NOTIFICATION FORM Section 1 Market definition 1.1 The relevant product/service market. Is this market mentioned in the Recommendation on relevant markets? Market of the facilities to deliver broadcasting transmission services. Market of the facilities to deliver broadcasting transmission services is not included either in the annex of Commission Recommendation 2007/879/EC or in the annex to the Commission Recommendation 2003/311/EC. Market of the facilities to deliver broadcasting transmission services has not been analyzed separately before, only included into the analysis of Market 18 (the first round of analysis was in 2006, registered as cases LT/2006/0376 and LT/2006/0468; the second round took place in 2009, registered as case LT/2009/1022; the third round of analysis launched in 2012 and the draft report and measures were communicated to the Commission) as a closely related market on the grounds that the facilities related to the provision of broadcasting transmission services were necessary for broadcasters and re-broadcasters to deliver content to end users. The analysis of the Market of the facilities to deliver broadcasting transmission services was initiated on the initiative of the Communications Regulatory Authority of the Republic of Lithuania (hereinafter RRT). Hereby RRT notifies the Commission of the results of the analysis of Market of the facilities to deliver broadcasting transmission services where 5 individual submarkets were defined: 1) Market of the facilities to deliver terrestrial television broadcasting transmission services in the territory of the Republic of Lithuania (further referred to as Market A); 2) Market of the facilities to deliver terrestrial radio broadcasting transmission services in the territory of the Republic of Lithuania (further referred to as Market B); 3) Market of the facilities to deliver cable television broadcasting transmission services in the territory of the Republic of Lithuania; 4) Market of the facilities to deliver IPTV broadcasting transmission services in the territory of the Republic of Lithuania; 5) Market of the facilities to deliver satellite broadcasting transmission services in the territory wider than the Republic of Lithuania; To identify whether the relevant market defined is susceptible to ex ante regulation, the three criteria test was applied in every submarket listed above. Only two of the 5 submarkets were found to be susceptible to ex ante regulation, Market A and Market B. 1.2 The relevant geographic market. Market A: the territory of the Republic of Lithuania. Market B: the territory of the Republic of Lithuania. 1.3 A brief summary of the opinion of the national competition authority and market players where provided.
The national consultation ran from 16 October 2013 to 16 December 2013. RRT received a response and/or comments from TEO LT, AB; Lietuvos radijo ir televizijos centras AB, Laisvas ir nepriklausomas kanalas UAB, TELE-3 UAB, Lietuvos nacionalinis radijas ir televizija VšĮ, Baltijos TV UAB, SATV network UAB, the Competition Council of the Republic of Lithuania, and the Ministry of Transport and Communications of the Republic of Lithuania as a representative of shareholders of Lietuvos radijo ir televizijos centras AB. The Competition Council of the Republic of Lithuania had no comments. Laisvas ir nepriklausomas kanalas UAB, TELE-3 UAB, Lietuvos nacionalinis radijas ir televizija VšĮ, Baltijos TV UAB, SATV network UAB agreed with the conclusions of the market analysis and had an opinion that Market A must be regulated as soon as possible. TEO LT, AB agreed with the conclusions of the market analysis, and proposed in Market A: a) to regulate not only facilities to deliver television broadcasting transmission services but also auxiliary services; b) to apply LRAIC accounting method instead of FDC; c) to recalculate prices of access to facilities to deliver television broadcasting transmission services once per year but not every quarter. Lietuvos radijo ir televizijos centras AB disagreed with the conclusions of the market analysis. The main comments are as follows: a) in the opinion of Lietuvos radijo ir televizijos centras AB, RRT did not carry out a substitution analysis of retail television broadcasting services; b) in the opinion of Lietuvos radijo ir televizijos centras AB, RRT did not make a thorough demand substitution analysis of facilities to deliver television broadcasting transmission services and made no supply substitution analysis of facilities to deliver television broadcasting transmission services; due to this, RRT incorrectly defined the market of facilities to deliver television broadcasting transmission services. According to Lietuvos radijo ir televizjos centras AB, there is a substitution between facilities to deliver terrestrial television broadcasting transmission services, facilities to deliver cable television broadcasting transmission services, facilities to deliver IPTV broadcasting transmission services, facilities to deliver satellite broadcasting transmission services. c) According to Lietuvos radijo ir televizijos centras AB, RRT carried out a three criteria test of Market B incorrectly, because no barriers to entry of Market B exist, as Market B has characteristics which tend towards effective competition without ex ante regulatory intervention and competition law is effective to solve problems of competition in Market B. Therefore, Market B is not susceptible to ex ante regulation. d) In Lietuvos radijo ir televizijos centras AB view, FDC cost accounting method is not the right method to calculate costs in Market A. The comments of the Ministry of Transport and Communications of the Republic of Lithuania on the relevant market were in line with the comments of Lietuvos radijo ir televizijos centras AB. 1.4. A brief overview of the results of the public consultation to date on the proposed market definition (e.g. how many comments were received, which respondents agreed with the proposed market definition, which respondents disagreed with it). 1) The Competition Council of the Republic of Lithuania had no comments regarding the definitions of relevant markets; 2
