WRITTEN QUESTION E-3119/00

by Brigitte Langenhagen (PPE-DE) to the Commission

(6 October 2000)

Subject: Allocation of UTMS licences in Spain

The Spanish government chose to issue UTMS licences by means of a procedure that generated very little revenue. According to press reports, this procedure was deliberately chosen to provide Spanish businesses with higher profits and consumers with lower charges.

Would the Commission state:

1. To what extent is the Commission aware of the procedure chosen, and can it influence that choice?

2. Is the procedure that was followed in Spain compatible with the European competition rules?

3. Does the Commission regard the procedure adopted in Spain as providing covert or overt subsidies, thus placing other European enterprises at a disadvantage?

4. Will the Commission take action to prevent Member States from providing specific sectors with subsidies of this kind? If so, by what means?

Answer given by Mr Monti on behalf of the Commission

(22 November 2000)

With respect to the procedures followed by Spain and generally by other Member States for the granting of third-generation mobile licences, the Commission would like to draw the attention of the Honourable Member to the fact that neither Decision No 128/1999(1) nor any of the Community directives related to mobile services(2) and licensing(3) requires Member States to adopt a specific licensing procedure (i.e. a comparative selection beauty contest or competitive bidding auction). However, Member States, when awarding third-generation mobile licences, are required to comply with the EC Treaty and a number of general principles of Community law which are clearly stated in these directives. In particular, any spectrum pricing method should take account of the need to favour the development of innovative services and competition while reflecting the need to ensure the optimal use of scarce resources. Furthermore, the number of third-generation mobile licences may be limited only for reasons of demonstrated lack of frequency spectrum and licences should be granted on the basis of objective, non-discriminatory, detailed and proportionate criteria. Provided that the EC Treaty and these principles are complied with, there are no grounds for the Commission to intervene or seek to influence the process by which Member States decide to grant third-generation mobile licences.

The Commission has been following closely the third-generation licensing process in the different Member States. However, the Commission has not received any complaint as to the alleged violation of the above-mentioned principles or of the competition rules by the Spanish authorities.

As regards the question of whether the procedure effectively provided subsidies to firms awarded third-generation mobile licences, it should be noted that Member States can choose which procedure to apply and that the Commission has no objections to this provided that Article 87 (formerly Article 92) of the EC Treaty is respected.

In principle, the two procedures for the sale of licences, beauty contest and auction, are permitted under the rules on state aid as long as they are transparent, objective and non-discriminatory. Furthermore, the practical arrangements and conditions of the procedure selected must be such that no form of aid is directly or indirectly granted to the buyers or the activity in question.

The Commission has received a number of complaints alleging that state aid was granted in the framework of procedures for granting third-generation mobile licences, which it is now looking into.

(1) Decision No 128/1999/EC of the Parliament and of the Council of 14 December 1998 on the coordinated introduction of a third-generation mobile and wireless communications system (UMTS) in the Community (OJ L 17, 22.1.1999).

(2) Commission Directive 96/2/EC of 16 January 1996, amending Directive 90/388/EEC with regard to mobile and personal communications (OJ L 20, 26.1.1996).

(3) Parliament and Council Directive 97/13/EC of 10 April 1997, on a common framework for general authorisations and individual licences in the field of telecommunication services (OJ L 117, 7.5.1997).