Price Control and Cost Accounting Obligations

ComReg’s role in reviewing the relevant telecoms and broadcasting markets is to examine the extent of competition and where a market is not found to be effectively competitive, due to one or more providers having significant market power (SMP), ComReg must address the competition problems identified by imposing regulatory obligations.

In the absence of regulation, an SMP provider has the ability and incentive to engage in anti-competitive pricing behaviours e.g., excessive pricing and/or predatory pricing (lowering of prices), and to address these ComReg imposes appropriate price control obligations. The price control imposed should meet ComReg’s regulatory objectives, including the promotion of competition, providing the appropriate investment incentives to alternative providers, while also ensuring that the SMP provider can recover its efficient costs as well as a rate of return on its investment.

To ensure the effectiveness of the price control, the Pricing team must also consider imposing an obligation to implement or maintain a cost accounting system to ensure that fair, objective and transparent criteria are followed by the SMP provider in allocating their costs to services in the case where they are subject to a price control, in particular, a cost orientation remedy.

The Decision documents setting out various regulatory obligations that are imposed on SMP providers, including price controls, are set out in the table below: