Competition or regulation for multimedia?

Telecommunications Policy

Volumn 22, Issue 3, 1998, Pages 207-218

  Nihoul, Paul ^a  

^a UNIVERSITÉ CATHOLIQUE DE LOUVAIN   (Belgium)

Author keywords

[No Author keywords available]

Indexed keywords

COMPETITION; INFORMATION TECHNOLOGY; PUBLIC POLICY; SOCIETIES AND INSTITUTIONS; TELECOMMUNICATION; TELEVISION BROADCASTING;

MULTIMEDIA; TECHNOLOGICAL CONVERGENCE;

LAWS AND LEGISLATION;

EID: 0032049172     PISSN: 03085961     EISSN: None     Source Type: Journal    
DOI: 10.1016/S0308-5961(98)80036-0     Document Type: Article

References (76)

1. Although the convergence concerns different economic sectors, the debate will concentrate in the present article on telecom and broadcasting.
2. See, C. Blackman, Convergence between telecommunications and other media: how should regulation adapt? Telecommunications Policy, 1998, 22(3), 163-170.
3. Ireland's auntie May wins Plaudits: independent body managing national debt has been a big success. Financial Times, 15 August 1997, p 2. The National Treasury Management Agency claims a reduction of the Irish public debt from 125% GDP in 1985 to 72.4% at the end 1996 - thereby making the country eligible for the first wave of Member States to enter EMU.
4. See e.g. Breyer, S., Regulation and its Reform. Harvard University Press, Cambridge, 1982;
5. Majone, G., ed., Deregulation or Reregulation: Regulatory Reform in Europe and the United States. Pinter Publishers, London, 1990.
6. The ability to respond quickly and efficiently is only just beginning: we have to become accustomed to the idea of shopping across Europe via the Internet with electronic detectors for good bargains and the possibility of comparing single-currency denominated prices.
7. With Sony, Fuji TV and Softbank.
8. Financial Times, 26 August 1997, p 26.
9. For an analysis of the institutional structure of competition law in the EC, see a.o. Bellamy, Ch. and Child, G., Common Market Law of Competition. Sweet & Maxwell, London, 1993 (edition by V. Rose), pp 1-008 s.;
10. Whish, R. and Sufrin, B., Competition Law, Butterworths, London, 1993, pp. 31 s.;
11. and Korah, V., An Introductory Guide to EEC Competition Law and Practice. Sweet & Maxwell, London, 1994, pp 15s.
12. These comments are common in the literature concerning competition in the European Community. For references, see above.
13. See a.o. Scherer, F. M. and Ross, D., Industrial Market Structure and Economic Performance. Houghton Mifflin Company, Boston, 1990, p 9 s.
14. Representations are important in our society. Many decisions are taken in - direct or indirect - reference to the people. Yet, the latter do not decide on technical issues. They are rather given an option among political trends - which are made up of a great many representations. Decisions based on representations are not exclusive to popular processes. Many company managers and senior civil servants rarely have a precise idea of the matters which are submitted to them - with the result that their decisions are often based on representations as well. There is even a philosophical argument that all our decisions and behaviours are based on assumptions which are no less than representations or beliefs. See KPMG, Public Policy Issues Arising from Telecommunications and Audiovisual Convergence Report for the European Commission, 1996, p 171: 'We believe that regulation . . . over and above competition law must be fully justified' (italics added).
15. A lot of literature about universal service is of that nature: see a.o. Cartelier, L., Fournier, J. and Monnier, L. (dir.), Le secteur public en danger: critique de la raison communautaire, utilité publique et concurrence dans l'Union européenne, Economica, Paris, 1995.
16. A short overview on the reform may be found in Hocepied, Chr., Telecoms Sector Soon Fully Open to Competition. Competition Policy Newsletter, 1996, 2 (1), 13-17. The reform was partly implemented by the Commission: see mainly directives 88/301 (OJ 1988 L131/73) and 90/388 (OJ 1990 192/10) as amended by directives 94/46 (OJ 1994 L 268/15), 95/51 (OJ 1995 L 256/49), 96/2 (OJ 1996 L 20/59) and 96/19 (OJ 1996 L 74/13). Directives were also adopted by the Council and the European Parliament, in the framework of the Open Network Provision (ONP). For a full presentation of the reform, see my doctoral dissertation, where I argue that both sets of measures are basically similar in nature with the result that the so-called regulatory measures (ONP) may not be distinguished from those allegedly adopted in order to liberalise the markets.
17. One can hardly expect the Commission to suggest a scheme different from that which it has applied in telecommunications and which - it boasts - is offering unprecedented potential for growth in Europe.
18. A paper on that subject by B. Clements - an official actively involved in the preparation of the Green Paper - is due to published in the current or a next issue.
19. Directives 88/301, art. 2 and 90/388, same provision (as amended).