2) TEO LT, AB, Laisvas ir nepriklausomas kanalas UAB, TELE-3 UAB, Lietuvos nacionalinis radijas ir televizija VšĮ, Baltijos TV UAB, SATV network UAB agreed with the definitions of relevant markets; 3) Lietuvos radijo ir televizijos centras AB agreed with the definition of Market B and disagreed with the definition of Market A. In the opinion of Lietuvos radijo ir televizijos centras AB, there is a substitution between facilities to deliver terrestrial television broadcasting transmission services, facilities to deliver cable television broadcasting transmission services, facilities to deliver IPTV broadcasting transmission services, facilities to deliver satellite broadcasting transmission services, therefore, one individual market of facilities to deliver television broadcasting transmission services should be defined. 1.5 Where the relevant market is different from those listed in the Recommendation on relevant markets, a summary of the main reasons justifying the proposed market definition by reference to Section 2 of the Commission Guidelines on market analysis and the assessment of significant market power under the Community regulatory framework for electronic communications and services, and the three main criteria mentioned in recitals 5 to 13 of the Recommendation on relevant markets and Section 2.2 of the accompanying Explanatory Note. Markets A and B are not defined either in the Commission Recommendation 2003/11/EC or in the Commission Recommendation 2007/879/EC. Markets A and B have not been analyzed before, only included into the analysis of Market 18 as closely related markets on the grounds that the facilities related to the provision of broadcasting transmission services were necessary for broadcasters and re-broadcasters to deliver content to end users. To define the relevant markets, first of all RRT analyzed the facilities whereby broadcasting transmission services are delivered in the Republic of Lithuania, namely via: 1. satellite networks; 2. cable networks; 3. IPTV networks; 4. terrestrial networks. The analysis showed that facilities to deliver terrestrial broadcasting services could be split into the facilities to deliver terrestrial radio broadcasting services and facilities to deliver terrestrial television broadcasting services. At the next stage of market definition, RRT performed the substitutability test on demand and supply side whereby 5 relevant service markets were defined: 1) market of the facilities to deliver terrestrial television broadcasting transmission services in the territory of the Republic of Lithuania; 2) market of the facilities to deliver terrestrial radio broadcasting transmission services in the territory of the Republic of Lithuania; 3) market of the facilities to deliver cable television broadcasting transmission services in the territory of the Republic of Lithuania; 4) market of the facilities to deliver IPTV broadcasting transmission services in the territory of the Republic of Lithuania; 5) market of the facilities to deliver satellite broadcasting transmission services in the territory wider than the Republic of Lithuania; 3
Finally, a three criteria test was performed whereby two markets of the said three were found to be susceptible to ex ante regulation: 1) Market A - satisfied all the three criteria of the test and was found to be susceptible to ex ante regulation; 2) Market B - satisfied all the three criteria of the test and was found to be susceptible to ex ante regulation; 3) Market of the facilities to deliver cable broadcasting transmission services in the territory of the Republic of Lithuania taking into consideration the fact that none of the undertakings had significant market power in delivering rebroadcasting transmission services via cable networks and that the said services could be provided by relatively small cable television operators which deliver their services to several hundred of service users, it may be concluded that the provision of re-broadcasting transmission services via cable networks has the characteristics of effective competition. Therefore, a vertically related Market of the facilities to deliver cable broadcasting transmission services in the territory of the Republic of Lithuania does not meet the second criteria of the test and is not susceptible to ex ante regulation. 4) Market of the facilities to deliver IPTV broadcasting transmission services in the territory of the Republic of Lithuania has the characteristics of effective competition because these facilities already have been included into the analysis of the market of wholesale broadband access defined in the Commission Recommendation 2007/879/EC as Market 5 (case LT/2012/1369). Therefore, the Market of the facilities to deliver IPTV broadcasting transmission services in the territory of the Republic of Lithuania does not meet the second criteria of the test and is not susceptible to ex ante regulation. 