Merger Control in the Telecommunications Sector
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Description
As the first decade of the new millennium draws to a close, the telecommunications sector continues to be a focus for innovation, growth and dynamic competition. Ten years after the liberalization of European markets, the economic and regulatory barriers between Member States are diminishing and the technological divisions that used to help defining telecommunications, broadcasting and internet related markets are becoming harder to pinpoint with certainty. Accordingly, due to the ‘convergence phenomenon’, questions of substitutability and competitive effects become increasingly complex. At the same time, vigorous merger and joint venture activity in this dynamic sector continues to provide the Commission with a full merger-review workload. Merger cases provide the Commission with the opportunity to ‘fix’ certain shortcomings of sector-specific regulation through the imposition of ‘regulatory’ remedies (e.g., open access obligations) as a condition for clearance. The Commission has made use of this approach in the past and appears determined to do so in the future when sector-specific rules are gradually phased out as mandated by the Regulatory Framework for Electronic Communications. Against this background, this chapter is intended to serve as a guide to the European Commission's review of concentrations in the telecommunications industry and the closely related broadcasting and internet sectors. This chapter is divided into five sections. Section I, Introduction, provides a top-level overview of merger control in the European Union—including the basic legal standard and the applicable procedural framework—as well as a bird's eye view perspective of the relevant industries. Section II, Market Definition, reviews decisions of the European Commission that relate to telecommunications and related markets in order to provide an indication of market definitions likely to be reached by the Commission in future decisions. The highly fact-specific nature of the market-definition exercise—as well as the rapid pace of technological, regulatory and societal changes that affect these markets—means that the value of precedent in any single case is questionable at best, and the value of inferences and inductions drawn on the basis of a divergent and occasionally contradictory body of precedent doubly so. Nevertheless, when appropriately qualified, previous Commission decisions provide the best guide to the likely assessment of a given concentration short of direct contact with the Commission itself. Sections III and IV together explain the Commission's practice regarding the analysis of the competitive effects of horizontal (Section III) and non-horizontal (Section IV) mergers. These sections explore the relevant factors used by the Commission to assess the likely effect of the proposed transaction on competition in relevant markets. Illustrating these factors with examples from previous decisions of the Commission in telecommunications and related markets, these sections provide an insight into the heart of the merger review process. Section V, Remedies, explores the Commission's responses, short of outright prohibition, to mergers and concentrations that are found to present a risk of anticompetitive effects. Cases in relevant sectors in which parties to a transaction have successfully negotiated structural or behavioural ‘commitments’ (guarantees subject to which the transaction is allowed to proceed) are discussed to illustrate the practice of the Commission in this regard.
Source Publication
EC Competition and Telecommunications Law
Source Editors/Authors
Christian Koenig, Andreas Bartosch, Jens-Daniel Braun, Marion Romes
Publication Date
2009
Edition
2
Recommended Citation
Rosenthal, Michael and Francis, Daniel, "Merger Control in the Telecommunications Sector" (2009). Faculty Chapters. 628.
https://gretchen.law.nyu.edu/fac-chapt/628
