BEREC Opinion on Phase II investigation (Article 7a) Case HU/2018/2107

On 16 August 2018, the European Commission registered a notification by the Hungarian Regulatory Authority, NMHH, concerning the market for wholesale high quality access provided at a fixed location in Hungary, corresponding to market 4 in Commission Recommendation 2014/710/EU.
The draft measure defines a wholesale market for leased lines encompassing analogue TDM- and Ethernet lines irrespective of bandwidth, supplied through copper, fiber and wireless. The draft measure proposes to designate Magyar Telekom (hereinafter: MT) as the only operator having significant market power (SMP) in the relevant wholesale market and proposes the imposition of a range of regulatory remedies on MT including access remedies, obligations of transparency and non-discrimination, and price controls.
On 17 September 2018, the European Commission sent a serious doubts letter opening a Phase II investigation pursuant to Article 7 and 7a of Directive 2002/21/EC as amended by Directive 2009/140/EC. The Commission’s doubts concern the SMP assessment, the under-recovery of costs and the mark-up for company size in the WACC calculation. The first doubt was addressed in BEREC Opinion of 15 October 2018 (BoR (18) 199). In this Opinion BEREC assesses the two latter doubts.
Based on the economic analysis set out in this Opinion, BEREC considers that the Commission’s serious doubts are partly justified.