Starting from December 2015, the European Commission has tabled a series of legislative proposals2 – ranging from portability of online content to geo-blocking – to bring about the Digital Single Market strategy (DSM) launched in May 2015.3 In the second half of 2016 the Commission issued further proposals, notably on copyright,4 and on the review of the regulatory framework for telecoms.5
In addition to proposing new legislation, in May 2015 the European Commission also started a sector inquiry into the e-commerce sector over concerns about anticompetitive practices.6 A preliminary report released in September 2016 found potential competition concerns, including: (1) in relation to consumer goods, geographic sales restrictions, and bans on sales via marketplaces such as eBay and Amazon; and (2) in relation to digital content, geo-blocking, exclusivity of rights and content, bundling of online rights in licensing, and the long durations of some licensing agreements. The preliminary conclusion was that these types of contractual sales restrictions ‘may, under certain circumstances, make cross-border shopping or online shopping in general more difficult’.7 The final report is expected in the first quarter of 2017.
i The regulators
The European Commission (the Commission) is the most prominent regulatory body at the EU level. The Commission is equipped with a variety of regulatory and enforcement powers in areas related to TMT, including antitrust, privacy,8 online transactions, intellectual property9 and consolidation of the internal market for electronic communications.10 The adoption of the regulatory framework for electronic communications in 2009 has, inter alia, increased the Commission’s powers to oversee the measures proposed by national regulatory authorities (NRAs) to address problems relating to competition in the various telecommunications markets.
The Body of European Regulators for Electronic Communications (BEREC) was established by Regulation (EC) No. 1211/2009 (the BEREC Regulation),11 and became fully functional in 2011. Its role is to guarantee consistent application of the EU regulatory framework by, for example, delivering opinions on NRAs’ draft regulatory measures and, upon request, offering assistance to NRAs in carrying out their duties under EU law. The Commission also turns to the BEREC before adopting recommendations on relevant product and service markets, which NRAs must rely on in defining the relevant national markets. The Commission may also task the BEREC with carrying out ad hoc market studies. In September 2016, the European Commission proposed an updated BEREC Regulation to transform BEREC into a fully fledged agency.12
ii Regulated activities
In 2002, the EU adopted a new comprehensive regulatory framework for electronic communications networks and services, with the aim of fostering a consistent regulatory approach across the EU. In 2009, Directive 2009/140/EC,13 Directive 2009/136/EC14 and Regulation (EC) No. 1211/2009 were adopted to improve and revise the 2002 regulatory framework.
As part of the DSM strategy, in May 2015 the Commission announced a complete review of the framework for telecommunications. The consultation closed in December 2015. In the context of the 2016 annual State of the Union, the European Commission presented the so-called connectivity package, proposing to strengthen the role of BEREC and to recast four existing telecoms directives (the Framework, Authorisation, Access and Universal Service Directives) into a new European Electronic Communications Code (discussed in Section VI.iii, infra).15 The approval of this legislative proposal is not expected before 2018.
The regulation of audiovisual content is addressed by the Television Without Frontiers Directive. With the last revision in 2007, the directive was renamed the Audiovisual Media Services Directive (AVMSD); it was then codified in 2010. In May 2016 the Commission tabled a proposal for its reform.16
The Commission also has extensive investigative powers in the area of antitrust. It cooperates with national competition authorities (NCAs) to prohibit concerted practices, agreements restricting competition, and unilateral anticompetitive behaviour. The Commission has exclusive jurisdiction over mergers above certain thresholds, including in the area of TMT.17
iii Ownership and market access restrictions
In principle, EU undertakings and undertakings from third states with reciprocity agreements can freely provide electronic communication services and networks. Under the Authorisation Directive, a prospective electronic communications provider needs an authorisation from the competent NRA. Obtaining this authorisation involves a procedure whereby an applicant notifies the NRA of its intentions without having to wait for any approval by the NRA.18 The information that may be requested in such a notification must be limited to what is necessary for the identification of the provider. By contrast, the use of spectrum in telecommunications is subject to a licence granted by the Member States. The Authorisation Directive lays down not only rules governing the procedures for granting general authorisations or rights to use radio frequencies or numbers and the content of those authorisations, but also rules setting out the nature and scope of the financial payments related to those procedures which Member States may impose on electronic communications providers.19
III TELECOMMUNICATIONS AND INTERNET ACCESS
i Internet and internet protocol regulation
On 25 November 2015, the European Parliament and the Council adopted Regulation (EU) No. 2015/2120 (the Open Internet Regulation).20
The Open Internet Regulation aims, first of all, to safeguard net neutrality. Thus, within the EU, all internet traffic will be treated equally, subject to some specific public-interest exceptions (e.g., those concerning network security and child pornography). Second, the Regulation also provides for the end of roaming charges from 15 June 2017 through a gradual one-year phase-out process. The Open Internet Regulation is discussed in more detail in Section VI, infra.
