Table of Contents. About the Author. xvii. List of Tables N. List of Figures. List of Abbreviations. Preface... xxix.

Transcription

1 About the Author List of Tables N List of Figures List of Abbreviations Forward v xvii xix xxi xxv Preface... xxix Acknowledgement xxxiii CHAPTER 1 Interaction between Competition and Regulation Evolution of Electronic Communications Regulation 1 [A] Liberalization. 2 [1] Initial Breakthrough ( ) 3 [2] Transition to Full Liberalization ( ) 4 [3] Aftermath (1999-now) 7 [B] Harmonization 8 [1] Harmonization of Terminal Equipment (1986-now) 8 [2] Harmonization of Services and Networks (before 2002) 9 [3] Harmonization of Services and Networks (2002-now) 12 [a] The 2002 Regulatory Framework 12 [b] The 2009 Amendments 16 [C] Competition Economic Regulation ' 20 [A] Introduction. 20 vu

2 [B] Exclusive or Special Rights ( ) 21 [C] The SMP Regime within the 1998 Regulatory Framework, ( ) 21 [D] The Current SMP Regime (2003-Present) 25 [1] The Three-Step Analysis 26 [a] Market Definition 26 [b] SMP Assessment 28 [c] Remedies 30 [2] EU Consultation Procedure Research Objective, Methods and Materials 35 [A] The Relationship between Competition Law and Regulation 35 [B] Residual Differences between the SMP Regime and EU Competition Law 39 [C] Research Objective, Methods and Materials 42 CHAPTER 2 Market Definition Product Market Definition 46 [A] Principles of Defining Relevant Product Markets 46 [B] Application within EU Competition Law 48 [1] Public Telephone Services Provided at Fixed Location 50 [2] Access to Data and Related Services at Fixed Locations 51 [3] Dedicated Connections and Capacity 52 [4] Services Provided at Non-fixed Location 52 [5] Broadcasting Services 52 [C] Application of Electronic Communications Regulation 53 [D] Comparison and Implications Geographic Market Definition 67 [A] Introduction 67 [B] Geographic Market Definition in the Area of Competition Law 67 [1] The General Method. 67 [2] The Sector-Specific Method Regarding Electronic Communications Networks and Services 69 [a] Two Criteria 69 [b] Geographic Markets within Competition Law Cases 71 [3] A Lacuna with Regard to the Sector-Specific Approach 74 [C] Geographic Market Definition within Electronic Communications Regulation under the First Market Recommendation ( ) 75 [D] Geographic Market Definition within Electronic Communications Regulation under the Second Market Recommendation (2008-Present) 77 [1] Introduction 77 [2] Preliminary Analysis 80 [3] Defining Geographic Units 81 via

3 [a] The Market of Wholesale Broadband Access 81 [b] The Market of Wholesale Terminating Segments of Leased Lines 83 [4] Grouping Geographic Units with Homogeneous Conditions of Competition 84 [a] Quantitative Criteria 85 [i] Number of Competitors 85 [ii] Distribution of Market Shares 86 [iii] Density of Customers 89 [b] Qualitative Criteria 90 [i] Geographically Differentiated Pricing 90 [ii] Stable Market Boundaries 92 [iii] Marketing Strategies 93 [iv] Contiguous Market Boundaries 93 [5] Geographically Differentiated Remedies 94 [E] Conclusions 96 [1] A Comparative Study 96 [2] The First Contact between Competition Law and Electronic Communications Regulation The Three-Criteria Test: A Critical Assessment 100 [A] Introduction 101 [1] The First Criterion 101 [2] The Second Criterion 103 [3] The Third Criterion 103 [B] Application 104 [1] Uncertainties 104 [2] Decisions within the EU Consultation Procedure 105 [a] The First and the Second Criterion 106 [b] The Third Criterion 112 [3] The ERG Report 114 [a] The First and the Second Criterion 114 [b] The Third Criterion 114 [C] Assessment 116 [1] The First and the Second Criterion 116 [2] The Third Criterion 117 [3] Conclusions 119 CHAPTER 3 Market Power ' Single SMP versus Single Dominance 124 [A] Introduction 124 [B] Market Shares 125 [1] Competition Law Practice 125 [2] NRAs' Practices 126 IX