5) Market of the facilities to deliver satellite broadcasting transmission services in the territory wider than the Republic of Lithuania has the characteristics of effective competition because there are 12 of undertakings which are working in this relevant market. Therefore, the Market of the facilities to deliver satellite broadcasting transmission services in the territory wider than the Republic of Lithuania does not meet the second criteria of the test and is not susceptible to ex ante regulation. Section 2 Designation of undertakings with significant market power 2.1 The name of the undertakings designated as having, individually or jointly, significant market power. Lietuvos radijo ir televizijos centras AB is designated as having significant market power both in Market A and Market B. Where applicable, the name of the undertakings considered no longer to have significant market power. 4
2.2 The criteria used to designate an undertaking as having significant market power, individually or jointly, or not. The criteria used to designate Lietuvos radijo ir televizijos centras AB as having significant market power both in Market A and Market B are as follows: 1. Market structure (market shares). 2. Vertically related services. 3. Barriers to enter the market. 4. Absence of countervailing buying power. 5. Absence of potential competition. 2.3 The name of the main undertakings (competitors) active in the relevant market. The main undertaking acting both in Market A and Market B is Lietuvos radijo ir televizijos centras AB. 2.4 The market shares of the undertakings mentioned above and the basis for calculation of market share (e.g. turnover, number of subscribers). The undertaking acting in Market A is Lietuvos radijo ir televizijos centras AB whose market share totalled 72.2 per cent at the end of 2012. The market shares of other undertakings were significantly smaller: the market share of Pūkas UAB amounted to 3.7 per cent, and the market share of Omnitel UAB was 3.2 per cent at the end of 2012. The market shares of the 29 undertakings present in the market hardly reached 3 per cent each. The total market share of all the 29 undertakings active on the market amounted to 20.9 per cent. The undertaking acting in Market B is Lietuvos radijo ir televizijos centras AB whose market share totalled to 94.4 per cent at the end of 2012. 2.5 The opinion of the national competition authority, where provided. The Competition Council of the Republic of Lithuania had no comments, objections, or proposals regarding the market definition, designation of undertakings having significant market power, and imposition of remedies. 2.6 The results of the public consultation to date on the proposed designation(s) as undertakings having significant market power (e.g. total number of comments received, numbers agreeing/disagreeing). This information is provided in Section 1.4. of this notification. Section 3 Regulatory obligations 3.1 The legal basis for the obligations to be imposed, maintained, amended or withdrawn (Articles 9 to 13 of Directive 2002/19/EC). 5
The legal basis to impose obligations on Lietuvos radijo ir televizijos centras AB in Market A and Market B is as follows: - Obligation to provide access Article 12 of Access Directive; Article 21 of the Law on Electronic Communications of the Republic of Lithuania; - Obligation of non-discrimination Article 10 of Access Directive; Article 19 of the Law on Electronic Communications of the Republic of Lithuania; - Obligation of transparency Article 9 of Access Directive; Article 18 of the Law on Electronic Communications of the Republic of Lithuania; - Price control and cost accounting obligations Article 13 of Access Directive; Article 23, of the Law on Electronic Communications of the Republic of Lithuania; - Accounting separation obligation Article 11 of Access Directive; Article 20, paragraph 1 of the Law on Electronic Communications of the Republic of Lithuania. 3.2 The reasons for which the imposition, maintenance or amendment of obligations on undertakings is considered proportional and justified in the light of the objectives laid down in Article 8 of Directive 2002/21/EC. Alternatively, indicate the paragraphs, sections or pages of the draft measure where such information is to be found. The detailed reasoning is provided in Chapter 5 of the draft report on the analysis of Market of the facilities to deliver broadcasting transmission services. 3.3 Where the remedies proposed are other than those set out in Articles 9 to 13 of Directive 2002/19/EC, please indicate what «exceptional circumstances» within the meaning of Article 8 (3) of that directive justify the imposition of such remedies. Alternatively, indicate the paragraphs, sections or pages of the draft measure where such information is to be found. Section 4 Compliance with international obligations 4.1 Whether the proposed draft measure intends to impose, amend or withdraw obligations on market players as provided for in Article 8(5) of Directive 2002/19/EC. 4.2 The name of the undertakings concerned. 4.3 What international commitments entered into by the Community and the Member States are to be met. 6