1. COMPETITION - McCarthy TÃ©trault

More documents

Recommendations

Info

The objective for implementing number portability is to facilitate the process for customers to switch from one operator to another. This, in turn, should enhance competition in the market. Under the newly implemented regulations, a mobile number is ported when a customer enters into a subscriber agreement with a new operator and receives a new SIM-card. The old subscriber connection remains operable until the new connection with the new operator is activated. Any additional services requested by the customer must be agreed to separately with the new operator, as the existing services will not transfer with the number. In practice, the subscriber is not charged for porting a number, since the law prohibits the former operator from charging the customer for the change. The former operator may, however, collect from the new operator a one-off payment equivalent to the costs of porting the phone number if the technical process of porting the number generates one-off costs. At the same time, the one-off payment cannot be so high as to deter the use of the service. While the new operator can pass on the costs of the port to the customer, in practice the new operator does not do so. According to the regulation, any delay in providing a connection to a new subscriber when the number is ported may not exceed five working days. The regulation further provides that the so-called "black-out" period between closing the old subscriber connection and opening a new connection may not exceed ten minutes. Customers' eagerness to change operators has caught most mobile phone operators by surprise, and has lead to severe delays in the time limits set for the change. FICORA has repeatedly emphasized the operators' duty to attend to their obligations and has issued a deadline for the operators to comply with the regulations. After the deadline of 6th October 2003, FICORA may consider imposing a conditional fine to those operators that still fail to meet the time limits. For more information visit: http://www.ficora.fi/englanti/tele/puhelinnumeron_siirrettavyys.htm or contact: craig.thompson@roschier.com MEXICO ANTITRUST CONCERNS: IMPLEMENTING SOUND REGULATION Many problems faced by the telecommunications sector today derive from the incumbent's abuse of power. Previously, we discussed the reasons why the Dominance Rules imposed on TELMEX a couple of years ago failed and were overturned. We have not discussed, however, what the qualifications of any regulatory agency in charge of governing antitrust matters in this sector should be, so that its resolutions can both withstand the test of judicial tribunals and afford legal certainty to all players in the Mexican market. Two agencies are involved in the process of determining the existence of substantial power in the relevant market and imposing specific obligations on the incumbent. On the one hand, the Mexican Federal Antitrust Commission (the "COFECO") is in charge of implementing the Mexican Federal Antitrust Law (the "LFCE") by determining the relevant markets and substantial power of the economic agent. Once COFECO makes such a determination, the Mexican Federal Telecommunications Commission (the "COFETEL") is in charge of imposing specific obligations against the incumbent. Deficiencies have arisen in the past precisely in the determination of the relevant market and substantial power. Under current regulations, COFECO has broad powers to interplay with different economic variables to determine what the relevant market is and what products, if any, may serve as adequate substitutes thereof. This discretionary power affects the "incumbent" insofar as it is unable to know beforehand the elements that will be considered by COFECO in its analysis, thus leaving it in a state of judicial uncertainty. A lack of clear and specific regulations as to the powers of the authorities, and of the standards for imposing penalties or other administrative sanctions, have been recurring deficiencies that were brought before Mexican courts to combat administrative resolutions and the constitutionality of the laws. If COFETEL will be in charge of imposing specific obligations, and if COFETEL is the agency that is most likely to have the necessary elements to make a thorough analysis in the determination of the relevant market and the substantial power, antitrust matters in the telecomm sector should be vested primarily in the hands of COFETEL, even if the administrative act through which the antitrust activity is condemned is made by COFECO. Naturally, this would require an amendment to the current antitrust and telecom regulation to include specific testing parameters and broaden COFETEL's powers participate in the analysis of the markets and the relevant market. The current draft of the new Federal Telecommunications Law aims to amend some of the deficiencies listed above by including specific criteria to determine the existence of a dominant player in the relevant market. However, COFETEL's actions are still limited to merely advisory activities to COFECO, which the latter may disregard with or without cause. For more information visit: www.cfc.gob.mx or contact: aam@bstl.com.mx TURKEY DOMINANCE IN THE MOBILE TELECOMS MARKET In a landmark decision, published in the Official Gazette on 22nd July 2003, the Competition Authority (the "Authority") imposed a 7 trillion TL (approximately eur 4.5 million) fine on Turkcell, a major GSM services provider in Turkey. The Authority found that Turkcell was abusing its dominant position in the market to prevent the growth of other companies. The decision was rendered upon complaints made to the Authority by Basari Electronic ("Basari"), one of the former largest cell phone distributors, and Telsim, another GSM services provider that felt subject to Turkcell's domination from 1994 to 2000. The companies' complaints were based on Turkcell's dominance in the GSM services market. Basari claimed that Turkcell had applied dissimilar conditions to equivalent transactions. Turkcell placed Basari at a competitive disadvantage both by requesting a fee for the line and the sale of a SIMcard with a cellular phone, and by not paying the "sale support bonus" that they formerly paid to Basari. Turkcell had continued to pay this bonus to other distributor companies, which thus caused an increase on the prices of phones sold by Basari as compared to those of other companies. Telsim claimed that the major owner of Turkcell, Cukurova Holding, wrongly perceived the two separate GSM operating market and GSM devices market as one, which made it impossible for Telsim to enter into the market. The Authority provided a detailed analysis of how dominance in the relevant market should be determined. First, it pointed out that market share is a strong indication, but is not itself determinative, of dominance in the given market. On the other hand, evidence that market shares are consistently much higher than those of competitors' for a prolonged period strongly suggests dominance. Additionally, in a market where competitors are also trying to increase their subscribers' use of data and voice communication, the total values of such use should be considered to determine whether a company is in a dominant position. Accordingly, the fact that Turkcell had 8,037,000 subscribers, where, as of July 2000, ISSUE 22 SEPTEMBER – OCTOBER 2003 2
