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Published online by Cambridge University Press: 12 May 2011
The judgment of 3 December 2009 in Commission v Germany touches upon the issue of improper implementation by a Member State (Germany) of the EU regulatory framework in the electronic communications sector.1 In this sense, the judgment in question belongs to the relatively large group of rulings in which the European Court of Justice (ECJ) categorizes the legislative actions (or inactions) of Member States in the field of electronic communications as infringing the Union secondary legislation.2 Undoubtedly, however, Commission v Germany constitutes a judgment that is of paramount importance within the above-mentioned group of rulings and deserves a particularly close attention. Being confronted here with the German rules that generally exempted the so-called new (emerging) markets in the sector concerned from ex ante regulation, the Court had an opportunity to express its views on such key regulatory issues as:
1) the position of encouraging efficient investment in infrastructure, and promoting innovation within the hierarchy of objectives that the EU regulation in electronic communications sector aims to achieve;
2) the scope of discretionary powers of national regulatory authorities (NRAs) in defining the markets susceptible to ex ante regulation, and in regulating those markets, including the markets having a new or emerging character;
3) the role of national legislators in regulating electronic communications markets, and particularly the relationships between national legislators and NRAs in the field of regulation of the markets in question.
1 To put it more precisely, the following Directives forming part of the EU Regulatory Framework in Electronic Communications, as infringed by Germany, were at stake here: 1) Directive 2002/21/EC on a Common Regulatory Framework for Electronic Communications Networks and Services (Framework Directive), OJ L108/33 (amended by Directive 2009/140/EC OJ L337/37); 2) Directive 2002/19/EC on Access to, and Interconnection of, Electronic Communications Networks and Associated Facilities (Access Directive), OJ L108/7 (amended by Directive 2009/140/EC); 3) Directive 2002/22/EC on Universal Service and Users' Rights Relating to Electronic Communications Networks and Services (Universal Service Directive), OJ L108/51 (amended by Directive 2009/136/EC, Directive 2002/58/EC Concerning the Processing of Personal Data and the Protection of Privacy in the Electronic Communications Sector and Regulation (EC) No 2006/2004 on Cooperation between National Authorities Responsible for the Enforcement of Consumer Protection Laws, OJ L337/11).
2 As far as infringements of the EU regulatory package of 2002 are concerned, see for example the following cases: C-380/05, Centro Europa 7 Srl v Ministero delle Comunicazioni e Autorità per le garanzie nelle comunicazioni, Direzione generale per le concessioni e le autorizzazioni del Ministero delle Comunicazioni, [2008] ECR I-349; C-227/07, Commission v Poland, [2008] ECR I-8403; C-220/07, Commission v France, [2008] ECR I-95; C-493/07, Commission v Slovakia, [2008] ECR I-120; C-274/07, Commission v Lithuania, [2008] ECR I-7117; C-492/07, Commission v Poland, [2009] ECR I-8; C-458/07, Commission v Portugal, 12 March 2009; C-230/07 Commission v Netherlands [2008] ECR I-144.
3 Telecommunications Act of 22 June 2004, BGBl. 2004 I, 1190.
4 This provision reads as follows: ‘1. Save as provided for in the following paragraph, new markets shall not, in principle, be subject to regulation (…). 2. Where certain facts suggest that, in the absence of regulation, the development of a sustainable competitive market in the area of services or telecommunications networks would be hindered in the long term, the ‘Bundesnetzagentur’ [German regulatory authority in the telecommunications sector] may, by way of derogation from subparagraph 1 above, submit a new market to regulation (…). In order to assess the need for regulation and in imposing specific measure, the ‘Bundesnetzagentur’ shall take into particular account the objective of promoting efficient investment in infrastructure and of supporting innovation'.
5 ‘A ‘new market’ is a market for services or products which are significantly different from currently available services or products in terms of their effectiveness, their range, their availability for a large number of users (mass-market capacity), their price or their quality from the point of view of a knowledgeable buyer, and which do not simply replace those products' (para 3(12b) of TKG).
