Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

On Case C-165/19 P, Slovak Telekom: an upcoming development under the radar

with 4 comments

Under the Radar: How to Protect Against the Insider Threat

These days, attention in competition law circles seems to focus more on the policy dimension – new cases brought by competition authorities, new legislative initiatives – and less on developments before review courts. Keeping an eye on the latter makes sense, if only because major policy initiatives end up challenged.

Slovak Telekom is a key pending case for the future of Article 102 TFEU and the boundaries of the the various legal tests. More precisely, the Court will rule on the scope of the Bronner doctrine (and more precisely of the indispensability condition).

It is one of these cases where the outcome is probably far less relevant than the rationale underpinning the outcome. The former comes across as relatively straightforward, in my view; the latter is far more interesting.

Slovak Telekom: on ‘margin squeeze’ and… ‘margin squeeze’ by other means

Slovak Telekom is a chapter in the long saga of Commission decisions against incumbents in the telecommunications sector.

It is interesting because it involves non-price conduct. The trinity of Deutsche Telekom, Wanadoo and Telefonica revolved around pricing strategies, which were examined under the ‘margin squeeze’ and the predatory pricing labels.

Slovak Telekom, on the other hand, involves price-based strategies (‘margin squeeze’) and non-price-based ones (broadly speaking, unfair terms, such as withholding the necessary information to compete or reducing the scope of its obligation to provide unbundled access to the local loop).

The object and/or effect of both sets of strategies was in any even the same, according to the decision: hinder new entrants’ ability to compete in retail telecommunications markets.

Key point of law: is indispensability an element of the legal test?

The case was decided after TeliaSonera. And TeliaSonera had already clarified that, for better or worse, a ‘margin squeeze’ can be abusive even when the input involved is not ‘indispensable’ within the meaning of Bronner/IMS Health.

The point of law raised in the applications for annulment is interesting: does the TeliaSonera doctrine also apply to non-price-based conduct in a similar economic and legal context (recently liberalised industry subject to sector-specific regulation)?

Following TeliaSonera, it seems to me that indispensability is unlikely to be deemed a pre-requisite for intervention in a case like Slovak Telekom. I fail to see how one can justify applying different legal tests to practices that have the same object and/or effect.

If indispensability is not required for the ‘margin squeeze’ aspect of the overall strategy, I cannot think of a good reason why it would for its non-price aspects.

Explaining the most probable outcome of the case

While it seems relatively easy to anticipate the most probable outcome of the case, teasing out the logic underlying the outcome is far more interesting.

The General Court explored two possible justifications. One the one hand, it argued that, since there is already a regulatory obligation to give access, indispensability would no longer be required. On the other hand, it took the view that the scope of TeliaSonera could be read as applying beyond ‘margin squeeze’ conduct.

I can think of a way to reconcile these two justifications and in which they both make sense. As I have explained before, the key probably lies in Van den Bergh Foods. In the relevant economic and legal context, the Slovak Telekom decision did not amount to mandating the firm to transfer an asset or enter into agreements with persons with whom it has not chosen to contract.

In the circumstances of the case, the infringement could be addressed with an old-fashioned one-off negative obligation (that is, an obligation to cease and desist the conduct).

Because there is a regulatory apparatus in place, there was no need for the Commission to take over the role of a sector-specific agency. For the same reason, the issues raised in cases like Bronner (the imposition of access obligations on regulated terms and conditions) do not arise.

Which takes me to TeliaSonera. In a passage (occasionally criticised), the Court explained that, if indispensability were required in the context of a ‘margin squeeze’, then it would be required in every abuse case.

If you think about it, the passage makes sense. A ‘margin squeeze’, as a practice, typically raises issues that are not fundamentally different from those at stake in predatory pricing cases (as Wanadoo shows, the two labels are sometimes even interchangeable).

If one has never thought of requiring indispensability in a predatory pricing case, there should be no reason why it should be required in the context of a ‘margin squeeze’ (or any other case that would not demand the administration of proactive, regulatory-like remedies à la Bronner).

Summing up: the regulatory context is key, as suggested by the General Court. This is so insofar as, in such a context, a cease-and-desist obligation is enough to bring the infringement to an end. In the same vein: the key in TeliaSonera is not so much the pricing or non-pricing nature of the practice, but the nature of intervention.

Written by Pablo Ibanez Colomo

24 July 2020 at 1:28 pm

Posted in Uncategorized

4 Responses

Subscribe to comments with RSS.

  1. What is your guess for hypothetical situation in Bronner case: Mediaprint gives offer for Bronner, but the offer is squeezing.

    Peter Silanič

    3 August 2020 at 3:48 pm

    • Thanks, Peter! If the question is ‘are there instances where a practice presented as a squeeze may demand the administration of regulatory-like remedies and are therefore subject to Bronner?’ my answer is yes. I touch upon these matters in my paper on indispensability (and suggested new categories acknowledging this fact). It would be wonderful to get your thoughts on it.

      Pablo Ibanez Colomo

      13 August 2020 at 12:31 pm

  2. Une fois n’est pas coutume…I concur with your insights re Van den Bergh and TeliaSonera. Great post.

    ChiChiTo

    7 August 2020 at 3:32 pm

  3. […] two of my latest posts – a though experiment on smartphones and cameras, and an update on Slovak Telekom[1]– some of you have contacted me about the central argument I […]


Leave a Reply to Peter Silanič Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: