The telecommunications market is not always sufficient to provide a competitive environment and growth, protect consumers and create equal conditions for new companies in the telecommunications sector. The undertakings in the industry can be different, and the situation is too. European Commission’s Directorate-General for Competition still faces challenges in this area, therefore, in our efforts to make such markets competitive and to preserve them for our consumers.
Before making a legal memo I would like to state that the EU's regulatory framework for electronic communications is a series of rules which apply throughout the EU Member States. It encourages competition, improves the functioning of the market and guarantees basic user rights. The overall goal is for European consumers to be able to benefit from increased choice thanks to low prices, high quality, and innovative services. EU Commission regulates the market in order to counterbalance the significant market power of former monopolies, to ensure universal service and to protect consumers.
Being the case handler in the European Commission’s Directorate-General for Competition I received Arcadium consumer groups’ complaints calling upon to take action against rising prices in the mobile telecommunications market.
I intend to share my views on the state of legality of price increases in the context of competition in telecoms industries of one of the state members of EU ( Arcadium ) with special reference to the latest merger between Arcadium and Shaolin mobile operator. Below there is a brief review of telecom markets in Arcadium.
There are currently five operators of mobile telecommunication networks (‘MNOs’) active in Arcadium: the formerly State-owned Telecom Arcadium (30% market share), Getaway (30% market share), Parallel Universe (20% market share), Shaolin (10% market share) and Unreachable (10% market share).
According to the Regulatory Framework for electronic communications in the European Union, before taking action against the pricing policies of the five MNOs there has to be a prove of anticompetitive behavior. In the regulatory framework, markets are defined in accordance with the principles of competition law, as explained in the Commission Notice on Market Definition 7 and the Guidelines.
It is considered that the criteria for identifying markets for the purposes of regulation should include an overall assessment of the effectiveness of competition law alone in addressing the market failures concerned.
However, is there should be sufficient analysis of the market before taking actions against pricing policies of 5 MNOs?
Hence approve of taking actions against pricing policies is depended on the justification of inefficiency of competition law that in our case took place when over the last year, the prices for the different mobile telecommunication services provided by the MNOs have increased in lockstep. This shows that the undertakings jointly have significant market power, which means they enjoy a position equivalent to dominance.
In accordance with the provisions of Article 8, the European Commission’s Directorate-General for Competition (national regulatory authority) may impose obligations relating to cost recovery and price controls, including obligations for cost orientation of prices and obligations concerning cost accounting systems. Under the conditions of new market liberalization, the conditions for connecting to the network of the existing operator are crucial for the successful opening of the market. The directive gives national regulatory authorities the flexibility to promote interconnections. All public telecommunications network operators in the EU have both the right and the obligation to negotiate the relationship with each other in order to allow users of one network to communicate with users on other networks and give them access to services provided on other networks.
The main fact regarding this memo is connected with market definition and analysis. The telecommunication market is a fairly new market that requires careful consideration when choosing the application of the regulation. The aim of refraining from interference in new emerging markets is to promote competition and innovation. In General, new and emerging markets are unstable, demonstrating uncertainty in supply and demand and fluctuations in market share. They are characterized by a significant degree of innovation that can lead to abrupt and unexpected changes. The Commission considers that "emerging markets" are markets that are so new that it is not possible to determine whether the "three criteria" are met. In this particular case a meeting where the CEOs of the five MNOs discussed subscription plans, customers’ behavior, and preferences, services packages and discounts can be aimed to improve the efficiency of market and services, and discover ways to reduce costs so as to launch 5G technology.