|
|
Under the old regulatory framework40, National Regulatory Authority (NRA) imposed ex ante obligations on operators with market share exceeding 25% of relevant market.41 Under the new framework, NRAs would impose ex ante obligations only if there is a dominant player according to the new definition of “significant market power” (SMP)42 which has been built upon general concepts of competition law, referred to as “light regulation”, as applied to normally functioning competition.43 Therefore, the EU new regulatory framework is based on the regulatory approach focusing on two fundamental procedures. The first is to identify market definition, and the second is an analysis to identify SMP on which ex ante regulations may be imposed.44
- Market Definition Procedure: the market definition is a procedure under the provision of the Framework Directive, to define the boundary of “relevant markets” which is a ground of “market analysis”. This is the first regulatory feature of the new framework in which the EU adopted in accordance with the principles of competition law. Moreover, the provision also provided necessary considerations taken into account for applying the market definition including “market recommendation and guidelines”, “national circumstances,” and “geographic territory”.45 The market recommendation and guidelines shall be regularly46 adopted by the Commission to identify relevant product and service markets within the electronic communications sector, in accordance with the principles of competition law.47 Systematically, the provision also set the initial list of relevant product and service markets.48 However, it is questionable of what extent is the legal binding of the recommendation, especially in regards to how each NRA would define its national market definition.49
- Market Analysis Procedure: The next regulatory feature of the framework is a procedure of market analysis in order to find out that: (1) there are undertakings with “significant market power”50 on the respective relevant markets, where appropriate, in collaboration with the national competition authorities,51 (2) Whether a relevant market is effectively competitive,”52 (3) the NRA is required to determine whether to impose, maintain, amend or withdraw appropriate obligations on undertakings in accordance with the competition effectiveness.53
Remarkably, the EU new regulatory framework establishes a procedural system that integrates the Community level into administrative procedure at the Member State level.54 The so-called Article 7 procedures require NRAs to notify the regulatory measures they intend to take to the European Commission and the other NRAs, prior to their adoption.55 When an NRA notifies proposed measures under the Article 7 procedures, the Commission has one month in which to assess the measures (“phase one” procedure).56 In case that the Commission considers the proposed measures would create a barrier to the single market or if it has serious doubts as to their compatibility with Community law, it can conduct a more detailed investigation lasting a further two months (“phase two” procedure)57. The commission may withdraw the draft measures together with a detailed and objective analysis, and specific proposals for amending the draft measure (“veto decision”).58 59
As a recent remark by Viviane Reding60, those EU countries which have fully implemented and efficiently applied EU rules have been the most successful in terms of competition and investment on the electronic communications markets.61 Therefore, the EU telecommunications is in the need of a true internal market for Europe's electronic communications sectors.
2.2 The Phasing-out
The U.S. telecommunications
Generally, sector-specific regulations referred to as ex ante regulations create market distortions which are biased against an error of business doing consumer harm. General competition law referred to as ex post regulations is likely to bias toward another error of ensuring business to operate. The major argument is that ex ante regulations imposed by the regulator may not be well-defined since government officials generally lack sufficient information and incentive to make decisions.62 Then the market-based regulations should be the final destination of industries. The U.S. telecommunications are a good example of this transitioning policy.
It could be noted that U.S. telecommunications industry was subjected to the general competition at the beginning. The industry structure has then gradually reformed; the need of preconditioning has changed, and needed to be redefined. Interconnection issue, however, is the most required precondition in telecommunications competition preceding other issue such as universal services, price-cap, merger, etc. since it is the only factor to allow entrants compete with less network effects. The U.S. telecommunications has seen a series of regulatory controversy on interconnection since the “Kingsbury Commitment” until recently in the “Trinko” case.63 While there is interconnection as a sector-specific regulation, there has also been a developing doctrine: “essential facilities”, in general competition context since 191264, particularly dealing with the interconnection issue in two major cases65, and then appears to be an exception to the general antitrust rule.
