V. Solutions to Possible Antitrust Problems

V. Solutions to Possible Antitrust Problems

With extraterritoriality unable to provide much influence, there are those who suggest looking outside the US and EU for guidance. This specifically means turning to the World Trade Organization (“WTO”) for a sort of global antitrust watchdog. In 1997, sixty nine members of the WTO signed an agreement to “provide market access to their basic telecommunications services.”¹³⁸ This agreement, signed by all EU Member States, encourages the replacing of monopoly with competition by instituting many of the same policies as the EU.¹³⁹ The perceived benefit is that an international body might have more of an impact on the EU markets than the Commission. However, several problems arise from this proposal. First, it will take much longer for an international body to implement policies than the Commission. The most significant problem, however, is a philosophical one. It is clear that there is a significant philosophical difference between US and EU antitrust law. Therefore, it is possible to infer that competition policies in other countries also vary for whatever reasons. It is impossible for an international antitrust guideline to conform to the different desires and goals of each signatory to the agreement. As a result, it may be best to hope for continued guidance from the Commission with regard to the ever changing market of telecommunications.

VI. CONCLUSION

The telecommunications sector in the US and EU share a number of similarities and differences as do US and EU competition laws. Yet they have been thrown together as a result of the Big Three alliances and now must determine how to proceed together in order to continue their pledge for more competition in the telecommunications market. Though it may be difficult, it is necessary for the US and EU to continue to develop antitrust laws and regulations that correspond with the changing market. Otherwise, the Big Three alliances may signal a new era in telecommunications monopolization.

1 See Paul W. MacAvoy, The Failure of Antitrust and Regulation to Establish Competition in Long-Distance Telephone Services 15 (The MIT Press, Cambridge, 1996).

2 See id. at 19.

3 See id. at xi.

4 While the United States uses the term antitrust law, the European Union chooses the term competition law. In this paper, the term used will correspond to the country they belong to. However, the two terms can be used interchangeably.

5 See William P. Cassidy, Jr., Universal Service in a Competitive Telecommunications Environment: The Current State of Universal Service in the European Union and United States, 25 N.C. J. Int'l L. & Com. Reg. 107, 125 (1999).

6 See id.

7 See id. “By 1902, three thousand commercial telephone systems existed to challenge the Bell System.” Id.

8 See id.

9 Milton L. Mueller, Jr., Universal Service Competition, Interconnection, and Monopoly in the Making of the American Telephone System 107 (The MIT Press, Cambridge, 1997).

10 See Cassidy, supra note 5, at 126.

11 Id.

12 See id.

13 See id. The Kingsbury Commitment also required AT&T to sell its stock in Western Union and to allow independent companies to interconnect with its lines. See id.

14 Willis-Graham Act, 42 Stat. 27 (1921).

15 See id.

16 See MacAvoy, supra note 1, at 8.

17 See id.

18 See id.

19 See United States v. American Telephone and Telegraph Company, 552 F.Supp. 131, 136.

20 See MacAvoy, supra note 1, at 1.

21 See Microwave Communications, Inc., 18 F.C.C.2d 953 (1967), recons. denied, 21 F.C.C.2d 190 (1970), modifications granted, 27 F.C.C.2d 380 (1971).

22 See Hush-A-Phone Corp. v. U.S., 238 F.2d 266 (D.C. Cir. 1956); Carterfone, 13 F.C.C.2d 420 (1968), 13 Rad. Reg.2d 597 (1968).

23 See Cassidy, supra note 5, at 130-131.

24 MacAvoy, supra note 1, at 16.

25 See Cassidy, supra note 5, at 131. The three markets were telephone equipment, local exchange and long-distance service. See MacAvoy, supra note 1, at 16.

26 See Cassidy, supra note 5, at 131. From AT&T, seven regional Bell companies were formed. See id. These regional companies were required to allow any long distance company access to its network. See id. In addition, they were not allowed to engage in “competitive telecom ventures, such as equipment manufacturing, information services and long-distance services, outside designated areas known as local access and transport areas (LATAs).” Id. at 131-132.

27 See id. at 132.

28 Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified in sections of 47 U.S.C.A.).

29 See MacAvoy, supra note 1, at 210.

30 See Francoise Blum and Anne Logue, State Monopolies Under EC Law 1 (John Wiley & Sons, Chichester, 1998). Other sectors included the energy market, the broadcasting market, the postal market and the transportation market. See id.

