BEREC Guidance on the regulatory accounting approach to the economic replicability test (i.e. ex-ante/sector specific margin squeeze tests)
In 2013 the Commission adopted Recommendation 2013/466/EU on consistent non-discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment. The Recommendation requires NRAs, among others, to put in place obligations to ensure economic replicability of retail offers of undertakings with significant market power (SMP) and therefore preventing them from engaging in margin squeeze practices.
Based on the experience of NRAs in conducting ex-ante margin squeeze tests an taking into account Annex II of the Recommendation, which introduces the parameters of the economic replicability test, in compliance with its Work Programme 2014, BEREC has decided to develop a Guidance document to provide the NRAs with information on how to conduct the economic replicability test and more generally ex-ante margin squeeze tests in practice.
Therefore during the 20th BEREC plenary meeting (25-26 September 2014, Rome) BEREC approved for a public consultation a draft BEREC Guidance on the regulatory accounting approach to the economic replicability test (ex-ante margin squeeze test). The public consultation ran from 29 September to 24 October 2014, with an oral hearing on 16 October 2014 during the 2nd BEREC Stakeholder Forum meeting.
During the public consultation BEREC received 11 contributions, which were examined and reflected in the revised Guidance paper where appropriate. All individual contributions have been published on the BEREC website subject to the confidentially requirement introduced by the contributors.
An overview of the contributions received and explanation how they were reflected in the revised Guidance is presented in the Report on the outcome of the public consultation.
The final text of the Guidance as amended after the public consultation and approved by BEREC during the 21st plenary meeting of the Board of Regulators (Brussels, 5-6 December 2014), is presented below.