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Perhaps realizing this problem, the Commission without further develop the concept of insufficiency of competition law alone states that
“in practical application NRAs should consult with their NCA and take into account that body’s opinion when deciding whether use of both complementary regulatory tools is appropriate to deal with a specific issue, or whether competition law instruments are sufficient”.
Reflecting on this interpretation, this paper supposes that the Commission is not so much about to clarify the concept of insufficiency of competition law, but to establish a cooperation mechanism between competition authorities and regulatory authorities. The Commission expects the (in)sufficiency of competition law can be determined jointly by the two institutions through an institutional negotiation rather than a substantive analysis. However, no provision of the final decision maker by the Commission would lead to a risk indicated in the following paragraphs.
In order to target this risk, it is better to assess the negative effects of the uncertainty of the concept of insufficiency of competition law within the entire EC legal context. On the one hand, because the Commission is granted veto power on the definition of national markets, DG Information, together with DG Competition, can finally determine whether EC competition law alone is sufficient or not with regard to a certain market failure. In other words, there does indeed stand a final decision maker, i.e. the Commission. On the other hand, after the adoption of the Commission’s veto decision, (1) Member States are competent to institute an action of annulment before the ECJ according to Article 230 EC Treaty against the Commission’s decision on behalf of their NRAs; (2) the national court can refer a case accidentally concerning validity of the Commission’s decision to the ECJ by a preliminary ruling in accordance with Article 234 of the EC Treaty; and (3) undertakings directly and individually concerned by the Commission’s decision can bring an action of annulment pursuant to Article 230 of the EC Treaty . Therefore it is reasonably safe to draw a conclusion that there is no jurisdictional conflict between EC competition authorities, say the Commission, and the NRAs stemming from the ambiguous concept of (in)sufficiency of competition law vis-à-vis SSR.
Nevertheless, the 2002 Framework nevertheless keeps silence on the final decision maker with regard to the diverging views on the (in)sufficiency of national competition law between the NRAs and the NCAs. The NCAs have no veto power or equivalent to challenge the decisions of NRAs which still exclusively fall into the competence of the NRAs. The present coordination mechanism may be inefficient especially in case of a failure of the negotiation. Therefore, a possible risk may be detected that NCAs might resolve their conflicts with the NRAs by undoing the latter’s work through the application of competition law on an already regulated issue ex post.
To conclude, the ambiguity of insufficiency of competition law will not lead to jurisdictional conflicts between EC competition law and SSR while it may raise a risk of institutional tensions between national competition law and SSR. Unfortunately the Commission appears to pay no attention to this problem so far.
iii. An Area outside Market Analysis: Article 5 of Access Directive
In line with the 2002 Framework, the regulatory obligations can be divided into two categories: (1) the obligations imposed independently of a specific designation by the authorities when an operator enjoys SMP and (2) the obligations that are imposed on the operators have specifically been designated as having SMP. A majority of regulatory obligations has been required to be imposed based on the three-step analysis and then to be reviewed by the Commission according to the Article 7 Procedure. Obligations imposed without conducting market analysis are outside the control of the Commission. Not all the obligations within the first sub-category may raise institutional conflicts between competition authorities and regulatory authorities, nevertheless there is an area within the first sub-category, i.e. Article 5(1) of Access Directive (hereinafter, Article 5(1)), which may engender institutional conflicts.
Article 5(1) empowers the NRAs to impose remedies under certain conditions upon undertakings without SMP in order to ensure adequate access and interconnection, and the interoperability of services in a way that promotes efficiency, sustainable competition, and gives the maximum benefit to end-users. Distinct from the second sub-category obligations the obligations under Article 5(1) can be imposed without conducting market analysis.