4 Table of Contents [C] [a] In Excess of 50% [b] Between 40% and 50% [c] Less than 40% [d] Conclusions Other Criteria [1] Introduction [2] Decisive Criteria [a] Countervailing Buying Power [i] An Overview [ii] Sufficient Alternative Infrastructure Competition 131 [iii] Switching Costs [b] Sufficiency of Wholesale Remedies [3] Important Criteria [a] Dynamic Competition [i] Decreasing Market Shares [ii] Falling Prices [b] Overall size of the Undertaking [4] Ambiguous Criteria [a] Vertical Integration [b] Technological Advantages or Superiority [c] Easy or Privileged Access to Capital Markets/Financial Resources [d] Three Uncertain Criteria [D] [E] Leverage of Market Power Single SMP versus Single Dominance [1] Market Shares [2] Other Criteria 3.02 Collective Dominance versus Collective SMP [A] [B] Collective Dominance [1] Economic Links [2] Oligopolistic Market Structures [3] An Outlook [a] ( Integration of Economic Links with Oligopolistic Market Structures [b] Collective Dominance and SIEC Collective SMP [1] Oligopolistic Market Characteristics Conducive to Coordination [a] Decisive Market Characteristics [i] Stable Market Shares [ii] High Barriers to Entry [iii] Similar Cost Structure [b] Important Market Characteristics [i] Market Concentration

5 [ii] Asymmetric Market Shares 161 [iii] Mature Market and Lack of Technical Innovation, Mature Technology 163 [iv] Homogeneous Product 164 [v] Various Kinds of Informal or Other Links between the Undertakings Concerned 165 [c] Two Ambiguous Market Characteristics 165 [i] Stagnant or Moderate Growth on the Demand Side 165 [ii] Low Elasticity of Demand 166 [2] Incentives to Coordinate " [a] Access-Oriented Coordination 167 [i] Focal Points 167 [ii] Pent-up Demand 168 [iii] Retail Monopolistic Profits 168 [b] Price-Oriented Coordination 169 [c] A Case Study 170 [3] Abilities to Retaliate 171 [a] Access-Oriented Retaliation 171 [b] Price-Oriented Retaliation ^ 172 [4] Abilities to Resist Market Constraints 172 [5] Evaluation 173 [a] A Prudent Approach 173 [b] A Forecast 175 [C] Comparison 177 [1] Similarities 177 [a] Equivalent Approach ' 177 [b] Equivalent Criteria for Assessment 178 [2] Differences 179 [a] Different Causes 180 [b] Economic Links 180 [c] Criteria for Assessment 180 ; ( CHAPTER 4 Remedies Regulatory Remedies 184 [A] Introduction 184 [B] Regulatory Remedies: Choices and Principles 185 [1] Choices of Remedies ' 186 [a] Transparency 186 [b] Non-discrimination 186 [c] Accounting Separation 186 [d] Access and Interconnection 187 [e] Price Control and Cost Accounting 188 XI

6 [C] [D] [f] Functional Separation [g] Retail Remedies [h] Exceptional Remedies [2] Principles to Impose Remedies [a] Introduction [b] The Nature of Competition Problems [c] Proportionality Potential Competition Problems [1] Market Failures in the Electronic Communications Sector [a] Natural Monopoly [b] Network Externality [c] Monopoly Legacy [2] Assumptions to Identify Competition Problems [a] Incentive to Conduct Anti-competitive Behaviour [b] Ladder of Investment [3] Potential Competition Problems [a] Refusal to Access Wholesale Inputs [b] Price Squeeze [c] Non-price Discrimination [d] Excessive Prices [4] Summing-Up Remedying Competition Problems [1] Refusal to Grant Access [a] Negotiation in Good Faith [b] Non-discrimination [c] Mandated Access Upon Reasonable Request [d] Mandated Access Ex Ante [e] Ladder of Investment: Best Practice [i] Retail Fixed Telephone Calls [ii] Leased Lines [iii] Mobile Telephony [iv] Broadband [2] Price Squeeze [a] Transparency [b] Accounting Separation [c] Non-discrimination [d] A Price Squeeze Test [e] Price Control [3] Non-price Discrimination [4] Excessive Prices [a] Methods for Price Control [b] Reasonable Price Requirement [c] Benchmarking [d] Retail Minus Xll