ii Universal service
Under EU law, telecoms operators should provide to all citizens a basic set of fixed network electronic communications services irrespective of the end-users’ location and profitability. Access to broadband internet is currently outside the scope of universal service at the EU level.21 However, on 19 January 2016 the European Parliament welcomed a review of the Universal Service Directive to ensure the requirements of high-speed broadband internet access are fit for purpose to reduce the digital divide.22
The Commission’s major contribution to the achievement of the goal of ‘broadband for all’ is the adoption of:
- a a 2010 Broadband Communication outlining a common framework within which EU and national policies should be developed to lower the costs of broadband deployment throughout the entire EU territory;
- b a 2010 Recommendation on next-generation access networks (‘NGA Recommendation’);
- c a 2013 Recommendation on non-discrimination obligations and costing methodologies for access services (Access Recommendation);23 and
- d 2013 guidelines for the application of state aid rules relating to the rapid deployment of broadband networks.24
On 11 June 2015, the EU Court of Justice (CJEU) issued a judgment clarifying the scope of the Universal Service Directive.25 It remarked that the Directive expressly enacts an obligation to guarantee the connection at a ‘fixed location’ to a public communications network. Yet ‘mobile’ communication services are excluded from the minimum set of universal services defined by the Universal Service Directive.
iii Restrictions on the provision of service
The Commission adopted the NGA Recommendation on 20 September 2010.26 The NGA Recommendation seeks to provide NRAs with guidance so that they may have a common approach when deciding whether to impose obligations on incumbents in connection with NGA networks.
The scope of the Recommendation primarily covers remedies to be imposed on operators deemed to have significant market power.27 However, where it is justified on the grounds that duplication of infrastructure is economically inefficient or physically impracticable, NRAs may also impose obligations of reciprocal sharing of facilities on non-dominant undertakings, which would be appropriate to overcome bottlenecks in the civil engineering infrastructure and terminating segments.
After a long debate with BEREC and NRAs, the Commission published a recommendation on access remedies on 11 September 2013.28 The Access Recommendation relies on two pillars: ensuring equivalence of access and setting out a harmonised costing methodology.
As to the first pillar, the Commission suggests that equivalence of inputs (EoI) (i.e., the supply to competitors of the same access services enjoyed by the vertically integrated company’s downstream units) is in principle ‘the surest way’ to avoid non-price-related discrimination.29
As to the second pillar, in the former Commissioner Kroes’ words ‘we need to lift price regulation of high-speed networks where it is not warranted, and make regulation of copper prices stable and consistent across the EU’30 to guarantee market stability and regulatory consistency, thus favouring broadband investments. Therefore, the Commission has suggested the adoption of a common costing methodology (called ‘bottom up – long run incremental cost +’), which, for copper-based local loop unbundling services, should lead to monthly tariffs within the price band of €8/€10 per line (2012 prices).31
To enhance regulatory stability and market consistency, the Commission has recommended that, once they have set tariffs within the mentioned price band, NRAs should not modify the costing methodology (and hence the tariffs) without a market-analysis procedure, and should avoid undue price fluctuations by ensuring stable access prices over at least two review periods (i.e., about six years).
The Commission has extensively relied on the Access Recommendation’s principles to criticise NRA proposals that were inconsistent with the above-mentioned principles.32
Monitoring and control of content
Directive 2000/31/EC (the Electronic Commerce Directive) explicitly sets out that no ‘intermediary’ should be obliged to engage in monitoring activities of a general nature (‘mere conduit’ rule).33 This was confirmed in the 2009 reform of the regulatory framework (see, in particular, Recital 30 of Directive 2009/136).
The interpretation of the mere conduit rule was also probed in two cases before the CJEU, which involved Scarlet (an ISP) and Netlog (a social networking website) and each company’s responsibility for exchanges of allegedly unlawful content by its users.34 In essence, according to the CJEU, the EU framework does not require a hosting service provider to filter all information stored by users as a preventive measure.
In Scarlet, the Court held that EU law precludes a national court from issuing an injunction against a hosting service provider that requires it to install a system for filtering information that is stored on its servers by its service users, if the injunction applies indiscriminately to all those users as a preventative measure, at the exclusive expense of the hosting service provider, and for an unlimited period of time.35 However, the Court left open the question on the admissibility of injunctions against specifically determined copyright-infringing practices.