31 See Cassidy, supra note 5, at 117.

32 See Mark Naftel, Countdown to 1998: Status of Telecommunications Competition in Europe and Comparison with the United States, 7 J. Transnat'l L. & Pol'y 1, 6 (1997).

33 See Cassidy, supra note 5, at 117.

34 See id.

35 See id. at 118.

36 Id.

37 See Catherine Olson, Job Centre: The Ongoing Demise of Public Monopolies in Europe, 27 Denver J. Int’l L. & Pol’y 615 (1999). “The dynamics of economic integration and the need for job growth in the midst of a more globally competitive and technologically-oriented environment have created this impetus.” Id.

38 Boaz Barack, The Application of the Competition Rules of the European Economic Community 333 (Kluwer Law and Taxation Publishers, Antwerp, 1981).

39 See id.

40 See Eleanor M. Fox, The Central European Nations and the EU Waiting Room: Why Must the Central European Nations Adopt the Competition Law of the European Union?, 23 Brook. J. Int’l L. 351, 352 (1997).

41 See id.

42 See Eleanor Fox, The Proper Goals of Antitrust: When Public and Private Interests Collide, 9 Loy. Consumer L. Rep. 112, 135 (1997).

43 Allison J. Himelfarb, The International Language of Convergence: Reviving Antitrust Dialogue Between the United States and the European Union with a Uniform Understanding of ‘Extraterritoriality’, 17 U. Pa. J Int'l Econ L. 909, 927 (1996).

44 Id.

45 See Lawrence B. Landman, Innovation and the Structure of Competition: Future Markets in European and American Law: Part II, 81 J. Pat. & Trademark Off. Soc’y 789, 790 (1999).

46 15 U.S.C.A. §1.

47 See Landman, supra note 45, at 791.

48 15 U.S.C.A. §2.

49 See Landman, supra note 45, at 792.

50 See id.

51 See id.

52 See Landman, supra note 45, at 794-95. Examples of per se offenses include price-fixing, boycotts, market division and tying. See id.

53 See id. at 795. Among the factors to be evaluated: “the number and power of the competitors in the relevant market, the background of their growth, the power of the joint venturers, the relationship of their lines of commerce, the competition existing between them, and the power of each in dealing with the competition.” Id.

54 See Barack, supra note 39, at 334.

55 See Landman, supra note 45, at 792.

56 See Barack, supra note 39, at 334.

57 See id. Civil penalties include treble damages and temporary injunctions. See id. Criminal penalties include fines, imprisonment and forfeiture of property. See id. Regulatory penalties include dissolution, divestiture and divorcement. See id.

58 See id. at 335.

59 See id. at 334.

60 Id.

61 See Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European Communities and certain related acts, Oct. 2, 1997, O.J. C 340/1 (1997) [hereinafter Treaty of Amsterdam] (amending Treaty on European Union (“TEU”), Treaty establishing the European Community (“EC Treaty”), Treaty establishing the European Coal and Steel Community (“ECSC Treaty”), and Treaty establishing the European Atomic Energy Community (“Euratom Treaty”) and renumbering articles of TEU and EC Treaty). The Treaty of Amsterdam renumbered former articles 85, 86 and 90 to articles 81, 82 and 86. See id.

62 Stephanie L. Harkness, International Partnerships in the European Union Telephone Service Market: Towards a New Monopoly?, 19 B.C. Int’l & Comp. L. Rev. 187 189 (1996).

63 See id.

64 See id.

65 See id.

66 See Harkness, supra note 61, at 189.

67 See Barack, supra note 39, at 4.

68 Id. at 4-5.

69 See Blum & Logue, supra note 31, at 8.

70 See Harkness, supra note 61, at 190.

71 Id. Council Regulation No. 4064/89, O.J. L 395/1 (1989), corrected version in O.J. L 257/13 (1990), amended by O.J. L 180 (1997) [hereinafter Merger Regulation].

72 Himelfarb, supra note 44, at 929.

73 See id at 928.

74 See id.

75 Id.

76 See Landman, supra note 45, at 798.

77 See id. at 799

78 David S. Barrett, The European Commission’s Antitrust Analysis of High-Technology Joint Ventures and Strategic Alliances: A Diverging Analysis? 12 Transnat’l Law. 475, 477 (1999).

