WRITTEN QUESTION E-3272/00

by Francesco Turchi (UEN) to the Commission

(20 October 2000)

Subject: UMTS licences

The ever-expanding market in telecommunications is of great economic importance and UMTS licences are crucial to the further development of this sector, as they represent the future of mobile telephony.

Various European Union governments have awarded UMTS licences on the basis of public auctions organised by themselves rather than on the basis of rigorous scrutiny of the necessary documentation.

This has tended to result in UMTS licences being awarded to operators with significant public sector involvement, as was the case in Italy, where Wind is controlled by ENEL, which in turn is controlled by the Italian Ministry of the Treasury.

Does the Commission agree that this constitutes a distortion of the market and of competition, and what measures does the Commission intend to take in response to this state of affairs?

Answer given by Mr Monti on behalf of the Commission

(14 December 2000)

According to Article 295 (ex-Article 222) of the EC Treaty, this Treaty shall in no way prejudice the rules in Member States governing the system of property ownership. However, Article 86 (ex-Article 90), paragraph 1, of the EC Treaty provides that in the case of public undertakings, Member States shall neither enact nor maintain in force any measure contrary to the EC Treaty rules and in particular, to the competition rules contained in Articles 81 to 89 (ex-Articles 85 to 94).

Furthermore, with respect to the granting of third generation mobile licences, 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 a competitive bidding auction). However, Member States, when awarding third generation mobile licences, are required to comply with the EC Treaty and a certain number of general principles of Community law. In particular, 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. In addition, when establishing such licensing procedures Member States should give due weight to the need to maximise benefits for users and to facilitate the development of competition.

Provided that the foregoing principles and the competition rules contained in Articles 81 to 89 of the Treaty are complied with, the participation of public undertakings in the licensing procedures for the award of third generation mobile licences does not constitute, in itself, a distortion of competition. Accordingly, Member States may not treat state-owned undertakings or undertakings in which state authorities exercise decisive influence differently from private-owned undertakings by excluding them from the licensing selection procedures for third generation mobile licences on the sole ground that they are state-owned.

(1) Decision No 128/1999of 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).