In Search of Efficiency in Telecoms

Abstract

Agreements between telecom operators are allowed, as long as they do not distort competition (Article 101(1) TFEU). In this paper we explore the possibilities for undertakings to cooperate while competing for business. Telecoms are a regulated industry. Therefore operators are not only subject to competition rules, but also to ex ante regulation. However, both kinds of rule tend to play complementary roles. We cannot ignore that there are factors in the industry which may be likely to favour anti-competitive agreements. Notwithstanding this, many agreements are expected to improve efficiency or even enhance competition in the industry. In particular, co-investment agreements may facilitate the deployment of new networks. On the other hand, agreements which restrict competition can be allowed whenever their pro-competitive effects compensate for the restriction of competition (Article 101(3) TFEU). In this sense, most of the joint ventures have been cleared by the Commission due to their positive effects on competition. However, strengthening cooperation is not a way to avoid merger scrutiny.