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Global Media and Communications Watch The International Legal Blog for the Tech, Media and Telecoms Industry
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BEREC stakeholder forum: Revisiting the scope of bundling in the EU

At the Body of European Regulators for Electronic Communications (BEREC)’s annual stakeholder forum in Brussels, bundling in the telecom sector came under the spotlight, and in particular some questions were aimed at whether “bundled” offers were legal.

On the occasion of the BEREC forum, we thought it useful to revisit European rules on bundling which are relevant both from a regulatory and from a competition law perspective. Bundling can primarily occur in two ways. The first is known as “pure bundling”. Pure bundling is when two products can only be sold as a bundle without separate markets existing for the individual elements. The other way is known as “mixed bundling”. This is when two products, that also exist as individual elements in their respective markets, are bundled together usually at a discount. An example of mixed bundling is when an ISP offers content and internet connectivity in a single commercial offer.  Bundling is different from “zero rating” data plans.  Zero rating occurs when an ISP offers broadband connectivity with monthly a data cap, but excludes from the data cap certain applications or classes of applications.  Under the BEREC guidelines  on Regulation (EU) 2015/2120 (“Net Neutrality Regulation”), zero-rating data plans are evaluated on a case by case basis. (See Winston Maxwell’s blog on the subject.)

Bundling and Net Neutrality regulation

Bundling is not prima facie affected by net neutrality. Net neutrality warrants that all traffic is treated equally, whereas bundling affects the competitive environment/prices when consumers choose ISPs.  If however, ISPs use bundling to promote bespoke services specific to certain content, then this could be contrary to the Net Neutrality Regulation if it affects the general quality of internet access services. (Article 3(5) of the Regulation). More explanation on bundling and zero-rating vis-à-vis net neutrality can be found in the BEREC guidelines on the Regulation.

Relevant market of bundles

The European Commission’s explanatory note on relevant markets in the electronic communications sector looks at whether in the case of a SSNIP (Small but significant and non-transitory increase in price), customers would unpick the bundle to receive individual services for the elements of the bundle. The BEREC report on market definition  notes that the SSNIP test is a good starting point in addressing the relevant market. However, it warned on using “prevailing prices” as the basis of the SSNIP test, as that could misconstrue already inflated current price for the actual competitive price. A SSNIP at that level may consequently show more substitutes than there are actually in the market. With that in mind, it noted that the SSNIP test is best used under “competitive conditions”. To see whether such prices are indeed at the competitive level, the profit margin of the company in question can be assessed. Then, in addressing whether such a SSNIP would be possible without customers unpicking the bundle, other factors such as economies of scope, and transaction cost savings could be taken in consideration. The OECD report on relevant markets in telecommunications (OECD)(p.36-56), and a report by the International Competition Network also give a good account on this.

Asymmetrical substitutability

A particular point that may arise with regards to bundling markets is asymmetrical substitutability. This occurs when consumers may be willing to switch from one product to another in the case of a SSNIP, but not be willing to go back. In the Wanadoo decision (paras 193-204) the Commission discusses asymmetrical substitutability in the context of high speed versus low speed internet markets. While consumers may move from low to high speed, it is harder for them to move back. This means that high speed internet could be in the same relevant market when considering dominance in the low speed internet market, but not vice versa.  This was approved in France Telecom v Commission (paras 88 – 89). The same could apply between bundles and their constituent elements. While it may be easy for consumers to move to bundled products because of discounts, but may not be willing to switch back because of switching costs. Therefore, depending on the alleged abuse in question i.e. if the incumbent is offering mixed bundles, or the constituent elements individually, the relevant market definition in hand may differ. The OPTA report on bundle markets, and the BEREC report mentioned above address this point.

Abuse through bundling

The Commission Guidance on exclusionary practices (paras 47-62) states that bundling will be deemed to be anticompetitive where equally efficient competitors offering only some of the components cannot compete against the discounted bundle. If the incremental price that customers pay for each of the dominant undertaking’s products in the bundle remains above the Long Run Average Incremental Cost of the dominant undertaking from including that product in the bundle, the Commission will normally not intervene since an equally efficient competitor with only one product should in principle be able to compete profitably against the bundle. To that effect BEREC also published a paper on margin squeeze for bundled offers.

Practical application of the abuse test

In the early 2000s,  the by-then UK competition authority OFT (now replaced by the CMA) rendered a decision concerning an incumbent in the markets for the wholesale supply of TV channels carrying sports content. The content was to appear only on pay-TV sports channels and premium pay-tv channels; the incumbent was active in both of the latter markets. The competition authority looked at whether the incremental avoidable cost per additional subscriber of supplying particular channels exceeded the implied incremental price of such channels (para 180). In this case the incumbent in question always provided the sports channels in the mixed bundle at a higher price than their respective cost, and so foreclosure was not considered with regards to those channels.


Bundling can raise issues both under regulatory law and competition law. It is also important for companies to consider whether the effect of bundling only occurs in one market or may trigger the attention of several regulators. As such, bundling in the telecoms industry will continue to be a key enforcement area in the years to come.