The essential facilities doctrine consists of four elements: (1) the control of the essential facility by a monopolist; (2) a competitor’s inability to duplicate the essential facility; (3) the denial of the use of the facility to a competitor; and (4) the feasibility of providing the facility. This was reflected in MCI Communications Corp. v. AT&T (1983) in ruling for opening up local markets to the competition in the long distance market.66 The doctrine could be seen in the same reasoning of interconnection under the general competition concept of “refusal to deal”.67 While the Telecommunications Act of 1996 imposes interconnection duty on carriers, the essential facilities doctrine requires proof that a competitor needs access to compete and the business justifications defense appears to be limited.68 In addition, the 1996 Act has seemed to put an end to antitrust supervision of the telecommunications industry and place jurisdiction of the markets under the FCC69; however, Section 601(b)(1) of the Act contains an antitrust-specific saving clause that provides, “…nothing in this Act shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws”. In this viewpoint, the essential facilities doctrine could be a progressive transition for the interconnection regulation as its characteristics conform more closely to that of general competition concept.70 |
|
|
40 Directive 97/33/EC
41 Directive 97/33/EC, Article 4(3)
42 Directive 2002/21/EC, Article 14, 16.
43 Europe’s Information Society, “Electronic Communications New Regulatory Framework – Principles”, eCommunications Regulation - IS Policy Fact Sheet, <http://europa.eu.int/ information_society/doc/factsheets/013-regulatory_framework.pdf>, (September 2005)
44 Buigues, supra note 62, p.12.
45 Directive 2002/21/EC, Article 15(3).
46 Directive 2002/21/EC, Article 15(1), subparagraph 2.
47 Directive 2002/21/EC, Article 15(1).
48 Directive 2002/21/EC, Annex I., see also Commission Recommendation 2003/311/EC – The recommendation of 11 February 2003.
49 Loetz, Sascha., and Andreas Neumann, “The Scope of Sector-specific Regulation in the European Regulatory Framework for Electronic Communications”, German Law Journal, Vol. 04, No. 12, p.1317-1321.
50 Commission guidelines on market analysis and the assessment of significant market power under the Community regulatory framework for electronic communications networks and services (2002/C 165/03)
51 Directive 2002/21/EC, Article 16(1).
52 Directive 2002/21/EC, Article 16(2).
53 Directive 2002/21/EC, Article 16(3) , (4).
54 Loetz, supra note 49, p. 1332.
55 Directive 2002/21/EC, Article 7
56 Directive 2002/21/EC, Article 7(3)
57 Directive 2002/21/EC, Article 7(4)
58 The Commission has adopted a decision requiring NRAs to withdraw their proposed measures to date only in four out of 334 cases (19 January 2006), see Europe’s Information Society, “Article 7 procedures – consolidating the EU single market for electronic communications”, eCommunications Regulation - IS Policy Fact Sheet, <http://europa.eu.int/information_society/doc/factsheets/052-art7-en.pdf>, (January 2006)
59 Directive 2002/21/EC, Article 7(4)
60 Member of the European Commission responsible for Information Society and Media
61 Reding, Viviane. “Why we need more consistency in the application of EU telecom rules”. Remark at Telecom Italia Reception, Brussels, 11 December 2006
62 Buigues, Pierre-Andre. “Competition Policy v. Sector-Specific Regulation in Network Industries-The EU Experience”. Submitted to UNCTAD’s 7th Session of the Intergovernmental Group of Experts on Competition Law and Policy. Geneva. 30 October to 2 November 2006. p.7.
63 Verizon Communs., Inc. v. Law Offices of Curtis V. Trinko, LLP, 539 U.S. 980 (U.S. 2003)
64 United States v. Terminal R.R. Ass’n of St. Louis, 224 U.S. 383 (1912)
65 MCI Communications Corp. v. AT&T and Verizon Communications., Inc. v. Law Offices of Curtis V. Trinko, LLP
66 MCI Communications Corp. v. AT&T, 708 F.2d 1081, 1132 (7th Cir.1983)
67 Rubin, Jonathan L., Norman Hawker, and D. Adam Candeub. Network Access, Regulation and Antitrust. The Economics of Legal Relationships. 8, Access Remedies after Trinko. Diana L. Moss. New York: Routledge, 2005. p.71.
68 There are 2 main reasons disfavoring the essential facilities doctrine, as put by Professor Howard A. Shelanski, Antitrust Class Spring 2007, Boalt Hall Law School:
-
The doctrine provides very pluasiblity in punishing investors and innovators
-
The doctrine turns court to regulators of a specific industry, which is not difficult and out of scope of courts.
69 Rubin, Jonathan L., supra note 67, p.58.
70 It is an objective to encourage competitors to build facilities or circumvent rather than free-ride. The doctrine is actually no greater than the only reason of no valid business justification as seen in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985). Shelanski, supra note 68.
|
| |
This article is published with the kind permission of Piyabutr Bunaramrueang, Professor of Law at the School of Law, University of the Thai Chamber of Commerce. This article was presented at the 2007 ALIN International Academic Conference at Chulalongkorn University. Except where otherwise noted, content on this site is licensed under a Creative Commons Attribution 3.0 License, <http://cc.in.th/wiki/by_f> |
|
