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3.3.2 Conflicts raised by the convergence
Nevertheless, the convergence of methodology of competition law and regulation would bring about more jurisdictional and substantive conflicts than ever. The first problem is that two different types of rules, competition law and sector-specific regulation, can be applied to the same matter. This would raise a risk of obscurity of the applicable law, if there were a divergence at understanding whether it is necessary for the regulator to intervene under a certain case. A second issue is that different authorities (for example, the Commission, NRAs, NCAs, and national and European courts) can simultaneously be competent in respect of the same case, which would produce tenseness in respect to the relationship between those institutions. These factors create an environment in which jurisdictional and substantive conflicts are likely to occur.
4. The Remedies of SSR vs. the Remedies of Competition Law
If the remedies impose by competition law and regulation were identical, or not greatly distinct, then the first conflict above between the two types of tools would be ignored at least from the eyes of market players, and as well, it would be not a knot to deal with institutional conflict between every authorities. Nevertheless, if the remedies imposed by different authorities varied from each other to a substantial extent, the potential conflicts would become actual and must be resolved. Therefore, it is necessary to investigate how competition authority and regulatory authority impose remedy. The key points are how each authority applies imputation tests or other tests identify to competition problems in telecommunications sector on the one hand, and on the other hand, to what degree they impose their remedy on those competition issues. Since as we see from Table 1 that the formality of remedy of competition law and regulation is almost identical, in order to find the divergence of remedies of the two instruments, we must investigate the remedies imposed by them one specific competition problem by another.
This part will look into the application of the two tools on similar competitive issues to see the different legal conditions and remedies under competition law and regulation. And the work of this part is just at the stage of collection of data and design of research plan and the applicant has not developed it deeper. Therefore, in this project the applicant will only present a tentative research plan and nothing more.
4.1 Introduction
As we discussed above, the competition problems in telecommunications sector are mainly related to market power and therefore the job of competition law and regulation is to control market power, which is in most cases pointing to the incumbent since it has vested advantages inherited from its former monopolistic operation. According to the law and economics part, we know that the incumbent has great incentives to unreasonably exploit its market power to exclude competitors and foreclose market in the end. In respect that the primary objective of liberalisation is to promote effective competition , controlling market power means to prevent the incumbent from strengthening its market power at unnecessary loss of new entrants on the one hand and to create favourable market conditions for the minor undertakings to make them really competitive on the other hand. Consequently, the main competition problems in post-liberalisation telecommunications sector are to prohibit abusing dominance or SMP, both ex ante and ex post.
Specifically speaking, the competition problems in telecommunications markets, which will be used as basis to compare remedies of competition law and regulation, include the following. Before I start to describe each category of competition problems, I must say that this classification is not accurate because particular competition problems may have many effects that raise difficulty to classify them.
4.2 Third party access
This case is the key causation of ineffective competition in telecommunications sector and is mostly related to a scenario that the undertaking with market power hold an essential facility, such as local loop, on the wholesale market that is a necessary intermediate input for the retail operators without which they cannot provide telecommunications services to end users. This case may be expected, when the undertaking with SMP feels that granting access would harm its interests or even, more generally, when it considers that granting access would not serve its interests. On the other hand, the new comers have so less advantage that they cannot replicate the facility in question and they would find no place to play on the downstream market. Both competition law and regulation have competence over this issue and they impose the same kind of remedy, namely granting access, when the respective legal conditions are fulfilled.
The principle to deal with third party access issues by general competition law is essential facility doctrine (EFD), which was established by the Court of Justice (ECJ) in Bronner Case. In that case, the ECJ stated that access to essential facility might be granted only if
(1) The undertaking must be dominant in the supply of the product or services in question;
(2) For access to be ordered, the refusal to contract must be likely to eliminate all competition on the part the undertaking requesting it;
(3) Access must be indispensable; and
(4) The refusal must be incapable of being objectively justified.
However, since the firms required to provide access may experience a substantial loss of profits and granting access would have negative long-run effects on investment incentives, competition authorities and courts are relatively reluctant to apply the doctrine. Under some certain situation, it is necessary for the intervention of regulation.
The legal basis of regulation to deal with access problems is Access Directive. The legal conditions of granting third party access can be summarise as:
(1) The requested undertaking must be designated to have SMP on the relevant market;
(2) Denial of access would hinder the emergence of a sustainable competitive market at the retail level, or would not be in the end user’s interest;
(3) Access is requested to specific network components and associated facilities; and
(4) Access offer must be reasonable.
A bold conclusion by comparing the legal conditions of the two tools is that EFD has a higher threshold than access obligations. Therefore, the applicant would more likely get access from the regulator than competition authority. However, another knot is that there will be a growing number of cases which will not be covered by any sector-specific regime and therefore it can be safely expected that general competition law will be more and more faced with access situation.
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