The Court of Appeal, in TalkTalk v Ofcom  EWCA Civ 1318, recently gave an important reminder to all competition practitioners that market definitions are a tool rather than an end: what matters is substance not form.
The facts of the case were relatively simple. Ofcom conducted a market review for wholesale broadband access and, in December 2010, issued a decision defining three relevant markets. Market 1, which was the only market in which a charge control would be imposed, comprised “…exchanges where only BT is present or forecast to be present”. In relation to its forecasts, Ofcom stated that in “…assessing forecasted plans we have only counted operators as present where they have firm plans to deploy in specific exchanges”. Ofcom conducted an assessment by reference to those criteria and identified 3,389 exchanges which fell in Market 1. Ofcom deliberately included 700 exchanges in Market 1 on the basis that although TalkTalk had announced an intention to rollout into such exchanges (in competition with BT), the plans were not yet “firm” or “committed”. By July 2011, however, when Ofcom came to issue its decision on the precise form of the charge control for Market 1, the factual position had changed. In particular, in the seven months since the market definitions were adopted, TalkTalk had either deployed, or now had firm plans to deploy, in all 700 of the exchanges which had been included in Market 1.
Did Ofcom have to conduct a new market review, so as to change the ambit of Market 1, by removing the 700 exchanges in which TalkTalk was now “present”, using Ofcom’s own definition? Continue reading