Expert legal insight into Ofcom’s market review and significant market power regime

Overview

SMP regulation is the most intrusive part of the UK’s ex-ante telecoms regulatory framework. It enables Ofcom to assess competition in wholesale markets, determine whether any provider holds significant market power (SMP), and impose targeted obligations to address competition concerns. This page explains the legal basis for SMP regulation, how Ofcom conducts market reviews, the range of potential remedies, how decisions are implemented and appealed, and why this regime matters for operators, wholesale customers and investors.

Legal Basis for SMP Regulation

Statutory foundation

The UK framework is established under the Communications Act 2003 (CA 2003), particularly:

• ss 45–50 (regulatory conditions)
• ss 78–86 (market reviews, SMP assessments and obligations)
• s 135 (information gathering)
• ss 192–196 (appeals)

Although originally derived from the EU regulatory package, the UK SMP regulation regime remains substantively in place following Brexit. Ofcom continues to apply concepts and analytical tools from the former EU SMP Guidelines, including the three-criteria test and the competition-law concept of dominance.

Ofcom’s statutory duties in relation to SMP regulation

Under CA 2003 s 3, Ofcom must further:

• the interests of citizens in relation to communications; and
• the interests of consumers, where appropriate by promoting competition.

These duties underpin Ofcom’s interpretation of market dynamics, SMP findings and choice of remedies.

What SMP Regulation Is

SMP regulation is a forward-looking, ex-ante framework designed to prevent anti-competitive behaviour in markets where effective competition is not yet established. It involves:

• defining relevant markets;
• assessing whether any operator holds SMP (akin to dominance under UK competition law); and
• imposing proportionate regulatory obligations to address the risks arising from SMP.

In recent years, the objective is not to control competitive retail markets, but to ensure wholesale markets function effectively so that downstream retail competition can develop.

Ofcom’s Market Review Process to impose SMP regulation

Ofcom follows a structured, evidence-based approach divided into three stages.

Stage 1: Market definition

Ofcom defines the relevant market based on substitutability and competition-law principles, considering:

• demand-side and supply-side substitution;
• functional level (wholesale or retail);
• product and geographic scope;
• technology and network topology.

Markets commonly reviewed include:

• wholesale local access (fixed networks);
• leased lines and business connectivity;
• wholesale broadband access;
• call termination on fixed and mobile networks.

Definitions are reassessed periodically (typically every five years) to reflect technological and competitive developments.

Stage 2: Assessing significant market power

SMP is the ability of a provider to behave independently of competitors, customers and end-users. Ofcom evaluates:

• market shares and concentration;
• barriers to entry and expansion;
• economies of scale and scope;
• access to essential facilities;
• countervailing buyer power;
• dynamic competition and potential entry.

A market share above 50 per cent may indicate SMP, but is never determinative; the assessment is holistic.

Stage 3: Designing SMP remedies

If SMP is found, Ofcom must decide which obligations are objectively justified, proportionate, transparent and targeted to address the identified risks (CA 2003 s 47).

Remedies typically address:

• the risk of anti-competitive pricing;
• discriminatory access;
• foreclosure of competitors;
• operational leverage arising from vertically integrated business models.

SMP Remedies

Ofcom may impose one or more of the following remedies.

Access obligations

Requiring the SMP provider to supply access to network elements, interfaces, facilities or information on fair and reasonable terms.

Non-discrimination

Preventing favourable treatment of an SMP operator’s retail arm or selective treatment of wholesale customers.

Transparency and publication

Mandating the publication of:

• reference offer(s);
• technical information;
• service descriptions;
• key performance data.

Price controls and cost orientation

Ofcom may impose charge controls, set cost-orientation requirements, or cap prices, typically using CPI-X or cost-modelling methodologies.

Accounting separation

Requiring separate accounts for regulated and unregulated businesses to support monitoring and cost-orientation.

Quality of service

Specifying minimum service standards for provisioning, repair and service levels.

Separation (functional or structural)

In exceptional cases, Ofcom may impose functional separation where conduct remedies are insufficient to secure compliance.

