11 Colum. J. Eur. L. 355 (2005)
Patrick S. Ryan. Attorney, PSR Law Firm, LLC, Denver, Colorado.
Governments in both the United States and Europe have been in the process of deregulating telecommunications, thus letting go of the idea that telecommunications monopolies are necessary (in accordance with the defunct pre-1980s belief that the telecommunications industry was a “natural monopoly”). Instead, these governments have embraced modern economic trends, which stipulate that consumers benefit when a market has multiple competitors. In this essay, we will consider whether this deregulation in the wireless market may create anticompetitive situations of “joint dominance” or “collective dominance” under European law. The concept is as follows: since there are, at most, only four to six mobile operators in each European country (because there are only four to six mobile licenses in each country), these operators all have a shared interest in controlling supply and pricing in the marketplace in order to maximize their collective profits. As a result, the European telecommunications industry may have reached a point of equilibrium where price efficiencies and service offerings, though improved over the last twenty- five years, still may be improved considerably.
This investigation is relevant to wireless regulation because any oligopoly that exists among mobile providers has, in effect, been created as a result of government wireless licensing procedures. It is, after all, the state that decides how many licenses shall be awarded, how those licenses shall be awarded (e.g., auction, beauty contest, or other means), and who shall receive the licenses. Although existing competition (antitrust) laws certainly attempt to weaken the power of oligopolies, those laws may be too cumbersome or may not be able to sufficiently combat the problem. In such cases, however, the regulators who have issued wireless licenses can use their jurisdictional authority to open up the market somewhat, thus allowing more unlicensed users to compete directly with licensed users, and consequently dilute the oligopolies that may exist. In this essay, we will focus on the situation as it exists in Europe because, as we will see, the topic of collective dominance has been heavily debated by various European organizations, most notably the International Telecommunications Users Group (INTUG), based in Brussels.
It is impossible to exhaustively analyze competition law as it relates to wireless communications within a short essay. After all, as we shall see, over five years ago the European Commission launched a competition investigation into the mobile telephone oligopoly, with few tangible results. Therefore, we will take a different approach. First, in the following section (Section !1), we will review a few of the arguments advanced by prominent European players regarding the likelihood of collective dominance in the mobile market. In Section III, we will examine European definitions of collective dominance, as set forth in competition laws and merger regulations, and we will evaluate the subsequent interpretations of these laws by the European courts.
Finally, in Section IV we will apply these laws to the actions of the European mobile operators. In the end, we will conclude that current European law is not likely to provide a remedy for joint dominance in the mobile sector. Thus, while a collective dominance problem may very well exist, the laws are seemingly not yet well-enough developed to remedy such a situation. However, as we will describe in further detail, if regulators believe that a collective dominance problem may exist, they can take another approach (what we call here an “end run”)6 by liberalizing spectrum regulations and releasing more unlicensed spectrum into the market.