Judgment (Market Definition)

Neutral citation:

[2017] CAT 25

Published:

10 Nov 2017

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Summary:

Judgment of the Tribunal in relation to an appeal by British Telecommunications PLC (“BT”) relating to the Business Connectivity Market Review 2016 (“BCMR 2016”) conducted by the Office of Communications (“Ofcom”). Ofcom’s conclusions from its review were set out in a Statement published on 28 April 2016 (the “Final Statement”).
In the Final Statement Ofcom defined a single product market for “contemporary interface symmetric broadband origination” (“CISBO”) services of all bandwidths; and three separate relevant geographic markets – the Central London Area (“CLA”); the London Periphery (“LP”); and the rest of the UK (excluding Hull) (“RoUK”). Ofcom determined that BT had Significant Market Power (“SMP”) in the LP and RoUK. Ofcom found that BT’s prices in those markets were well above costs and its quality of service was unacceptably poor. By way of remedies, Ofcom introduced (inter alia) a “passive” remedy, allowing CPs to lease only the fibre element of leased lines from BT and to attach equipment of their own choosing at either end, instead of having to purchase an “active” service (a package including fibre and electronics to “light” the fibre) from BT. This passive remedy is referred to as Dark Fibre Access (“DFA”).
BT contended that Ofcom: wrongly defined the relevant product and geographic market (Grounds D1 and D2); wrongly defined the extent of the “core conveyance network” (Ground D3); and erred in imposing a DFA remedy (Grounds E1 to E3). As explained in Section A(3) of the judgment, the Tribunal ordered a split hearing and so the judgment concerns only BT’s grounds of appeal D1 toD3 which concern Market Definition.
Following the hearing, which took place in April-May 2017, the Tribunal issued a short ruling ([2017] CAT 17) on 26 July 2017 (the “Ruling”) that:
1. Ofcom erred in concluding that it was appropriate to define a single product market for CISBO services of all bandwidths;
2. Ofcom erred in concluding that the RoUK comprises a single geographic market; and
3. Ofcom erred in its determination of the boundary between the competitive core segments and the terminating segments of BT's network.
This Judgment sets out the Tribunal’s reasons for its Ruling of July 2017. The Tribunal’s reasoning is summarised in Section I of the judgment. As explained in the judgment, the Tribunal did not consider itself to be in a position to substitute its own findings in relation to any of the above matters. The Tribunal therefore decided to remit these matters to Ofcom for reconsideration.

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.