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EU Court Rulings Provide Important Message to Irish Telcos on Interaction Between Competition and Regulatory Laws

AUTHORs: Kate McKenna co-author(s): Simon Shinkwin, Conor Doyle Services: EU, Competition & Regulatory DATE: 01/04/2021

The European Court of Justice (“ECJ”) has recently delivered two judgements which provide an important message for telecoms businesses operating in Ireland.  The first of these rulings confirms that the risk of non-compliance with competition rules is particularly high for telcos in that they may face two fronts of attack from both the European Commission and the Irish Commission for Communications Regulation (“ComReg”) for the same suspected anti-competitive behaviour.  The second ruling confirms that the risk of telcos falling foul of abuse of dominance rules when dealing with access seekers is significantly higher where the telco is subject to regulatory ‘open access’ requirements, or has otherwise decided to grant wholesale access, than where the telco has refused to deal with an access seeker (in a non-regulated context). 

We briefly consider these rulings from an Irish perspective, as well as pending cases of potential significance.

Slovak Telecom and ‘Ne Bis in Idem’

The legal principle of ‘ne bis in idem’ restricts the possibility of a defendant being prosecuted repeatedly on the basis of the same cause of action.  In its recent decision in Slovak Telekom a.s. v Protimonopolný úrad Slovenskej republiky decision (C-857/19), the ECJ clarified the application of this principle in the context of proceedings brought by both a national competition authority (“NCA”) and the European Commission for suspected abuse of market dominance by a telco operator during the same time period (with the wholesale broadband access services market being the focus of the European Commission’s investigation and, for the NCA investigation, the wholesale and retail markets for telephone services and low-speed internet access services).  The ECJ reiterated that where the European Commission initiates proceedings in connection with infringements that are identical to those for which a NCA has brought proceedings, the NCA will no longer have competence in that matter.  In this case however, while the European Commission and the NCA had both opened investigations into the alleged infringement, they had done so with different product markets as the subject matter.  Consequently, the ECJ held that the NCA had retained its competence to bring proceedings insofar as it was pursuing a different product market than the Commission.

The Slovak Telecom decision provides greater clarity on the issue that where a NCA and the European Commission have brought proceedings against an undertaking for an alleged infringement of competition rules, the NCA will only be relieved of its competence to bring proceedings for the same infringements occurring on the same product and geographical market during the same period.  The NCA will therefore continue to have competence to bring proceedings where it is pursuing a product market other than that which the Commission is pursuing.   

Two further cases in which the ne bis in idem principle is being considered are currently pending decision by the ECJ.  In Bpost SA v Autorité belge de la concurrence (Case C-117/20), the Court will rule on whether the principle applies between proceedings brought by a NCA and a national regulator (in this case a postal regulator) against an undertaking where the proceedings are in connection with the same or similar facts (thus examining the alleged breach under two different legal regimes).  In Bundeswettbewerbsbehörde v Nordzucker AG (Case C-151/20), the Court will also consider the application of the principle in circumstances where the competition authorities of two Member States are called upon to apply the same provisions of EU law on the same facts.  In this instance, the Austrian NCA is seeking to issue a fine against a sugar manufacturing company for cartel behaviour in circumstances where the company has already been fined in Germany on the basis of the same facts.

ECJ Clarifies Position on Refusal of Access

On 25 March 2021, ruling on the cases Deutsche Telekom AG v Commission and Slovak Telekom a.s. v Commission (Cases C-152/19 and C-165/15), the ECJ elucidated its position on refusals of access to network infrastructure by dominant undertakings.  The Court emphasised that even dominant undertakings remain free in principle to refuse to conclude contracts and free to use the infrastructure they have developed for their own needs – and that to oblige these undertakings to grant access to competitors would not be justified at a competition policy level unless they hold a “genuinely tight grip on the market concerned”.  It then set out that a dominant undertaking may be obliged to grant access to its infrastructure where:

  • refusal is likely to eliminate all competition on the part of the competitor seeking access;
  • refusal cannot be objectively justified; and
  • such access is indispensable to the competitor (ie, there is no available substitute). 

However, the ECJ also set out that, in circumstances where the dominant undertaking grants access to its infrastructure but such access is subject to unfair conditions, this cannot be equated with a refusal to access.  In such circumstances, allegations of abuse would need to be examined by reference to legal standards other than those regarding refusals of access – such as the imposition of unfair trading conditions. 

Application to Ireland

The clarification of the ne bis in idem principle comes at a time where the granting of new and enhanced powers to ComReg is proposed under the Competition (Amendment) Bill 2021 (the “Competition Bill”) – including greater power to issue fines for breaches of competition law such as cartel behaviour or the abuse of dominance. In light of its new fining powers and its recent moves towards deregulation of eir, we expect that ComReg will scale up its competition law enforcement activities which to date have been rare (for example, its competition investigation of RTÉ’s subsidiary, RTÉ Transmission Network Limited in 2014).  Irish telcos should be aware that they may face proceedings from both the European Commission and ComReg in connection with the same suspected anti-competitive practices during the same time period if the proceedings relate to separate product markets, while we will be closely watching for the outcome of the pending ECJ cases to see whether the Court will re-consider its narrow interpretation of ne bis in idem.  The Competition Bill is at present expected to be passed into law in the second quarter of 2021. 

It is also possible that the ruling on Deutsche Telekom AG v Commission and Slovak Telekom a.s. v Commission as discussed above, which could be interpreted as imposing a special competition law burden on regulated entities, will impact the eagerness of Irish telcos to campaign to ComReg for further deregulation – and in particular the removal of open access regulatory requirements. 

This article was authored by Kate McKenna, Simon Shinkwin and Conor Doyle.