Three defects can be discovered with regard to the approach of Article 5(1). First, it may lead to over-regulation and a fragmentation of the internal market. Second, the obligations imposed according to Article 5(1) are not subject to the review of the Commission because the veto power of the Commission so far is not concerned with a national regulatory remedy. Third, the 2002 Framework does not either provide a coordination system at national level for the involvement of NCAs with regard to the obligations imposed under Article 5(1). All of these three defects may lead to a possibility of the intervention of the Commission with regard to the over-intrusive SSR which endangers intra-Community trade, and consequently the risks of jurisdictional conflicts. A proposal for reform of Article 5(1) of Access Directive is brought forward by the Commission, which will be discussed in the next part of this paper.
iv. Interim Conclusions
The 2002 Framework expects to prevent duplication of procedures between competition authorities and regulatory authorities by providing a cooperation mechanism. Although the two innovations greatly contribute to resolving institutional conflicts, there are still three residual areas to which the 2002 Framework offers no answer. These three areas in conjunction with its respective potential risks are to be concluded as follows.
1. No veto power on national regulatory remedies may lead to a risk that the Commission may intervene into national regulatory measures under EC competition law, in particular Article 82 of the EC Treaty.
2. Ambiguity of insufficiency of competition law may not lead to duplication of procedure at European level whereas it would give incentives to NCAs to apply national competition law ex post to already regulated issues when an agreement on insufficiency of competition law remedies may be not successfully achieved.
3. Article 5(1) of Access Directive which is falling outside the scope of the three-step analysis regime may invite the intervention of the Commission when national regulatory remedies without conducting market analysis may be over-intrusive and endanger intra-Community trade.
IV. PROPOSALS FOR RESOLVING CONFLICT
In order to resolve the risks of duplication of procedures stemming from the three residual problems within the 2002 Framework, further harmonisation is necessary. This part will first examine the relationship between competition law and SSR in the EC legal regime. Then four proposals will be brought forward to improve the current regulatory framework by smoothing the residual institutional problems according to the problems occurring at the European level first and at national level second.
i. The Relationship between Competition Law and SSR – The Principle of lex specialis with Exceptions
With regard to the headstream of its legal basis the EC legislative regime in the electronic communications sector can be found to be based either on Article 95 of the EC Treaty, aimed at creating a genuine internal market for the free movement of people, goods, services and capital in the EC, or on Article 86 of the EC Treaty, which provides for the abolition of special or exclusive rights granted to undertakings. Therefore, from the normative point of view the regulatory framework in the electronic communications sector should be a lex specialis vis-à-vis the EC Treaty, in particular, the economy-wide EC competition law. Be this proposition true, competition law should have not contradicted SSR in terms of the general legal principle Lex specialis derogat legi generali. Furthermore, competition authorities and regulatory authorities in the EC should have had no overlap of jurisdiction, as maintained by the USA Supreme Court in Trinko case.
However, the EC practice is not fully consistent with this nomological deduction. As a fact, “competition rules may apply where the sector-specific legislation does not preclude the undertakings it governs from engaging in autonomous conduct that prevents, restricts or distorts competition”. The Commission’s decision may suggest a dual indication. On the one hand, the Commission accepts the position of lex specialis of SSR to some extent because it used the word may; on the other hand the principle of lex specialis of SSR in the electronic communications sector is not absolute and in some cases subject to exceptions because competition law may intervene. Unfortunately the approach of the concurrent application of competition law and SSR into the electronic communications sector may overburden the electronic communications players in a sense to require them to comply with two different sets of rules simultaneously.
Justifications for this approach must be varied. A possible explanation may be grounded on the fundamental objective of EC Treaty, i.e. the establishment of a single market. Because the Community does not have exclusive competence in the area of the liberalisation of the electronic communications sector, Member States, according to the principle of subsidiarity set out in Article 5 of EC Treaty, enjoy a considerable margin of discretion therein. However, were every action taken by the Community only after the entering into effect of a harmonization of legislation, the establishment of a single market for the electronic communications sector would be too slow to be achieved. Taking into account of the close relationship between competition and liberalisation, intervention based on competition law, where EC has exclusive competence in so far as national regulatory measures are incompatible with the common market and may affect trade between Member States, may be an ideally alternative for the Community to harmonise the EC electronic communications market. Subsequently this approach was evolved into the model of the concurrent application of competition law and SSR in the EC regime.
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