Communication of 29 May 2024 on applying a margin squeeze test for the large business segment at the level of individual contracts

In order to serve the large business segment alternative operators use Proximus wholesale offers that may fall under the product definition of either Market 3b1/2014 or Market 4/2014. On both markets Proximus has significant market power and therefore both in the CRC Decision of 29 June 2018 regarding the analysis of the broadband and television broadcasting markets and in the BIPT Decision of 13 December 2019 on the analysis of the high-quality access market the BIPT forbade Proximus to practise margin squeeze.

We talk of price squeeze or margin squeeze when the margin between all relevant revenues and the wholesale costs is not sufficient to cover the proper network and retail costs, including a reasonable return on capital. Margin squeeze can severely disrupt competition, jeopardising the possibilities of choice for the end-customer (in this case, wholesale customers) in the end.

As for the large business segment the BIPT last carried out a margin squeeze test in 2021 on the entire business portfolio of Proximus. As discussed in its communication of 7 December 2021, the BIPT could not find at the time any margin squeeze practices at the portfolio level based on this test. In that communication the BIPT also pointed out this does not exclude the possibility that in individual cases competitive problems may occur in that segment and that in view of that the BIPT will monitor the competition situation in that segment by performing systematic tests at the level of individual contracts. This communication reports on those tests.

The BIPT has carried out a margin squeeze test on a selection of Proximus contracts in the third and fourth quarter of 2023. The BIPT identified one contract being part of a framework agreement in which there was a negative margin and thus a possible infringement. However, considering the circumstances, in the light of some uncertainties about the interpretation of the guidelines, the BIPT is of the opinion that there is insufficient justification to start an infringement procedure.