79 See Treaty of Amsterdam, supra note 61.

80 See France, Italy, UK v. Commission, Cases 188 to 190/80, [1982] E.C.R. 2545 [hereinafter Transparency Directive].

81 See id.

82 Italian Republic v. Commission of the European Communities, Case 41/83, [1985] E.C.R. 873 [hereinafter British Telecom].

83 See Blum & Logue, supra note 31, at 220.

84 See id. at 223.

85 See id

86 See id

87 See Blum & Logue, supra note 31, at 17.

88 See id. at 66.

89 Regie de Telegraphie et de Telephone (RTT) v. GB-INNO-BM SA, Case C-18/00, [1991] E.C.R. I-5941 [hereinafter RTT].

90 See id.

91 See id.

92 See id.

93 See id.

94 See Blum & Logue, supra note 31, at 223.

95 Kristina Driscoll Carey, Competition Law and the Privatization of Telecommunications Markets in the European Union, 22 Suffolk Transnat’l L. Rev. 747, 758 (1999).

96 See Blum & Logue, supra note 31, at 66.

97 See Blum & Logue, supra note 31, at 66.

98 Commission Communication: Progress Report on the thinking and work done in the field of telecommunications and initial proposals for an Action Programme.

99 See Barrett, supra note 78, at 486. The Telecommunications Action Programme included in its new policy the desire to establish a Common Market for telephone equipment, standardize the telecommunications sector and open access to public telecommunications contracts. See Blum & Logue, supra note 31, at 221. Many of their objectives were adopted in the mid-1980s. See id.

100 Communication from the Commission: Towards a Dynamic Economy. Green Paper on the Development of the Common Market for Telecommunications Services and Equipment, COM(87) 290, 1987 [hereinafter Green Paper].

101 Id.

102 See Commission Directive 88/301/EEC of 16 May 1988 on competition in the markets for telecommunications terminal equipment, OJ 1988 L131/73.

103 The Directive called for competition in the telecommunication terminal equipment market by ordering the Member States to withdraw any special or exclusive rights to supply such equipment. See id.

104 See France v. Commission, Case 202/88, [1991] E.C.R. I-1223 [hereinafter Terminal Equipment].

105 See id.

106 See id.

107 See Commission Directive 90/388, 1990 O.J. (L 192) 10 [hereinafter Services Directive].

108 See Naftel, supra note 33, at 11-12.

109 See id. at 11. Other Directives include the Satellite Directive, Cable Directive, Mobile Directive and Open Network Provision Directives. See id at 12-18. To discuss them would require delving into more technical aspects of the telecommunications field, which is outside the scope of this paper.

110 Christopher Boam, Giving the Phoenix Wings: The Deutsche Telekom/France Telecom/Sprint Alliance, CommLaw Conspectus, Winter 1997, at 82.

111 See id.

112 See id.

113 See id.

114 See Barrett, supra note 78, at 521.

115 See Boam, supra note 110, at 83.

116 See id.

117 See id.

118 See id

119 See Barrett, supra note 78, at 525.

120 See Boam, supra note 110, at 83.

121 See id..

122 See id.

123 See id.

124 See id. at 84.

125 See id.

126 See id. at 87.

127 See id. at 86.

128 See id. at 88. “There were six criteria: (1) whether a US carrier can offer services similar to those than the foreign entity seeks to offer in the US; (2) whether competitive safeguards exist in the foreign country, including; (3) the availability of published charges, terms and conditions for interconnection; (4) timely and nondiscriminatory disclosure of technical information need for interconnection; (5) and the protection of carrier proprietary information; and (6) whether an independent regulatory body with fair and transparent procedures is established to enforce competitive standards.” Id.

129 See Boam, supra note 110, at 83.

130 See Barrett, supra note 78, at 536.

131 See id.

132 See Commission Directive, supra note 102.

133 See id.

134 See id.

135 See id.

136 See Himelfarb, supra note 44, at 913.

137 See Joseph P. Griffin, Extraterritoriality in the US and EU Antitrust Enforcement, 67 Antitrust L.J. 159 (1999).

138 Niels Quist, The WTO Agreement on Basic Telecommunications: Will European Union Telephone Service Finally Become Competitive?, J. of Int’l Legal Stud. , Winter 1998, at 133.

139 See id. at 155.

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