by Ewelina D Sage *
I. Background – behind the scenes
2. Relevant variables
The origin of the direct intersection between antitrust and regulatory intervention in telecoms are European rather than national in nature. They can be traced back to the implementation of the Electronic Communication
Framework of 20024 and the general applicability of competition law. Indeed,
3 J. Black, Rules and Regulators, Oxford 1997, p. 236.
4 The Liberalisation Package includes 5 directive and other associated acts the most important of which are in this context: Framework Directive 2002/21/EC, Authorization Directive 2002/20/ EC, Access Directive 2002/19/EC and Universal Services Directive 2002/22/EC, OJ [2002] L 108 and the Privacy Directive 2002/58/EC, OJ [2002] L 201; Guidelines on market analysis and the assessment of significant market power under the Community regulatory framework for electronic communications networks and services, OJ [2002] C 165/6, and Commission Recommendation on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation C(2003) 497, OJ [2003] L 114/45.
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seeing as incumbent telecom operators are far from immune to antitrust scrutiny, it is the prohibition of a dominant position abuse that is of particular relevance in this context. The Liberalisation Package’s reliance on the antitrust concept of relevant market definition has nevertheless proven in Poland to be the source of an inherent uncertainty concerning the practical rapport of competition law enforcement and regulatory interventions.
On the one hand, competition law and its enforcement practice precedes telecoms regulation both in time as well as experience and can thus be perceived as somewhat of an older brother in this relationship. This realisation seems to
be reflected by the fact that Article 15(1) of the Framework Directive5 explicitly
requires the use of competition law principles for the definition of relevant markets in the electronic communications field. This fact alone effectively introduces one of the most fundamental concepts of competition law, the notion of ‘a relevant market’, as the basic comparative framework for telecoms regulation. It represents the formalisation of the growing and increasingly acknowledged entwining of
sector-specific regulation and antitrust enforcement6. The EU liberalisation
process is in fact directly based on the assumption that regulation can be imposed only on those markets, defined as relevant on the basis of antitrust rules, which are void of effective competition. As a result, the Framework Directive effectively established an obligation to directly respect some basic principles of competition law in the framework of regulatory proceedings.
However, the unquestionably case-specific nature of relevant market definition in antitrust enforcement has been notably blurred here by the pre- determination of markets in the Commission Recommendation 2003/311/
EC7 regarding relevant product and service markets within the electronic
communications sector susceptible to ex ante regulation in accordance with the
Framework Directive 2002/21/EC8. Crucially, the Recommendation contained
a list of markets that the Commission considered at the time of its issue to suffer from the lack of effective competition and thus, which it believed to be
susceptible to ex ante regulation. Broadcasting transmission services used to
5 Directive 2002/21/EC of the European Parliament and of the Council on a common regu- latory framework for electronic communications networks and services, OJ [2002] L 108/33.
6 This entwining was noted by literature already before the liberalisation package see e.g. P. Larouche, Competition law...; A. Bavasso, Communications in the EU Antitrust Law: Market power and Public Interest, Hague 2003; W. Kip Viscusi, J. E. Harrington, J. M. Vernon,
Economics of Regulation and Antitrust, MIT Press, Cambridge Mass 2000.
7 Commission Recommendation of 11 February 2003 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communication networks and services C(2003) 497, OJ [2003] L 114/45.
WHO CONTROLS POLISH TRANSMISSION MASTS?… 133
deliver broadcast content to end users (market 18) were among the 7 retail and 11 wholesale electronic communication markets originally identified by the Commission. However, no list of that kind has ever been used in the realm of competition law. The rapport between the individualistic nature of relevant markets in antitrust enforcement and the generalist nature of the list created for the purpose of telecoms regulation has thus become subject to
controversy between the involved national authorities9. As such, regulation can
be perceived as the younger sibling in this relationship that is expected to use the experiences accumulated over the years by its competition law counterpart but within the special borders pre-determined by their parent, in other words, the European Commission.
In practice, the uncertainty about the state of the relationship between antitrust and regulatory intervention can be reinforced by the peculiarities of national legislation implementing the EU package as well as its domestic enforcement practice. This consideration derives from the inherent feature of EU directives – the fact that they must be transposed into the legal systems of all EU Member States. Eventual divergences, not only between the pro- competitive results achieved in different Member States but also between the aspirations of the EU liberalisation package and the outcomes of its practical application are thus inevitable.