Withdrawal of remedies

Obligations may be withdrawn where a market becomes effectively competitive.

How Ofcom Conducts a Market Review

Consultation

Ofcom publishes a detailed consultation setting out proposed market definitions, SMP findings and draft remedies, inviting stakeholder responses.

Information gathering

Ofcom may compel information under CA 2003 s 135, with significant penalties for non-compliance.

Final statement

Following stakeholder submissions, Ofcom issues its final statement, including legally binding SMP conditions.

Monitoring and enforcement

Obligations are monitored throughout the review period, typically five years.

Current Market Reviews

Market reviews in force (2021–2026)

• Wholesale Fixed Telecoms Market Review (WFTMR)
• Wholesale Voice Markets Review (WVMR)
• Wholesale Mobile Call Termination Review (WMCTR)
• Hull Area Market Review
• Business Connectivity Market Review (BCMR)

Market reviews in progress (2026–2031)

• Telecoms Access Review (TAR) 2026–31
• Call Termination Markets Review 2026–31

These processes will shape future fibre access, leased-line and interconnection markets as the UK transitions to full-fibre and all-IP networks.

Appeals

Right of appeal (s 192 CA 2003)

Affected persons may appeal Ofcom’s SMP findings or remedies to the Competition Appeal Tribunal (CAT).

Standard of review

Since reforms introduced by the Digital Economy Act 2017, appeals are generally determined on judicial review principles, not a merits-based reassessment.

Price-control matters may be referred to the CMA.

Why SMP Regulation Matters

For operators

SMP regulation defines the wholesale terms on which competitors gain access to critical infrastructure. Compliance failures carry significant enforcement risk.

For wholesale customers

SMP remedies create enforceable rights relating to access, pricing and service quality.

For investors

Market reviews determine the regulatory environment for long-term investment, particularly in fibre, leased-line and mobile termination markets.

How Bratby Law Assists

We advise operators, wholesale customers and investors on all aspects of SMP regulation, including:

• mapping activities to Ofcom’s market definitions;
• nalysing SMP determinations and draft remedies;
• preparing responses to consultations;
• negotiating and drafting reference offers and access agreements;
• supporting engagement with Ofcom;
• advising on appeals before the CAT.

Why Choose Bratby Law

Specialist expertise in regulated telecoms markets

SMP regulation is one of the most technical areas of UK telecoms law. We combine deep regulatory knowledge with first-hand experience of how Ofcom conducts market definition, SMP assessments and the design of remedies. Our advice is grounded in the realities of how regulatory decisions are made and how they affect network operators, wholesale customers and investors.

Technical understanding of networks and wholesale markets

Our background spans science, network economics and telecoms operations. This enables us to translate Ofcom’s analytical frameworks into practical commercial implications. Clients rely on us to explain not only what the regulation requires, but how it will shape pricing, access, service levels and investment models.

Experience with complex submissions and regulatory engagement

We regularly support clients through market reviews, including drafting consultation responses, negotiating reference offers, and managing information requests. We understand Ofcom’s expectations and how best to position evidence to achieve proportionate and workable outcomes.

Strategic advice informed by real-world implementation

SMP remedies have material operational and financial impacts. We help clients anticipate these impacts early, assess regulatory risk, and structure wholesale agreements that reflect evolving access and pricing obligations.

End-to-end support including appeals

Where Ofcom’s decisions are disputed, we provide support through Competition Appeal Tribunal proceedings, including coordination with economists and expert witnesses. Our experience across government, private practice and in-house roles means we are well placed to guide clients across the full lifecycle of regulatory intervention.

Independent directory rankings

Our specialist expertise is recognised in major independent legal directories:

• Chambers & Partners: Rob Bratby is ranked in the UK Guide 2026 in the “Telecommunications” category: Chambers
• The Legal 500: Rob Bratby is listed as a “Leading Partner – Telecoms” in London (TMT – IT & Telecoms): The Legal 500
• Lexology: Rob Bratby is featured on Lexology’s expert profiles (Global Elite Thought Leader): Lexology

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