20. Some terms used by the Commission look similar to those used by the sansculottes during the 1789 French revolution. Thus, the directives it has adopted call for the abolition of special and exclusive rights, as the latter sought the abolition of the privileges linked to the Ancient Regime.
21. The Telecom Unit, Telecommunications in Europe and the United States: How to Reconcile the Market Constraints and the Democratic Requirements, Center for the Philosophy of the Law, Louvain-la-Neuve, 1997.
22. KPMG, Telecommunications in Europe and the United States: How to Reconcile the Market Constraints and the Democratic Requirements, op. cit. 168.
23. See note 11 in fine.
24. See e.g. ONP directive 90/387 (OJ 1990 L 192/1), art. 3, par. 1.
25. Common rules are set out in the name of harmonisation, but they often offer a convenient medium for EC authorities to establish the framework which they feel is appropriate to the exercise of economic or social activities. In the reform, the harmonisation was mainly carried out in ONP measures: directives 90/387 (framework, OJ 1990 L 192/1), 92/44 (leased lines, OJ 1992 L 165/27), 95/62 (public vocal telephony, OJ 1995 L 321/6), 97/33 (interconnection and universal service, OJ 1997 L 199/32) and 97/51 (amending 90/387 and 92/44, OJ 1997 L 295/23).
26. OJ 1975 L 35/6.
27. That comment has been made both in the US and the EU. For the US, see Demsetz, H., Two systems of beliefs about monopoly. In Industrial Concentration: The New Learning, eds H. J. Goldschmid, H. M. Mann and J. F. Weston. Little, Brown & Company, Boston, 1974, p. 164s.
28. For the EU, see Turnbull, S., Barriers to entry. Article 86 EC and the Abuse of a Dominant Position: An Economic Critique of European Community Competition Law. European Competition Law Review 1996, (2), 96-103.
29. OJ 1972 L 7.
30. 21 February 1973, European Court Report (ECR), p. 215.
31. In some cases, the ECJ routinely states that exclusive rights are not exclusive perse, but reaches a different conclusion on the merits by finding that the companies would violate art. 86 by the mere exercise of their rights. See a.o. Höfner, 23 April 1991, ECR 1-1979 and Merci, 10 December 1991, ECRI-5889. In another trend, the Court places upon exclusive rights a presumption of illegality, that may be set aside if the Member State may establish that such a prerogative is necessary in order to pursue a superior interest accepted in the EC and if the means proposed to realize that objective are proportional. See Corbeau, 19 May 1993, ECR I-2533.
32. OJ 1990 L 257/14 and OJ 1997 L 180/1 for the latest modification.
33. For a similar critique based on a thorough review of the case law, see Cohen-Tanugi, L, e.a., La pratique communautaire du contrôle des concentrations: analyses juridique, économique et comparative. De Boeck, Louvain-la-Neuve, 1995.
34. For an annual review, see van de Walle, B. and Van Hees, B., Examen de jurisprudence: les règles de concurrence applicable aux entreprises. Journal des tribunaux-droit européen, 1995, 19, 109 s.;
35. van de Walle, B. and Van Hees, B., Journal des tribunaux-droit européen, 1996, 28, 86;
36. van de Walle, B. and Van Hees, B., Journal des tribunaux-droit européen, 1997, 38, 91 s.
37. See a.o. Almelo, 27 April 1994, I-1477, par. 41 s.; Societa Italiana Vetro/Commission, 10 March 1992, II-1403, par. 358. As for the Commission's practice, see also decision 92/262/EEC, 1st April 1992, OJ L 134/365, at par. 55 s. and decision 94/119/EEC, 21 December 1993, OJ L 55/79, at par. 11. In the literature, see Shaw, J., Collective dominance or concerted practices. European Law Review, 1989, p 96 s.;
38. Schodermeier, Collective dominance revisited: an analysis of the EC's new concepts of oligopoly control. European Competition Law Review, 1990, p 28 s.;
39. Soames, T., An analysis of the principles of concerted practice and collective dominance: a distinction without a difference?. European Competition Law Review, 1996, p 24 s.
40. With respect to the Merger Regulation, see Ridyard, D., Joint dominance and the oligopoly blind spot under the EC merger regulation. European Competition Law Review, 1992, (4), p 161 s.
41. as well as Winckler, A. and Hansen, M., Collective dominance under the EC merger control regulation. Common Market Law Review, 1993, p. 787 s.
42. For similar comments, see a.o. the works of H. Demsetz and S. Turnbull, cited above.
43. Among others Rodby, 21 December 1993, OJ 1994 L 55/52 and Stena Sealink, same date, OJ 1994 L 15/8. In the literature, see a.o. Glasl, D., Essential facilities doctrine in EC anti-trust law: a contribution to the current debate. European Competition Law Review, 1994, p 306.
44. See Council and European Parliament Directive 97/33 OJ 1997 L 199/32 art. 6 and Commission's Draft Notice on Access Agreements in the Telecommunications Sector, OJ C 76, 11 March 1997.
