The European Commission has today published its eagerly anticipated comments on the notification made by the Spanish Comisión del Mercado de la Telecomunicaciones (CMT) relating to the market for access and call origination on public mobile telephone networks in Spain (Market 15).

T-REGS Notes:

The European Commission’s eCCTF letter is unusually lengthy (11 pages), and, overall, provides what can only be described as a remarkably strong validation of the CMT’s market analysis (as supplemented by the CMT’s response to questions from the European Commission) and of the CMT’s finding of collective dominance.

Tacit collusion between Telefónica Moviles, Vodafone and Amena is deemed to have been sufficiently demonstrated by the CMT, in the form of an alignment of commercial strategies on the wholesale market (no joint SMP is considered to exist on the retail market), and specifically the refusal to supply wholesale access to third parties in order to protect strong profitability of each of the three mobile operators’ retail activities.

The letter also contains new guidance for National Regulatory Authorities that will be analysing Market 15 in the future, phrased as follows (selected extracts; the text should be read in full to achieve a full understanding):

[...] According to the case law of the Court of Justice, for a finding of collective dominance in the form of tacit collusion, members of the dominant oligopoly must be aware, sufficiently precisely and quickly, of the way in which the other members’ market conduct is evolving. The degree of transparency is important for the purpose of permitting each member of the oligopoly to detect deviation from the common policy and to ascertain whether it is necessary to react to any such deviations by punishing them.

CMT defines one focal point consisting in the denial of wholesale access to third parties. The Commission services consider that this focal point is transparent and that non deviator MNOs can easily detect any deviation resulting in the entry of a new competitor at the retail level. […]

[...] For a finding of collective dominance, there must be an incentive not to depart from the common policy. Demonstrating the possibility and sustainability of a common line of action presupposes, in particular, proof of the existence of efficient, credible retaliatory measures against any company that deviates from the common policy/strategy (i.e. the focal point). For a retaliation mechanism to be credible, it needs to be easily and quickly implemented.

CMT considers that the most credible retaliation would occur at wholesale level. If an MNO were to grant network access, the other firms could retaliate by granting access to another MVNO.

[…]  Specifically, NRAs are invited to assess in a market review whether the non deviator MNOs could easily conclude a contract with a MVNO, whose entry and specific commercial strategy is likely to discipline the deviator MNO. […]

This is an extremely important precedent, because it is only the second time that the European Commission has accepted an NRA’s finding of joint SMP on Market 15 (after Ireland, where the case was subsequently appealed successfully), because there was no PHASE II investigation, and also because it stands in stark contrast to the situation of France, where ARCEP was enjoined to withdraw its notification. Furthermore, the treatment of Market 15 is one of the key subjects in the context of the 2006 Review of the Recommendation on Relevant Markets Susceptible to Ex-Ante Regulation.

The CMT’s proposals, now validated by the European Commission, entail the imposition of the following obligations on each of the three mobile network operators to:

  • grant MVNO access when receiving reasonable requests
  • apply reasonable wholesale charges for MVNO access

The CMT has also anticipated on likely conflicts about the terms and conditions of MVNO access, and has set out how it will assess the ‘reasonableness’ of requests. The European Commission did not comment on the approach to regulatory remedies.

The full text of the eCCTF letter on Market 15 in Spain has been added to the T-REGS repository of eCCTF letters, which can be accessed via the 'Documents' section at the top right of this website. Downloading the eCCTF letters is available for registered users only, but registration is free and subject to our Terms of Use, including our Privacy Statement.

For an in-depth discussion of this key precedent, please contact Yves Blondeel.