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Indeed, the approaches of SSR are often different from those of competition rules. In the field of conditions for access to a network, for instance, SSR often takes into account the investments incurred by the owner of the infrastructure, the existence of intellectual property rights or the necessity to preserve competition in the long run. In contrast, competition rules are less concerned with these objectives. For instance, a generous application of essential facility doctrine may have a disincentive effect on potential competitors’ innovations and investments because they can free-ride on others’ commercial advantages by arguing that the latter is an essential facility. Since competition authorities are primarily concerned with the elimination of actual restrictions of competition, they generally give little importance to the necessity that access conditions ensure sufficient rates of return on investments and do not undercut incentives for innovation etc. A possible outcome is that NRAs may legitimate access conditions that a competition authority would on the contrary consider as incompatible with EC competition law.
Therefore, it is necessary to establish a cooperation measure at the enforcement stage, corresponding with the argument brought forward by the Commission that effective cooperation between competition authorities and regulatory authorities would prevent the duplication of procedures concerning identical market issues.
The third proposal of this paper is, if possible, to set up a cooperation procedure, analogous to the Article 7 Procedure, which can be launched by the Commission when a market failure is detected under EC competition law in the process of enforcement of SSR.
When detecting a market failure after the imposition of regulatory obligations, the Commission should be granted the power to ask for reasoned opinions from NRAs. After receiving the letter for reasoned opinions from the Commission, the NRAs should, within a certain time limit, provide sufficient justifications for the market failure identified by the Commission, or submit revised regulatory obligations in relation to the market failure concerned. Within both cases, the NRAs must take a new market analysis, as it did before for their draft measures under the current Article 7 Procedure. Similar as its veto power in the examination of draft measures, the Commission also enjoys veto power on the reasoned opinions or revised regulatory obligations of the NRAs. If the veto power is deployed by the Commission, NRAs have to take utmost account of the comments of the Commission and submit new regulatory measures afterwards.
This idea was unfortunately not yet caught by the Commission in its proposals for public input. A possible explanation is that at the current stage the Commission’s focus is the extension of its veto power to the area of remedies so that it is hesitating to go this far. However, the author wishes the Commission will take this step in its next review project.
3. No need to amend Article 5 of Access Directive
As we discussed before, Article 5(1) of Access Directive provides NRAs with an opportunity to impose regulatory obligations on none-SMP undertakings without conducting market analysis. Under the current Article 7 Procedure, the Commission enjoys no veto power on national regulatory obligations. Therefore, although Article 5(3) of Access Directive requires NRAs to implement this provision in accordance with the Article 7 Procedure, the Commission cannot actually surveille such regulatory measures. This could also render conflicts between the Commission and NRAs.
However, if the veto power in Article 7 Procedure would be extended to the level of remedies according to the first proposal of this paper, then the Commission could be given the possibility to veto NRA measures taken in this regard. Under such a situation, there would be no conflict between the Commission and NRAs, though those obligations are imposed without conducting market analysis.
The Commission paid attention to this issue in its proposal where it submitted that
“Article 5(1) of the Access Directive empowers NRAs to impose obligations, under certain conditions, on non-SMP undertakings in order to ensure adequate access and interconnection and interoperability of services. Unlike other obligations that can be imposed on companies by the NRAs, these obligations can be imposed without conducting market analysis. In order to avoid over-regulation and a fragmentation of the internal market by the imposition of inconsistent obligations under this article, the Commission could be given the possibility to veto NRA measures taken in this area.”
iii. Resolving Conflicts at National Level
The jurisdictional conflicts between competition authorities and regulatory authorities may exist not only at European level, between the Commission and NRAs, but also at national level, between NRAs and NCAs. In order to prevent national duplication of procedures, the 2002 Framework requires Member States to ensure consultation and cooperation between NRAs and NCAs on matters of common interest. However, because of the imperfection of the cooperation mechanism of the 2002 Framework as indicated above, the risk of multiple proceedings before NRAs and NCAs remains still high. In the following this paper will try to examine this issue first by ex ante preventive measures and second by ex post cooperative measures. The former measures concern the respective competences of NRAs and NCAs to liberalize the electronic communications sector while the latter measures refer to the allocation of jurisdictions between these two groups of institutions when a case comes up.
1. Ex ante preventive measures
Through integrating competition law methodologies into SSR provided by the 2002 Framework, NCAs are expected to be bound by the isogenously regulatory measures of NRAs through the cooperation mechanism, despite of the fact that the latter work on an ex ante basis, and therefore be self-restrained to take duplicated action ex post based on competition law. In particular, the 2002 Framework sets up a limitation that SSR can only be imposed where competition law alone is insufficient for a specific market failure. In so doing, the 2002 Framework aims to draw a borderline between the application of competition law and SSR at the stage of market analysis in order to eliminate the jurisdictional conflicts in the area of common interests between the two liberalization instruments. However, ambiguity of insufficiency of competition-law remedies and the loose cooperation between NRAs and NCAs would undermine the effectiveness of this promising mechanism.
Therefore, the fourth proposal of this paper is to urge the Commission to draw a guideline to set up a more effective cooperation mechanism between the NRAs and the NCAs with regard to the ambiguous concept of (in)sufficiency of competition law.
The 2002 Framework can be divided into three layers of SSR according to their respective objectives. First, “spectrum allocation” deals with the allocation of scarce resources by Authorization Directive; second, “social regulation” aims to ensure that the needs of citizens which are considered to be important by the legislature are satisfied even though they are not necessarily guaranteed by the market alone under Universal Service Directive; and third, “economic regulation” aims at ensuring the functioning of an effectively competitive internal market, thereby maximizing economic efficiency in line with Framework Directive and Access Directive. Driven by different underlying methodologies from competition law , spectrum allocation and universal service obligations are traditionally thought of as areas that competition law alone is insufficient to deal with. Therefore, the overlapped jurisdictional conflicts between NRAs and NCAs can only arise at the third layer of regulation, “economic regulation”. Based on assumptions of such the new guideline is expected to be drawn as follows.
(1) Exclusive areas of SSR vis-à-vis competition law
The exclusive jurisdictions of SSR to which the reach of national competition law should not be extended must be clearly underlined. These areas at least include (i) protection of universal services obligations and (ii) allocation of radio spectrum. This argument is compatible with the current regulatory framework and can be effectuated with little effort.
First, with regard to universal service obligations the recital 3 of Universal Service Directive clearly provides that
“(Universal service) obligations will not be regarded as anti-competitive per se, provided they are administered in a transparent, non-discriminatory and competitively neutral manner and are not more burdensome than necessary for the kind of universal service defined by the member”.
In addition, it is a principle confirmed by ECJ in Corbeau Case that universal service obligations may be a justification to exclude competition according to Article 86(2) of the EC Treaty. Therefore, it goes without doubt that a proportionate imposition of universal service obligations precludes the application of competition law. Then according to the words held by European courts and the Commission that 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 , there should be no duplication of procedures at national level regarding universal service obligations.
Second, as far as spectrum allocation is concerned, Authorization Directive leaves little room for competition law to play. It only requires that the procedure for assignment of radio frequencies should in any event be objective, transparent, non-discriminatory and proportionate. In accordance with the ECJ case law, the procedure for assignment of radio frequencies should be assessed according to Article 49 of the EC Treaty, which concerns the freedom to provide services. Furthermore, according to Authorization Directive undertakings that breach obligations under spectrum allocation will be monitored by NRAs and may be punished by a relevant authority. In this regard NCAs are certainly precluded by Authorization Directive and therefore should not take duplicated procedures concerning spectrum allocation.
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