This project is funded by the European Union EU regulatory framework for electronic communications - Competition rules, the Liberalisation Directive and privatisation Richard Harris Independent EU telecommunications consultant ICTtrain workshop London 3-14 November 2008

Agenda – The Competition rules Articles 81 to 89 of the EU treaty (1992) Articles 85 to 94 of the EEC treaty (1957) – Commission Directive 2002/77/EC the 17 recitals The 12 articles The 2 annexes – Is privatisation relevant? – Can “telecommunications” be found in the EU Treaty? 3rd November 20082

The competition rules What is an undertaking?. FR – entreprise DE – Unternehmen IT – impresa ES – empresa BG - HR - RO - TR - 3rd November 20083

The competition rules Articles of the EU Treaty. 81Anti-competitive agreements 82Abuse of a dominant position 83 Making of laws for enforcement of Until which time MSs are responsible 85 Commission to police principles of Rules apply also even where there are special or exclusive rights 87-89No state aid which distorts the market 3rd November 20084

A short, simple law 1 An article 86 Commission Directive is a clarification of the Treaty. In this case, the text in article 86(2) was said by the Commission in 1982 to mean that the business of providing telecommunications services was subject to the competition rules of the treaty. It was found also that certain behaviour by BT was in breach of Article 82 and BT was ordered to desist. Italy appealed to the ECJ and in 1985, the ECJ decided in favour of the Commission. This decided a key point for the first time and led the EU to develop and adopt a policy for the sector 3rd November 20085

A short, simple law 2 In 1990 an article 86 Commission Directive was adopted that required member states to abolish exclusive and special rights for providing telecommunications services. At first, certain activities were exempted from this but the Directive was later amended five times so that all exemptions were progressively removed. Directive 2002/77/EC explains all this in the recitals and then consolidates the remaining articles. 3rd November 20086

A short, simple law 3 ArticleSubject 2Prohibition on special & exclusive rights 3Non-discrimination by vertically integrated firms 4Right to use spectrum 5Directory services must be competitive 6Universal service obligation 7Use of satellites 8Cable TV networks 3rd November 20087

Is privatisation relevant? Privatisation is not required by the acquis. The competition rules apply in exactly way whether or not the state owns or controls an undertaking. However: Where the state has a commercial interest it is much harder for the regulator to be independent. Even where it is independent, it is harder to convince other investors. It is not sufficient to put independence in the law. 3rd November 20088

Article 154 of EU Treaty 1.To help achieve the objectives referred to in Articles 14 and 158 and to enable citizens of the Union, economic operators and regional and local communities to derive full benefit from the setting-up of an area without internal frontiers, the Community shall contribute to the establishment and development of trans-European networks in the areas of transport, telecommunications and energy infrastructures. 2. Within the framework of a system of open and competitive markets, action by the Community shall aim at promoting the interconnection and interoperability of national networks as well as access to such networks. It shall take account in particular of the need to link island, landlocked and peripheral regions with the central regions of the Community. 3rd November 20089

Why is it so important? EU telecom revenue is 3% of GDP The sector is vital to most economic sectors and social groups Mobile penetration very high (112%) but prices vary too much (6:1) Broadband penetration now growing (EU average 20%) but highest is 5 x lowest The Internet is bringing new risks 3rd November

Thank you for your attention For more information: See - Europa web-site 3rd November