Ministers stall over ‘unclear’ Liikanen telecoms proposal

Date: 21/12/00

By Peter Chapman

EU telecoms ministers will this week warn the European Commission that they cannot reach a deal on a crucial aspect of planned laws for the sector until they have received a report explaining how rules on fair competition should be applied.

The message comes as ministers prepare to debate telecoms chief Erkki Liikanen's proposals for a 'framework directive' setting out a new approach to policing the industry at a meeting tomorrow (22 December).

Liikanen wants to cut regulatory red-tape in the industry - saving the toughest rules designed to nip anti-competitive behaviour in the bud for companies enjoying 'significant market power'.

This approach would rely on the same definitions of market power used by Com-mission competition officials, who step in to police markets in response to allegations of anti-competitive behaviour.

But member states say it is still unclear what this would mean for the industry. They point out that the Commission itself is re-examining its approach to the emerging Concept of 'collective dominance', which allows a group of powerful firms to exercise power over their markets.

Experts believe this is likely to be a key issue in 21st-century telecoms markets such as the mobile sector, where only a limited number of operators will be able compete due to scarcity of space on the airwaves.

But diplomats say that until Competition Commissioner Mario Monti delivers on his promise to issue guidelines on what collective dominance actually means, ministers will be reluctant to agree a deal.

A key problem, they warn, is that there are only a handful of cases in which the Commission has delivered a ruling citing collective dominance as an issue, and none of these has involved the telecoms sector.

"There is a fear that because of the lack of jurisprudence, if a national regulator takes a decision and it is challenged, a national court would not want to take the decision," said one diplomat. "Instead, it would refer it to the European Court of Justice and we would have to wait years for a result."

The European Parliament is currently considering a different measure of significant market power based on the World Trade Organisation's rule book. Finnish Socialist MEP Reino Paasilinna, rapporteur on the issue for the assembly's industry committee, argues that the WTO gives a clearer definition of what significant market power means. But diplomats say that to date, there have been no WTO cases in which these laws have been invoked.

EU operators are split over the issue. Some believe tough rules based on a liberal interpretation of significant market power are the only way to ensure effective competition. But others are calling for a more narrow approach, focusing only on areas where there are genuine 'bottlenecks'.

On 22.12.00, EU telecoms ministers warned the European Commission that they could not reach a deal on a crucial aspect of planned laws for the sector until they had received a report explaining how rules on fair competition should be applied.