Ofcom reconsiders abolition of ex-ante regulations
Ofcom has recently published a final statement in relation to current market power in the UK broadcast transmission services market. This statement follows a whole line of reviews by Ofcom, dating back to the mid-2000s, at which time it was concluded that Crown Castle and NTL had significant market power in this area, and "ex-ante regulations" (i.e. government intervention) needed to be adopted to prevent competition restrictions. Crown Castle and NTL have since merged to become Arqiva. The Competition Commission consented to this merger, on the pretense that Arqiva gave a formal commitment about its future conduct (otherwise known as "behavioural undertakings").
The issue has come back to light since September 2016 when, following its most recent review, Ofcom concluded that these behavioural undertakings ensure that Arqiva does not have a "significant market power" in either of the following markets:
- the provision of network access for digital terrestrial television; or
- the market for the provision of network access for analogue and digital radio
Therefore, by adopting the "significant market power" test, Ofcom submitted to abolish the ex-ante regulations. However, the European Commission disagreed with Ofcom's analysis on two grounds. First, despite the fact that the undertakings reduce anti-competitive behaviour, Arqivis still holds a monopoly in the market. Secondly, the "significant market power" test should not have been applied, and instead Ofcom should have adopted a three-criteria assessment designed for ex-ante regulation.
Interestingly, Ofcom chose to overlook the Commission's assessment, and in its final statement confirmed that whilst the behavioural undertakings applied, ex-ante regulation was not required.