6 Koenig, C, ‘Herstellung von Wettbewerb als Verwaltungsaufgabe. Der Wettbewerbsbegriff als eingriffslegitimierendes Tatbestandsmerkmal der Regulierungsermächtigungsnorm’ (2009) 124 Deutsches Verwaltungsblatt 1089Google Scholar. Interestingly, it turned out relatively quickly that the above-mentioned solution was beneficial mainly to Deutsche Telekom (German incumbent in electronic communications sector), since otherwise it would have been required by Bundesnetzagentur to open up its fast internet network (VDSL) to competitors in order to enable them to offer their own value-added services to end-users. Ultimately, under Paragraph 9a of TKG, Deutsche Telekom was not subject to ex ante regulation in the fast internet network market: R Klotz, ‘The Liberalization of the EU Telecommunications Markets’ in C Koenig, A Bartosch, J-D Braun, M Romes (eds), EC Competition and Telecommunications Law (Kluwer Law International, The Hague, 2009) 103.
7 Case C-424/07 Commission v Germany, judgment of 3 December 2009, not yet reported.
8 ibid para 61. See also Case C-55/06, Arcor AG & Co KG v Bundesrepublik Deutschland [2008] ECR I-2931, paras 153–156.
9 ibid para 74.
10 Recital 27 in the preamble to the Framework Directive, point 32 of the Commission guidelines on market analysis and the assessment of significant market power under the Community regulatory framework for electronic communications networks and services (OJ C165/6; hereinafter: ‘Commission guidelines’), and recital 15 in the preamble to the Commission recommendation of 11 February 2003 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation (OJ L114/45; hereinafter: ‘recommendation of 2003). Currently the recommendation of 2003 has been replaced by Commission Recommendation of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation (OJ L344/65; hereinafter: ‘recommendation of 2007’; see in particular recital 7 in the preamble to that recommendation). All those provisions were invoked by Germany as—ostensibly—exempting new markets from ex ante obligations.
11 Above (n 7) para 73.
12 ibid para 79.
13 ibid para 91.
14 ibid para 93.
15 ibid para 94.
16 ibid paras 95–99.
17 ibid para 82.
18 Recital 27 in the preamble to the Framework Directive, point 32 of the Commission guidelines, recital 7 in the preamble to the recommendation of 2007.
19 On NGNs see more eg J Li Salina, P Salina, Next Generation Networks: Perspectives and Potentials (Wiley, Chichester, 2007) 5 ff.; N Wilkinson, Next Generation Network Services. Technologies and Strategies (Wiley, Chichester, 2002) 167 ff; T Van de Velde, Value-Added Services for Next Generation Networks (Auerbach Publications, 2008) 34 ff; N Seel, Business Strategies for the Next-Generation Network (Auerbach Publications, 2007) 16 ff; B Khasnabish, ‘Next Generation Technologies, Networks, and Services’ in T Plevyak, V Sahin (eds), Next Generation Telecommunications Networks, Services, and Management (Wiley, Chichester, 2010) 108 ff.
20 Above (n 7) para 82.
21 Gans, J, King, S, ‘Access Holidays for Network Infrastructure Investment’ (2003) 10 Agenda 165Google Scholar.
22 Provided that they have been classified beforehand as susceptible to ex ante regulation and currently are not effectively competitive within the meaning of art 16(4) of the Framework Directive.
23 On exact differences between allocative and dynamic efficiency see L. Peeperkorn, K. Mehta, The Economics of Competition, in J Faull, A Nikpay (eds), The EC Law of Competition (OUP, Oxford, 1999) 9 ff; M Motta, Competition Policy. Theory and Practice (CUP, Cambridge, 2005) 40 ff.; R Whish, Competition Law (Butterworths, London, 2003) 3–4.
24 These three cumulative criteria are as follows: 1) the presence of high and non-transitory barriers to market entry; 2) the structure of a given market does not tend towards effective competition within the relevant time horizon; 3) the application of competition law alone would not adequately address the market failure(s) concerned (recital 5 in the preamble to the recommendation of 2007 and point 2 of this recommendation).
