Liikanen calling: enterprise chief gives Germans a telecoms wake-up

By Peter Chapman

Date: 19/02/04

ENTERPRISE and Information Society Commissioner Erkki Liikanen has told Germany's legislators that a draft national law governing Europe's biggest telecoms market could clash head-on with new EU rules - and make it harder for companies to compete with Deutsche Telekom.

The EU's new telecoms package gets rid of swathes of detailed rules and regulations put in place when markets were first liberalized in 1998, only reserving tough controls on the few remaining markets devoid of competition.

But the Finn has targeted three potential glitches in the German rules which limit the way powerful firms are regulated to ensure they do not abuse their dominant positions in sectors of the telecoms market.

Firstly, the Germans want to impose an extra condition - "the lack of functional competition" - before regulators can be allowed to intervene in a particular sector.

Liikanen's aides believe this requirement would be above and beyond the existing formula enshrined in the EU's directive.

"This is unclear and could prove to be a different basis for the regulator to intervene than the basis foreseen in the Community framework," explained one official.

Another condition would narrow yet further the market conditions that must apply ahead of regulators stepping in before powerful operators can squeeze out their rivals.

"This is the idea of a "double threshold" for certain markets," said the Liikanen aide, adding: "The regulator would only intervene ex-ante in the market if an operator was seen to enjoy significant market power over both the wholesale and the retail market."

Finally, the commissioner is concerned that the extra rules could limit the German regulator RegTP's ability to act on a case-by- case basis, in line with the EU laws. This could force the regulator to act beyond the terms of the German law to do its job, Liikanen's officials believe.

The warning shot responds to concerns cited by European Competitive Telecommunications Association (ECTA), a group of telecoms firms, in an October letter to Liikanen and his competition counterpart Mario Monti.

ECTA Managing Director Roger Wilson said the rules would "jeopardize the new entrants' ability to compete on the German market", currently dominated by Deutsche Telekom.

"These provisions will not only increase legal uncertainty but will also undermine effective regulation, damaging the ability of new entrants to compete on German telecommunications markets," Wilson added.

Senior information society official Bernd Langeheine delivered Liikanen's message to German MPs last week.

However, Liikanen's spokesman Peter Sandler insisted the Commission would give the Germans a chance to put right any problems with the law before the EU executive starts-up legal action.

"Our moment to intervene and assess the full compatibility of legislation comes in the normal way once the German legislation is adopted," he said, adding that this is expected in the summer - already a year behind the EU's 2003 deadline. The Commission has already issued a legal warning to Berlin over its failure to meet this date.

Erkki Liikanen, European Commissioner for Enterprise and the Information Society, has told the German Government that a draft national law could clash with new European Union rules for the telecommunications market.