European Electronic Communications on the Road to Full Competition: The Concept of Significant Market Power under the New Regulatory Framework

Abstract

Electronic communications within the European Union today represent a sector characterized by an interplay of liberalization, regulation and competition. The new regulatory framework uses the concept of significant market power to assess the position of operators on the electronic communications markets and utilizes the competition law criteria of dominance to estimate whether an undertaking enjoys significant power on the relevant market. However, since the new regulatory framework pursues different aims than competition law, the importance of the criteria of dominance and their respective weight in any finding of significant market power on the electronic communications market should be different than in the case of a finding of an abuse of a dominant position under European competition law. This is because under general competition law it is abusive behavior that is denounced, whereas under the new regulatory framework it is the significant position itself that is a trigger for the application of ex-ante obligations on an SMP undertaking. The major indicators of significant market power to be used are market shares and barriers to entry as well as network or essential facility ownership but none alone should be sufficient for a finding of SMP. Since an SMP finding gives rise to serious and far reaching obligations on the selected operators, any analysis of SMP should be forward looking and flexible, competition oriented and promoting consumer interests, innovation and investment. With the dynamics of the sector in mind, national regulators will need to balance and reassess the reasons behind their SMP verdicts exactly because market players' incentives to follow these very goals will diminish with every wrongly pointed finger and every wrongly placed obligation.