25 Above (n 7) paras 85–94.
26 Art 16(4) of the Framework Directive.
27 Arts 9-13b of the Access Directive; Art 3 ff. of the Universal Service Directive.
28 Such an exceptional possibility is guaranteed by art 8(3) of the Access Directive.
29 Art 16(4) of the Framework Directive.
30 Art 15(3) of the Framework Directive.
31 Above (n 7) para 61.
32 See more H Maurer, Allgemeines Verwaltungsrecht (CH Beck, Munich, 2006) 135 ff; F Ossenbühl, ‘Rechtsquellen und Rechtsbindungen der Verwaltung’ in H-U Erichsen, D Ehlers (eds), Allgemeines Verwaltungsrecht (De Gruyter Recht, 2002) 206 ff; Korbmacher, G, ‘Ermessen—unbestimmter Rechtsbegriff—Beurteilungsspielraum’ (1965) 18 Die Öffentliche Verwaltung 696Google Scholar ff.
33 Art 16(4) of the Framework Directive, art 8 of the Access Directive.
34 Such a hierarchy is neither established in art 8 of the Framework Directive, nor can it be established by the national legislature: above (n 7) paras 85–94 of Commission v Germany.
35 On the relative priority of principles see R Alexy, Theorie der Grundrechte (Nomos, Munich, 1994) 78–79, 143 ff.
36 Gärditz, KF, ‘Zum Verhältnis von europäischen und mitgliedstaatlichen gesetzlichen Vorgaben für die Ermessensausübung der nationalen Regulierungsbehörden im Bereich der Telekommunikation. Anmerkung zum EuGH Urteil v. 3.12.2009—Rs. C-424/07 Kommission/Bundesrepublik Deutschland’ (2010) 65 Juristen Zeitung 199–200Google Scholar.
38 Gärditz (n 36) 200.
39 ibid.
40 On the significance of the ‘reservation of a statute’ for the regulated sectors see more Gärditz, KF, ‘Regulierungsrechtliche Auskunftsanordnungen als Instrument der Wissensgenerierung’ (2009) 124 Deutsches Verwaltungsblatt 71–72Google Scholar; Storr, S, ‘Soll das Recht der Regulierungsverwaltung übergreifend geregelt werden?’ (2006) 121 Deutsches Verwaltungsblatt 1021–1022Google Scholar.
41 Gärditz (n 36) 200.
42 See art 6 of the Framework Directive.
43 Art 35(4)(b)(ii) of Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (OJ L211/55) states that NRAs are not allowed to ‘seek or take direct instructions from any government or other public or private entity when carrying out the regulatory tasks. This requirement is without prejudice to close cooperation, as appropriate, with other relevant national authorities or to general policy guidelines issued by the government not related to the regulatory powers and duties [emphasis added]’. This means a contrario that NRAs cannot take into consideration any guidelines or other similar acts related to the regulatory powers and duties of NRAs that are issued by the national government or by the national parliament; see also 39(4)(b)(ii) of Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ L 211/94, 2009).
44 The examples of such a ‘foreign’ influence on the decision-making process of NRAs can be found in the following provisions: 1) Arts 7-7b of Framework Directive; 2) Art 3 of Regulation (EC) No 1211/2009 establishing the Body of European Regulators for Electronic Communications (BEREC) and the Office (OJ L 337/1); 3) Arts 38–39 of Directive 2009/72/EC; 4) Arts 42–43 of Directive 2009/73/EC; 5) Arts 7–8 of Regulation (EC) No 713/2009 establishing an Agency for the Cooperation of Energy Regulators (OJ L 211, 14.8.2009, 1).
45 On the process of deparliamentarization as the corollary to the enhanced Europeanization see for more A Moravcsik, ‘Why the European Union Strengthens the State: Domestic Politics and International Cooperation’ Center for European Studies. Working Paper Series 52 (Harvard University, Cambridge, 1994) 1 ff; J O'Brennan, T Raunio, ‘Introduction: Deparliamentarization and European integration’ in J O'Brennan, T Raunio (eds), National Parliaments Within the Enlarged European Union: From ‘Victims’ of Integration to Competitive Actors? (Routledge, London, 2007) 3–4.
46 Gärditz (n 36) 201.
