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Dutch competition authority takes note of telecoms regulation

Approval by the ACM (Dutch competition authority) of KPN’s acquisition of fibre operator Reggefiber was upheld by the Dutch Trade and Industry Appeals Tribunal in February 2018 – and as a commentary in JD Supra says, in assessing the merger’s competitive effects, “the tribunal notably considered regulatory measures adopted pursuant to sector-specific telecoms regulation”. As a result, “Telecoms regulations are a relevant element in determining the market effects of a merger and may be a ground for clearance, even in the presence of a potential post-merger price increase or an incentive to exclude access.” In this case the judgment affirms the ability the ACM to take into account sector-specific regulation in its merger control analysis, and lends significant weight to price regulation in appraising the potential effects of a merger.

The balance between regulation and competition law rules will remain of particular relevance in the face of a current revision of the EU regulatory framework and sector consolidation. The background is that following an in-depth investigation, the ACM unconditionally cleared the merger, despite finding that the proposed transaction gave KPN incentives to both charge higher prices and to exclude alternative providers from wholesale access to the local access network. ACM concluded that effective competition would nonetheless not be significantly impeded in the Dutch market, due to sector-specific telecoms remedies in place.

“The ACM's 2014 decision took into account the fact that KPN was regulated, pursuant to a decision by the Dutch telecoms regulator, based on the ex ante telecoms framework established under European Union law. As such, KPN was considered an operator with significant market power for unbundled access and consequently subject to access remedies and a regulated price cap.” Additionally, a draft revised decision by the Dutch telecoms regulator to maintain the mandatory access regime and the regulated price cap had also already been published and was set to enter into force in 2016. Thus, such a revised decision would ensure that KPN would continue to provide alternative providers with wholesale access to the local access network.

“Vodafone appealed the clearance decision, contending that, as a result of the merger, commercially agreed prices for unbundled access to the residential fibre access network would increase by 10-15%, up to the level of the regulated price cap under the applicable telecoms remedies. In rejecting Vodafone's argument, the district court ruled that sector-specific telecoms regulation could be used to assess whether a proposed concentration would significantly impede effective competition. Thus, the ACM had appropriately considered both existing and proposed telecoms remedies (under the Dutch telecoms regulator's decision and draft revised decision) in its appraisal of the merger.” 

The key takeaways, says the commentary, are that competition law and telecoms regulation work together to preserve effective competition in the telecoms industry, and that the new European electronic communications code and continued industry consolidation may change how sector-specific regulation interacts with merger control.

Read the full commentary here

  • Thursday, 22 March 2018

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