45. The last term was used by Ron Sommer, chairman of Deutsche Telekom in a comment to a German court decision to open the public network 'in accordance with competitors' wishes' (Financial Times, 29 August 1997, p 18). There is an argument to apply the doctrine to a network built with public money. But such an argument should not be extended in my opinion to essential advantages acquired under competitive conditions.
46. Thus, dominant firms could not charge their rivals more than their own departments - thereby rendering vertical integration not very attractive. . . The doctrine apparently ignores the gain in efficiency that may result from such integration.
47. Of course, the doctrine does not provide that competitors should share the losses incurred by a dominant firm. . .
48. For a similar analysis in the framework of US competition law, see Areeda, Ph., Essential facilities: an epithet in need of limiting principles. Antitrust Law Journal, 1989, 841 s.
49. A.o. see art. 2, par. 3 of directive 90/388 on telecom services, as amended by directive 96/19.
50. A.o. see Cohen-Tanugi, L., Antitrust Law Journal, op. cit., pp. 14 and 273. The authors are members of the international law firm Cleary, Gottlieb, Steen & Hamilton. In that capacity, they have a large experience of advice and litigation in European competition law.
51. See in the current issue the article written by V. Di Bucci.
52. 27 July 1994, OJ L 223/36. At the time the article was sent to the editor, the merger was set to be unbundled following the acceptance of the offer for MCI from WorldCom.
53. On the subject, see Holley, D. L., Ancillary restrictions in mergers and joint ventures. In Fordham Corporate Law Institute, 1994, pp. 423-459.
54. MCI in the US, BT in the rest of the world.
55. The authorization was granted for 5 years and passive sales must be accepted by the parties.
56. A similar argument was cited as a reason for the Commission to allow the Boeing McDonnell merger, as it would place further pressure on the Airbus partners for closer ties. The strategy has apparently succeeded, with the partners announcing a move in that direction. See a.o. Financial Times, 28 August, p 1.
57. The control exercised by the Court is close to that carried out by the Commission in competition cases. Both authorities assess possible restrictions to competition, then turn to possible justifications for a review of the objective pursued and the proportionality of the measures. The only difference relates to the entity from which the restriction originates - an enterprise in one case and an authority in the other.
58. The cases concern the free provision of services in the common market. Issues associated with proportionality are not different from those raised in competition cases, as rules concerning the common market are also of a competitive nature: they tend to introduce competition among companies, products, services and the like from different Member States.
59. 5 June 1997 ECR I-3091.
60. Keck and Mithouard, 24 November 1993, ECR I-6097.
61. 17 June 1997 ECR I-3395.
62. The regulation was not reviewed under the provisions concerning state aids (art. 92 s. EC).
63. KPMG, Financial Times, op. cit. 171.
64. Council Regulation 4064/89 OJ 1989 L 395/1 art. 7, as amended by Council Regulation 1310/97 OJ 1997 L 180/1 art. 1 par. 6.
65. Council Regulation, 17/62 OJ 1992 L 13/204 art. 15 par. 5.
66. On the relations between these policies in Europe, see Buigues, P, Jacquemin, A. and Sapir, A., European Policies on Competition, Trade and Industry: Conflicts and Complementarities. Edward Elgar Publishing, Aldershot, UK and Brookfield, US, 1995.
67. The book contains a law and economics overview as well as case studies. For the legal side, see Bourgeois, J. and Demaret, P., The working of EC policies on competition, industry and trade: a legal analysis. 65-114.
68. 15 October 1996, ECR, I-5023.
69. A distinction was admittedly drawn in the judgment between the objectives pursued by the authorities, as some were related to competition and others to fishing policy. Yet, the distinction appears futile: under the judgement, it clearly appears that the Commission has the possibility, not to say the obligation, to implement non-competition objectives with competition powers.
70. Eg GB-Inno-BM, 7 March 1990, ECR I-667 and Yves Rocher, 18 May 1993, ECR I-2361.
71. Keck and Mithouard, 24 November 1993, ECR I-6097.
72. See a.o. preamble to directive 95/51/EC of 18 October 1995 OJ L 256/49 at par. 18.
73. On the difference between US and EC law in that regard, see Joliet, R., Monopolization and Abuse of Dominant Position. Faculté de droit-Liège, Martinus Nijhoff, The Hague, 1970
74. as well as Vogel, L., Droit de la concurrence et concentration économique, Economica, Paris.
75. Heavy investments to reach a threshold of efficiency, . . .
76. The rule was first declared by the Commission, OJ 1975 L 95/1 and the ECJ 1978 ECR207, point 250 in United Brands/Commission. For other decisions by the Court, see also ECJ, 13 November 1975, General Motors Continental (GMC)/Commission, ECR 1367; 11 November 1986, British Leyland/Commission, ECR 3263; 11 April 1989, Ahmed Saaed Flugreisen e.a., ECR 803.