Regulating the Regulated: Deutsche Telekom v. European Commission

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Robert O’Donoghue, May 15, 2008

It is reasonably clear following Deutsche Telekom that the EC courts are comfortable with applying competition law in regulated telecommunications markets. In the United States, the Trinko judgment effectively found that there is no scope for applying a duty to deal under Section 2 of the Sherman Act where such issues have already been considered under the applicable regulatory framework. Whether that should also extend to margin squeeze conduct of the kind at issue in Deutsche Telekom forms part of a fascinating appeal pending before the U.S. Supreme Court. An influential body of opinion has submitted that the outcome should be the same as in Trinko (i.e., complex issues like margin squeeze are best left to the regulators, not competition authorities or courts). In broad terms, Deutsche Telekom shows that the EC courts do not share a similar aversion to parallel application of competition law and regulation in the area of telecommunications. In doing so, the CFI has greatly increased the burden on regulated firms and, although perhaps unintended, may also have reduced the overall effectiveness of regulation. Subscribers can download the entire article available in the column on the left.

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