WRITTEN QUESTION P-3493/97 by W.G. van Velzen (PPE) to the Commission (29 October 1997)

Subject: Supervision of supply of new telecommunications services by dominant market operators

On 21 October 1997 reports appeared in the Netherlands press concerning supervision of the Netherlands telecommunications market. It was claimed that it was sometimes difficult or even impossible for national regulatory authorities to investigate the supply of new (Internet-capable) services by existing operators holding dominant positions on the telecommunications market and who could consequently harm smaller operators on that market. Similar problems were said also to arise in other Member States.

1. What are the Commission's views on the supply of new services by operators in a dominant market position on the telecommunications market, having regard in particular to Article 8 of Directive 97/33/EC ((OJ L 199, 26.7.1997, p. 32. )) of 30 June 1997 (Interconnection Directive) in conjunction with Articles 5, 86 and 90 of the EC Treaty?

2. Has the Commission held consultations on this matter with the Netherlands government?

3. Does the Commission take the view that the existing telecommunications directives require Member States to give national regulatory authorities wide powers to monitor the supply of new services?

4. Is the Commission prepared to launch an urgent general inquiry into the compatibility of the supply of new services by dominant market operators on the European telecommunications market with European law?

Answer given by Mr Van Miert on behalf of the Commission (24 November 1997)

1. There is nothing in Community legislation which prevents incumbent telecommunications operators (TOs) from offering new services. Indeed, consumers can benefit from an increased choice of such services if as many new providers as possible are on the market. Competition law, in particular Article 86 of the EC Treaty, aims to prevent dominant operators from engaging in behaviour which would make it difficult or impossible for market entrants to compete in new market segments. To the extent such market entrants depend on the incumbent TOs for facilities which are necessary to provide new services, the general principles of Article 86 apply, particularly the ban on illegal cross-subsidisation and discrimination.

Neither Directive 90/388/EEC of 28 June 1990 on competition in the markets for telecommunications services ((OJ L 192, 24.7.1990. )) nor Directive 97/33/EC of the Parliament and of the Council of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of open network provision (ONP) require undertakings with significant market power to keep separate accounts for each new activity they pursue. Directive 97/33/EC does require an incumbent to implement accounting separation between its interconnection activities and its other activities, and also requires that incumbents provide interconnection facilities and information to others under the same conditions and of the same quality as they provide for their own services, or those of their subsidiaries or partners.

2. In the framework of decentralised implementation of the competition rules, the Commission has regular contacts with the Dutch authorities, both those dealing with telecommunications regulatory matters and the competition authorities. These contacts extend to individual complaints under the competition rules, including those alleging abusive behaviour by an incumbent TO towards new market entrants.

3. The current telecommunications directives require Member States to grant their national regulatory authorities the necessary powers in a number of specific areas, such as interconnection disputes. Specific cases of alleged abusive behaviour by dominant companies are monitored by competition authorities at Community or national level. This having been said, it is a general and important principle of Community law that all national authorities, thus including the telecommunications regulatory authorities, must ensure that any actions they undertake are consistent with Community competition law. They are therefore obliged to refrain from action that would undermine the effective protection of Community law rights under the competition rules ((See draft notice on access agreements in the telecommunications sector, OJ C 76, 11.3.1997. )).

4. Article 12 of Council Regulation No 17/62: first Regulation implementing Article 85 and 86 of the EC Treaty ((OJ 13, 21.2.1962. )) allows the Commission to initiate a general review of specific economic sectors where there are indications of a restriction or distortion of competition. Such an inquiry must however, as Regulation No 17/62 states, relate to a particular sector of the economy and could not therefore be undertaken with respect to such a broad and undefined notion as 'all new services' offered by incumbent TOs.