Telsim had 3,633,398 subscribers, demonstrates Turkcell's 6 years of constant leadership in the market, and indicates an overwhelming dominance of market share alone. Turkcell's dominance over Telsim is further established by the fact that an average Turkcell customer spoke for more than 125 minutes per month, where an average Telsim customer used only 45 minutes of speaking time. A company's dominance in a market also depends on the existence of barriers to market entry, such as a license that must be obtained from relevant authorities. This is the case for the GSM services market. Turkcell and Telsim were the first companies to obtain GSM licenses, followed by Aria and Ay-cell. However, obtaining a GSM license only secures the legal entry into the market, where achieving notable strength in the market requires substantial costs, such as infrastructure, marketing, sales and distribution expenses. Two of the most significant barriers to entry are "brand recognition" and "network externalities". Turkcell effectively maintains and increases its customer-base due a widespread use of its network, which naturally creates a difficulty for Telsim to maintain or increase its own market share. Another major barrier to entry was identified as the vertical integration of Turkcell that enables Turkcell to have an active role in the GSM devices market through exclusive relationships established between Turkcell and Turkcell Activation Centers and Turkcell Subscription Spots. Furthermore, 3,700 newspaper kiosks are selling pre-paid lines through A-Tel, a subsidiary of Turkcell's major shareholder. In light of the foregoing, Turkcell was found to have a dominant position in the relevant market, since it has the power to apply its very own strategies to determine variables that affect the demand in the market (such as discounts and rebates) "independent of its customers and other competitors". As a result, with regard to the dealers working exclusively for Turkcell, the Authority decided that there was no noncompliance with the competition rules if these dealers are not working as cell phone distributor dealers at the same time. On the other hand, if these dealers work exclusively for Turkcell, it would be impossible for other operators to secure dealers, and hence, competition would be seriously restricted in the market. As per the Sim-Lock application, the Authority decided that Sim-Locks cannot be used unless the price of the device is partially paid for by the operator in return for a certain subscription period within the scope of a promotion. If the aforesaid condition is present and the device is sold with a Sim-Lock, the consumer should be notified that the device is being sold with a lock, and that the expiration date of the lock will be removed free of charge upon the consumer's request. Further, the consumer should be informed of certain advantages that will be maintained if the consumer decides to continue with his subscription. The consumer must also be notified that s/he is free to have the lock removed anytime s/he desires in return for a fee, which will be calculated depending on the remaining time for the promotion. For more information visit: http://www.rekabet.gov.tr/english.asp or contact: dpolat@hbo-law.com.tr 2. COMPUTER CRIME BRAZIL LAW POWERS UP PIRACY COMBAT WEAPONS Brazilian Law No. 10695 (the "Law"), published on 2nd July 2003, amended the provisions of both the Penal Code and the Code of Criminal Procedure by broadening piracy prevention measures. The Law extends the minimum prison sentence for infringers of copyrights, who infringe with a view to obtain direct or indirect profits, to two years. It maintains the maximum prison sentence of four years. Under the Law, it is also a crime to market third-party copyrighted work without a license by means of cable, satellite, wave, or any other nonmechanical methods (the so-called "cyberpiracy"). Further, the Law now allows the police to seize counterfeit products, as well as the machinery and equipment used to manufacture them, without a search warrant. The Law establishes that reproduction of a work for personal and not-forprofit use is not considered a crime. For more information please contact: rapdecunto@pinheironeto.com.br 3. CONSUMER PROTECTION AUSTRIA NEW RULES ON UNSOLICITED COMMERCIAL COMMUNICATION On 20th August 2003, the Austrian Telecommunications Act (the "Telekommunikationsgesetz 2003," or the "TKG 2003") implemented new rules on unsolicited commercial communication via electronic mail and SMS. Austria was one of the world's first countries to enact a general ban on such communication in 1999 by amending § 101 of the then-effective Telecommunications Act. Sending e-mail in bulk or for advertising purposes required prior consent from the recipient, and, once given, that consent was revocable at any time. In addition, the old Act granted protection against commercial e-mail under both competition law, as unfair competition, and civil law, as a violation of privacy or property. While drafting the new Telecommunications Act, the legislature gave in to concerns raised by the Chamber of Commerce that this rule could affect the development of electronic commerce in Austria, and it thus restricted the scope of the ban. Under § 107 para. 2 TKG 2003, sending e-mail and SMS in bulk (to more than 50 recipients) or for the purpose of direct marketing is impermissible without prior consent only if the recipient is a consumer. Moreover, § 107 para. 3 TKG 2003 provides that such prior consent is not required where the following conditions are met: • the sender received the contact details for such messages in the context of the sale of a product or service to his or her clients; • the message is for the direct marketing of his or her own similar products and services; and • the client is clearly and distinctly given the opportunity to object, free of charge, and in an easy manner to such use of their contact details when they are collected and on the occasion of each further sent message. ISSUE 22 SEPTEMBER – OCTOBER 2003 3
Page 1: Click on a table of contents entry
Page 5 and 6: issuance of a certificate; provide
Page 7 and 8: United Phosphorous had already rece
Page 9 and 10: decided at the interim stage itself
Page 11 and 12: of phone traffic data for use in cr
Page 13 and 14: its intention as expressed in the e
Page 15 and 16: ITALY THE TELECOMMUNICATIONS CODE O
Page 17 and 18: have given their prior consent. Reg
Page 19 and 20: TABLE OF CONTENTS BY COUNTRY NEWS I

1. COMPETITION - McCarthy TÃ©trault

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?