7 [e] Price Cap [f] Cost Orientation and Cost Accounting 4.02 Competition Law Remedies [A] Introduction [B] Refusal to Deal [1] Refusal to Supply Non-competitors with a Product/Service Available on the Market [a] United Brands [b] GSK AEVE [c] BP ; [d] Review [2] Refusal to Supply Competitors with a Product/Service Available on the Market [a] BBI/B&H [b] London European/Sabena [c] British Midland [d] Clearstream [e] Comparison with the First Category Cases [3] Discontinuing Supply to All Third Parties [a] Commercial Solvents [b] Telemarketing [c] Filtrona /Tabacalera [d] Liptons/Hugin [e] Conclusions [4] Refusal to Supply a Product/Service That Has Never Been Available on the Market [a] Bronner [b] FAG and GVG/FS [c] Info-Lab/Ricoh [d] Summing-Up: Similarities and Differences between the Third and Fourth Categories [5] Refusal to Grant IPR License [a] CICRA/Renault and Volvo/Veng [b] Magill [c] Ladbroke [d] IMS Health [e] Microsoft [f] Reflection [6] Conclusions: A Proposed Framework for the Analysis of Abusive Refusal to Deal [a] Synopsis [b] A Proposed Analytical Framework [C] Price Squeeze [11 Introduction Xlll

8 [D] [E] [2] Contradictory Economics Theories 287 [a] Chicago School 287 [b] Post-Chicago School 288 [3] Preconditions for Price Squeezes 289 [a] National Carbonising 290 [b] Napier Brown/British Sugar 291 [c] Industrie Des Poudres Sphe"riques 292 [d] Deutsche Telekom 293 [e] Telefonica 293 [f] Intermediate Conclusions 294 [g] TeliaSonera 296 [4] [5] [6] Stand-Alone or Value-Added? The Imputation Test Conclusions Non-price Discrimination 306 Excessive Price 307 [1] Introduction 307 [2] Controversy 308 [a] Non-interventionist 308 [b] Interventionist 310 [c] Summing-up 311 [3] Exceptional Circumstances 312 [a] Various Proposals 312 [b] Evaluation 314 [4] The Analytical Framework 316 [a] Multiple Approaches? 317 [b] The First Step: Excessive Profit Margin 318 [i] The First Element: Profit Margin Calculation 319 [ii] The Second Element: Excessive Profit 321 [c] The First Prong of the Second Step: Abusive Price in Itself 321 [d] The Second Prong of the Second Step: Abusive by Benchmarking 323 [i] The Dominant Undertaking's Past Prices for the Same Product 323 [ii] The Dominant Undertaking's Current Prices for Other Products on the Same Relevant Market ' 324 [iii] The Dominant Undertaking's Competitors' Prices on the Same Relevant Market 325 [iv] The Dominant Undertaking's Prices of the Same Relevant Product in Other Geographic Markets 325 xiv

9 [v] The Dominant Undertaking's Prices of Related Products in Other Markets 326 [vi] Other Undertakings' Prices of Comparable Products in Other Markets 326 [5] Conclusions Comparison 329 [A] Introduction 329. [B] Forward-Looking Versus Backward-Looking 330 [C] Underlying Reasons for Similar Competition Problems 331 [D] Remedial Differences 334 [1] Refusal to Deal '"* [2] Price Squeeze 335 [3] Non-price Discrimination 337 [4] Excessive Prices 337 [E] Conclusions 339 CHAPTER 5 Conclusions Outline Competition Law versus Sector-Specific Regulation Concluding Remarks 358 [A] From Regulation-Oriented Competition Law to Antitrust-Based Regulation 359 [B] Fulfilment of the Principles of Good Governance? 363 [1] Flexibility and Transparency 363 [2] Harmonization 363 [3] Technological Neutrality 365 [4] Proportionality 366 [5] Legal Certainty 368 Appendix 371 Bibliography 377 Table of Cases ' 393 Table of Legislation and Materials 399 Index 407 xv