The second factor affecting the distance in the relationship between antitrust and regulatory intervention is the actual state of competition found on particular national telecoms markets. While the Commission has identified what criteria
a market must fulfil to be subject to ex ante regulation, the NRAs are obliged
to individually assess which of their own relevant markets fulfils the specified
conditions of ex ante regulation. Moreover, the ECJ confirmed recently that
this obligation, placed on NRAs by the Framework Directive, cannot be limited
by national legislation10. The three criteria to be considered are: high and
non-transitory barriers to entry enforced by the fact that the structure of the market does not independently evolve towards effective competition within the relevant time horizon coupled with the realisation that the application
of antitrust alone is not able to adequately address the arising issues11. As a
9 The Recommendation is not binding on national competition authorities in their analysis of the electronic communication field. It does however constitute an essential constraint of regulatory intervention.
10 ECJ judgment of 3 December 2009,C-424/07 Commission v Republic of Germany, available at http:eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62007J0424:EN: HTML, recital 65-67.
11 Particularly relevant here is the fact that because antitrust enforcement relies on individual cases, its principles, and thus also market impact, develops ‘sporadically (...) and may leave key issues untouched’ see R. Baldwin, M. Cave, Understanding Regulation. Theory, Strategy and Practice, Oxford 1999, p. 45.
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result, while competition law enforcement and regulation would by design have no point of direct intersection on competitive markets (since they would not
become subject to ex ante regulation), that relationship was predestined to be
close on markets struggling with market power.
While it is the state of competition in domestic telecoms that is decisive for
the application of ex ante regulation, it is the identification of prohibited market
practices that conditions the involvement of antitrust authorities. Thus, while both bodies must start their intervention by defining their relevant markets, the conclusions they reach can, but by no means have to coincide. Leaving aside for the moment the issue of the correctness and accuracy of market definition in any given case, the two bodies see the relevant market from an entirely different perspective. NRAs look first to the list published by the Commission. In truth, the list has neither a definite, biding or indeed closed character – national regulators are meant to define actual relevant markets in their own territory and in particular, to segment them further subject to notification and approval of the Commission. By contrast, it is the alleged existence of prohibited market practices (such as discrimination) that triggers an antitrust intervention. In other words, competition authorities will not get involved if market power exists but is not abused. In such circumstances, there will be no point of direct impact between antitrust enforcement and regulation. Still, if a dominant undertaking actually abuses its position on an interconnected, or indeed potentially identical relevant market to that defined by the NRA, then the two types of intervention will surely intersect.
Finally, the closeness of the bond between regulation and antitrust enforcement can also be greatly affected by their diverging nature (primarily
reactive vs. proactive), character (ex ante vs. ex post), instruments of intervention
(type of sanctions) and direct aims12 assuming that the improvement of
consumer welfare constitutes their common ultimate goal13. On highly
concentrated markets both types of interventions are likely to coincide with
12 The immediate aim of sector-specific regulation is to facilitation competition while antitrust is used to minimise its distortion; on the specifically pro-competitive function of telecoms regulation in Poland see M. Szydło, Regulacja sektorów infrastrukturalnych jako rodzaj funkcji państwa wobec gospodarki, Warszawa 2005 pp. 93-94.
13 The ultimate goals of competition law are still being debated both on the international as well as national level see D. Miąsik, ‘Controlled Chaos with Consumer Welfare as the Winner – a Study of the Goal of Polish Antitrust Law’ (2008) 1(1) YARS; on the other hand, regulators have been well known to pursue other, socio-political goals that are sometime in stark opposition to consumer welfare cf ‘Although maximising economic efficiency (…) may be touted by economists as our goal, in practice (…) regulators (…) respond to a variety of political constituencies’ in W. Kip Viscusi, J. E. Harrington, J. M. Vernon, Economics of Regulation ..., pp. 9-10; see also M. Król, ‘Liberalization without a Regulator. The Rail Freight Transport Market in Poland in the years 1996-2009’ (2010) 3(3) YARS.
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respect to the same entities and potentially, consider the very same market practices. However, while the comparative framework applicable to both is meant to coincide (relevant markets defined on the basis of competition law rules) their diverging characteristics might affect their outcome. Considering instruments of intervention for instance, while regulation is by definition meant to prescribe future actions (pro-active), the traditional approach the enforcement of the unconditional prohibition placed by antitrust rules on the abuse of dominance puts a stop to an existing infringement and penalises past
misconduct (reactive & repressive14). Thus, the divide between regulatory and
abuse decisions would not be as great where the latter can contain remedies (positive obligations referring to the means of ceasing the infringement),
as is the case on the basis of Article 7 Regulation 1/2003 in the EU15. The
difference would be much more pronounced if the traditional approach was
followed, as is the case in Poland16.