between undertakings,
k) Retaliatory mechanisms,
l) Lack or reduced scope for price competition.
   
Closely related markets

Article 9- (1) Where an undertaking has significant market power in a relevant market, and this position of the undertaking causes it to strengthen its market power in another market which is closely related to relevant market because of links between markets, then undertaking may also be deemed to have significant market power in closely related market.


THIRD PART

Other Provisions

Basic obligations that may be imposed on to the operators

Article 10- (1) Authority shall impose one, more or all basic obligations which are stated below, excluding the other provisions in related legal framework, on the operators that have significant market power.
a) Transparency obligation,
b) Publication of reference access and interconnection offers obligation,
c) Non discrimination obligation,
ç) Accounting separation obligation,
d) Subject to tariff regulation obligation,
e) Cost accounting obligation.

(2) The obligations that are imposed on the operators that have significant market power may be published on the Authority’s web site.
   


Differentiation of Obligations

Article 11- (1) Obligations shall be differentiated between the operators that have significant market power in the same market or in different markets. Differentiation can be implemented either in selecting different obligations and/or by selecting different application details.

Alteration and abrogation of obligations

Article 12- (1) Existing obligations shall be altered according to market analysis results depending on the structure of relevant market. If there will be no operator with significant market power in the relevant market, the obligations stated in the article 10 may not be imposed on any operator and existing obligations may be abrogated. Authority shall determine the commencement, alteration and termination dates of related obligations.

Publication

Article 13- Public consultations reports related to market analysis are published on the web site; the decisions related to determination of operators that have significant market power are published in the Official Gazette.

Administrative Fines and Measures

Article 14-In the case that the operators do not carry out the obligations defined in this ordinance, provisions of Ordinance on Monetary Penalties to be Imposed by Telecommunication Authority on Operators and Other Sanctions and Measures are implemented.

Enforcement

Article 15- This Ordinance comes into force as by the date of its issuing.

Execution

Article 16- The provisions of this ordinance are executed by the President of the Telecommunications Board.
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