Connected Research

Union policy research in the 21st century

EU private consultation on T-Orange concessions

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Mobile companies in the UK, plus BT, are reported to have received questionnaires from the European Commission concerning the concessions [registration required; limited viewing time] which Deutsche Telekom and France Telecom are (again) said to have made as a means of winning regulatory support for the merger of their UK interests.

Citing the old stand-by of ‘a person familiar with the situation’, but who appears to be a representative of the parent companies, the report states that the concessions include the sale of part of their combined radio spectrum and the provision of some network sharing guarantees to 3 UK, which has a network sharing agreement with T-Mobile. (It probably helps the spread of such rumours that more than half the mobile world is at a congress this week in Barcelona. Nevertheless, this seems to be a serious story, having also appeared in The Observer on Sunday.) The purpose of the EU questionnaires, which are due back with the Commission by the end of the week, is to assess whether the concessions on offer are sufficient to allay rivals’ concerns over the impact of the merger on competition.

Few of those involved – from the operators to the Commission – can thus far be found who will comment.

Those responsible for the appearance of the story are thought to believe that allaying the concerns of rivals might be sufficient to persuade the UK’s Office of Fair Trading to withdraw its request for the competition aspects of the joint venture to be examined in the UK – thus leading to a potentially shorter period in which the merger is officially reviewed.

Three comments, really:

1. Since when did the leading subjects of competition policy assume responsibility for determining its direction? Perhaps something of a naive question, and no doubt the questionnaires are consultative only and that the Commission will take into account the views of others, including the UK’s Office of Fair Trading, but competition policy cannot, as a matter of principle, be determined on the basis of what other companies in the industry think. Did consumer organisations receive a questionnaire? Did the Connect sector of Prospect and the CWU? (Slightly rhetorical questions, these.) Policy must be made on the basis of clear (and transparent) principles (and also in line with the principles of democratic accountability), not subject to a laissez faire carve-up between the major operators. Of course, the views of rivals are important ones, but this process is currently back to front.

2. The concessions which are reported to have been made are a matter of public concern and need to be made public. While they remain secret confidential, they have, in terms of the policy-making process, no validity. Policy is made on the basis of public consultation and that essential principle needs to be re-asserted.

3. The joint venture concerns only the UK interests of Deutsche Telekom and France Telecom. It thus concerns only the UK. The EU has clear rules of subsidiarity in terms of decision-making, with the result that the primary location for the determination of the policy issues behind whether such a joint venture should be allowed to proceed is the UK. Furthermore, where there is little or no direct interest in the outcome of decision-making, i.e. little or no stake in its outcome, how valid is that decision-making process in the first place, and how reliable are the decisions that result from it? Consequently, it is the Office of Fair Trading, not the EU, which ought to have the final authoritative say.

Perhaps it will. And perhaps the view of rival companies will be just one component in the decision-making, rather than what appears to be its sole determinant. Indeed, this may simply be another battle in Deutsche Telekom and France Telecom’s intentions to get the merger examined in Brussels – that if, by planting the story, they appear to assert the primacy of the European Commission’s role, via the apparent (though this may not be actual) by-passing of the UK authorities in this questionnaire process, the ‘logic’ of the venture being examined in Brussels will follow on.

This would, however, be a dangerous way to see both this story and the discomforting aspects of the policy-making process that it embodies.

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Written by Calvin

18/02/2010 at 11:36 am

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