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The design of judicial review in electronic communications What is the role of the Court of Justice in the sector: infringement procedures, annulment procedures, preliminary rulings. Alexandre Verheyden. Introduction (1).
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The design of judicial review in electronic communicationsWhat is the role of the Court of Justice in the sector: infringement procedures, annulment procedures, preliminary rulings Alexandre Verheyden
Introduction (1) • ECJ has played a major role in setting forth a path for regulation of electronic communications. • BT/Telespeed case (Case 41/83) of 20 March 1985. • BT’s attempt, in agreement with other PTOs, to limit or prohibit establishment of Telex refiling agencies in the UK. • Commission concluded that BT’s conduct amounted to breach of Article 81 and 82 EC. • Key legal issue: Telecommunications sector cannot benefit from exemption from competition rules under Article 86(2) EC (operator of services of general economic interest).
European Courts • Guidelines on market definition • Recommandation on market definition Community law Adoption of NRF Commission decision(s) pursuant to Article 7 • NRA adopts draft decision on: • Market definition • SMP • Remedies Cooperation with NCA Adoption of new law on Electronic Communications National law • NRA adopts final decision on: • Market definition • SMP • Remedies Domestic appeal body
European Courts Article 226 EC • Guidelines on market definition • Recommandation on market definition Community law Adoption of NRF Application for annulment pursuant to Art. 230 EC Preliminary ruling pursuant to Art. 234 EC Commission decision(s) pursuant to Article 7 • NRA adopts draft decision on: • Market definition • SMP • Remedies Cooperation with NCA Adoption of New law on Electronic Communications National law • NRA adopts final decision on: • Market definition • SMP • Remedies Domestic Appelate body
Multiplicity of types of interventions of European Courts.A. Enforcement of sector-specific Directives • Mechanical assessment of compatibility of national legislation with EC Directives. • French Universal Service case • Possibility of funding scheme for a period pre-dating liberalisation. • Tariff rebalancing. • Transparency obligations in calculation of costing elements. • Spanish tariff rebalancing case • Failure of Spanish state to mandate sufficient rebalancing of tariffs at a “sustained rate”. • Commission v. Portugal - Right of way discrimination • State of Portugal claimed that public service obligations and obligation to provide access to its network placed PT Communicacoes in a different position than other operators.
Multiplicity of types of interventions of European Courts.A. Enforcement of sector-specific Directives • “It is not inconceivable that the position of an undertaking for providing the universal service, which is under obligations to develop and maintain the network might be compared with that of other telecommunications operators.” • No evaluation of cost of universal service ahead of time – conditions of Altmark not met.
Application for preliminary ruling • Belgian mobile number portability case. Challenge of BIPT decision setting mobile number portability fees: • What is interconnection? Does it include one off portability fees? Teleogic interpretation of notions of interconnection. • Right to set portability fees on theoretical costs of a reasonability efficient operator with caveat (see below). • Connect Austria: • Dispute relating to allegations of discrimination of 3rd mobile operator, which had to pay for its DCS-1800 frequencies whilst GSM-900 operators received a free access to supplemental frequencies in 1800 MHz bandwidth.
Appeal of Article 7 decision (1) • According to the Commission, Article 7 decisions do not amount to typical decisions. It was not the intention of NRF to have the Commission conduct the same exercise as NRAs. • Nature of decision does not matter. Any measure taken by the European institutions are appealable, regardless of its form, when it produces legal effects (AETR case-law). • Decision not to adopt a serious doubt Decision. • Article 7§5 of Framework Directive: NRAs must take utmost account of comments made by Commission. • Is applicant directly and individually concerned by the decision? • Fundamental problem in having an administrative authority sheltering behind alleged absence of legal effects to adopt measures which are difficult to reconcile.
Appeal of Article 7 decision (2)Example of Article 7 non-opposition decisions on market 16 – Call termination on mobile network
Transversal Assessment of European Courts understanding of specificities of the telecommunications sector (1) • Materiality of an abuse • In principle, case-law takes little account of magnitude of market power in determination of obligations imposed on dominant enterprises. • In KPN v. OPTA, Advocate General Poiares Maduro Wrote: “A refusal to supply by a dominant undertaking may amount to an abuse of a dominant position in the situation of a recently deregulated industry in which the necessary inputs for a derivative market were obtained by an undertaking as a direct result of its prior position as a statutory monopolist and where access to those inputs is not regulated by sector-specific legislation. Under those conditions, where the supplier has an advantage in the secondary market which it was able to acquire because it was previously shielded from competition, the potentially deterrent effect on investment and innovation resulting from the imposition of a duty to supply is minimal and is likely to be outweighed by the interest in promoting competition.”
European Courts seem to have understood specificities of the telecommunications sector (2) • Situation of each operator must take into account past special or exclusive rights (Belgacom Mobile v. Commune de Schaerbeek). “In the context of its examination, the national court will have to assess the effects of the taxes bearing in mind, in particular, the point at which each of the operators concerned entered the market. It may become apparent that operators which have or have had exclusive or special rights were able to enjoy, before other operators, a position allowing them to redeem their costs of establishing networks. The fact that operators entering the market are subject to public service obligations, including those concerning territorial cover, is likely to put them, in terms of controlling their costs, in an unfavorable position by comparison with traditional operators.”
European Courts seem to have understood specificities of the telecommunications sector (3) • Obligation for regulatory framework to ensure true equality of chances (Connect Austria). “In that regard, it is important to recall that national legislation such as that at issue in the main proceedings is not contrary to Articles 82 EC and 86(1) EC if, taking into account the fees imposed on the different operators involved for their respective licences, the allocation of additional frequencies in the DCS 1800 band, without the imposition of a separate fee, to a public undertaking in a dominant position must be considered to comply with the requirement to ensure equality of opportunity for different economic operators and therefore to guarantee undistorted competition. “
European Courts seem to have understood specificities of the telecommunications sector (4) • Value of licenses in function of frequencies used and time of market entry (Connect Austria, paras 93 and 99). • Determination of number portability tariffs on the basis of theoretical costs of reasonably efficient operator is without prejudice to the need to ensure that such scheme does not advantage new entrants (Mobistar v. IBPT).
Way forward • Greater accountability of EC Commission. • Telecommunications regulations not applied independently from the general legal context in which they were adopted: • due process and access to the file. • discrimination (telecommunications directive, Art. 82 EC, European Court of Human Rights). • Increased forward-looking forms of competition law in line with forward-looking forms of sector-specific regulations. • Article 9 of Regulation 1/2003 (Plea bargaining). • Article 17 of Regulation 1/2003 (Sector inquiries). • Effectiveness of remedies. Parallel between sector-specific remedies and remedies mandated pursuant to competition law. (EDP v. Commission case)
