Transcript Document
European Commission
DG Competition
Chief Economist Team
Access and Termination
Charges in Telecoms: Antitrust
considerations
Eliana Garces Tolon
European Commission- DG Competition
Toulouse 30 June 2006
The views expressed in this presentation are those of the presenter and do not
attempt to portray the official position of the European Commission
Economic Issues and Antitrust Concerns
Optimal access and termination prices depend on
Price Elasticity and calling patterns of callers
Relative size of network
Nature of competition (price/non price, extent of differentiation,
access vs. usage)
Number of related services (bundling opportunities)
Prevalence of cross subsidisation and non linear pricing
Antitrust consequences
Might no be so obvious to define markets
Impact on consumer welfare difficult to assess
Collective dominance implications: effects of lack of transparency
in pricing - agreements
Approach by the European Commission
Market definition based on substitution possibilities and entry barriers at
each level of the communication process Narrow markets
Intervention based on competition concerns if SMP and
Abuse: Art. 82 cases (Roaming UK and DE, margin squeeze cases)
Presumption of harm: Regulatory framework
Harm is foreclosure or excessive price
Price related remedies: No price discrimination, Cost orientation
But asymmetric remedies in termination fees have been allowed
Simple economics
basically ignores MSM issues – ignores potential bundling and/or
price discrimination incentives.
Current Revision of the Framework
Regulation for Electronic Communications
Same criteria as before
Movement towards deregulation?
Take out some markets: retail except universal service obligation
Add some others: wholesale SMS
Are market definition and SMP the right criteria for ex-ante
regulation?
What would be viable alternatives (performance measures,…)?
Should there be a harmonisation of remedies?
(revision of directives 2009)
International Roaming Sector Inquiry
Regulation proposal based on excessive pricing allegations
BUT:
No theory of harm has been developed (excessive price w/o SMP)
No SMP has been demonstrated
Difficult to intervene on anti-trust grounds or even using current
regulatory framework.
Concerns with the proposed regulation:
Regulating prices without understanding pricing mechanism
What are the incentives to price high on wholesale
international roaming?
What determines (lack of) pass-on? How much pass-on is
there?
Impact assessment incomplete
General Considerations
EC should understand firms’ motivation and
incentives for pricing before taking action
This would help better identify the source of
potential inefficiencies and design the best
appropriate remedy
Examine consequences of remedies on entry,
consumer welfare and innovation.
Competition policy should only be used when there
is harm to the competitive process