rec_202

(202) The purpose of functional separation, whereby the vertically integrated undertaking is required to establish operationally separate business entities, is to ensure the provision of fully equivalent access products to all downstream operators, including the operator’s own vertically integrated downstream divisions. Functional separation has the capacity to improve competition in several relevant markets by significantly reducing the incentive for discrimination and by making it easier to verify and enforce compliance with non-discrimination obligations. In exceptional cases, it should be possible for functional separation to be justified as a remedy where there has been persistent failure to achieve effective non-discrimination in several of the markets concerned, and where there is little or no prospect of infrastructure competition within a reasonable time-frame after recourse to one or more remedies previously considered to be appropriate. However, it is very important to ensure that its imposition preserves the incentives of the undertaking concerned to invest in its network and that it does not entail any potential negative effects on consumer welfare. Its imposition requires a coordinated analysis of different relevant markets related to the access network, in accordance with the market analysis procedure. When undertaking the market analysis and designing the details of that remedy, national regulatory authorities should pay particular attention to the products to be managed by the separate business entities, taking into account the extent of network roll-out and the degree of technological progress, which may affect the substitutability of fixed and wireless services. In order to avoid distortions of competition in the internal market, proposals for functional separation should be approved in advance by the Commission.

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Source: EUR-Lex (Cellar) · retrieved 2026-10-28 · Text as adopted (Official Journal); later amendments are not incorporated in this text.