Wednesday, May 21, 2008
Posted by D. Daniel Sokol
Giorgio Monti of LSE's Law Department provides some thoughts on Managing the Intersection of Utilities Regulation and EC Competition Law.
ABSTRACT: Utilities regulation in the Member States is always subject to the application of EC competition law. However, this undermines the effectiveness of utilities regulation and a more flexible standard should be devised by the European Courts. The Court of First Instance has an opportunity to do so in two pending appeals where the Commission found an infringement of Article 82 EC after the actions of the dominant firm had been endorsed by the national telecommunications regulator. The grounds for affording greater latitude to regulators are threefold: first the regulator should be free to make decisions on economic grounds that support dynamic over allocative efficiency, second it should also be free to make decisions non non-economic grounds to prioritise other objectives at the expense of competition, third the present scope of EC competition law is so wide that in several instances the Commission acts in a regulatory manner, stepping over tasks best left to the regulator. No general principle is recommended to demarcate the borderline between competition law and sector regulation but a case-by-case assessment should be carried out to determine whether the application of competition law would cut across the policy choices reached by the utilities regulator, and competition law should not apply when it would harm the regulatory goals.