On 27 March 2014, the CJEU held that an ISP may be ordered to block its customers’ access to a copyright-infringing website (UPC Telekabel).36 The CJEU, in this case, provided guidance on the correct interpretation of Article 5, paragraphs 1 and 2, letter b) and 8, paragraph 3 of the EU Copyright Directive,37 as well as some of the fundamental rights enshrined in EU law. Specifically, the Court held that Member States must ensure a fair balance among the fundamental rights at stake. Therefore, the fundamental rights concerned do not preclude an injunction on two conditions: that the measures taken by the ISP do not unnecessarily deprive users of the possibility of lawfully accessing the information available; and that those measures have the effect of preventing unauthorised access to the protected material or, at least, of making it difficult to achieve and seriously discouraging users from accessing the material that has been made available to them through breach of the intellectual property right.
Another crucial aspect concerning the role of ISPs relates to the ‘right to be forgotten’. On 13 May 2014, the CJEU held that, by searching systematically for information published on the internet, indexing websites, and recording and making them available, the operator of a search engine is ‘processing’ personal data within the meaning of Article 2(b) of Directive 95/46/EC (Google Spain).38 Following its earlier decision (Satakunnan Markkinapörssi and Satamedia), the Court confirmed that, even when the information collected by the operator of a search engine has already been published elsewhere by others, the search engine’s related activities must still be classified as processing under the Directive.
The Court did not describe such a processing as unlawful, but clarified that even initially lawful processing of accurate data may become incompatible with the Directive ‘where those data are no longer necessary in the light of the purposes for which they were collected or processed […] in particular where they appear to be inadequate, irrelevant or no longer relevant, or excessive in relation to those purposes and in the light of the time that has elapsed’.39
In assessing whether the data subject would be entitled to require the search engine to remove information relating to him or her ‘on the ground that that information may be prejudicial to him or that he wishes it to be ‘forgotten’ after a certain time’, the Court did not provide the data subject with an absolute right to be forgotten. On the contrary, the request for erasure has to be assessed on a case-by-case basis by the operator of a search engine, which will have to apply the criteria mentioned in EU law and the European Court’s judgment. These criteria relate to the accuracy, adequacy, relevance – including time passed – and proportionality of the links in relation to the purposes of the data processing, but do not require that the inclusion of the information in question cause prejudice to the data subject.40
Privacy and data retention41
As regards privacy, under the EU Data Protection Directive42 the transfer of personal data from the EU to a country outside the EU or EEA may only take place if that third country ensures an adequate level of protection of the data. Article 25(6) of the Data Protection Directive enables the European Commission to adopt a decision on whether ‘a third country ensures an adequate level of protection […] by reason of its domestic law or of the international commitments it has entered into […] for the protection of the private lives and basic freedoms and rights of individuals.’ In 2000 the Commission had adopted a decision on the adequacy of the protection provided by the Safe Harbor privacy principles with regard to the US (the Safe Harbor Adequacy Decision),43 On 6 October 2015, the CJEU invalidated the 2000 Safe Harbor Decision.44
In its Schrems decision the CJEU held that the Commission did not comply with the requirements of Article 25(6) of the Data Protection Directive when adopting the Safe Harbor Decision. According to the Court, the decision does not contain any statement on whether the United States itself ensures an adequate level of protection by reason of either domestic law or international commitments. Under US law, national security, public interest, and law enforcement requirements would prevail over the Safe Harbor principles, and in case of conflict between the two, US firms would have to disregard the protective rules of the Safe Harbor scheme. The Court concluded that this would allow US public authorities to interfere with the fundamental rights of persons whose data was transferred to the United States, and held that ‘legislation permitting the public authorities to have access on a generalised basis to the content of electronic communications must be regarded as compromising the essence of the fundamental right to respect for private life.’
At the beginning of February 2016 the Commission put forward a successor agreement (known as the EU-US Privacy Shield).45 As in the case of the former Safe Harbor Agreement, the Privacy Shield is intended to enable personal data of EU citizens to be transmitted to and processed in the United States. The final draft of the Privacy Shield, which was adopted by the European Commission on 11 July 2016 by majority vote of the Member States, includes privacy principles which stipulate improved data protection requirements compared with Safe Harbor, with which US companies must comply if they want to be certified under the Shield. Following criticism of the first draft of the Privacy Shield, the European Commission has endeavoured in a revised draft to assuage in particular the concerns expressed recently by the Article 29 Working Party, which comprises representatives from national data protection authorities in Europe. It cannot be ruled out that the Privacy Shield will be referred to the CJEU again, in particular with regard to the legality of the mass recording of personal data by US public authorities that remains possible under the Shield.
As regards data protection legislation, on 27 April 2016, the European Parliament and the Council adopted the General Data Protection Regulation (EU) No. 2016/67946 together with the Police and Criminal Justice Data Protection Directive (EU) No. 2016/680.47 The General Data Protection Regulation is applicable from 25 May 2018; Member States should implement the Directive on data protection by 6 May 2018.
The Council and the Parliament made important changes to the Commission’s proposal, remarking that, inter alia:
- a data protection is not an absolute right and must be weighed against other fundamental rights;48
- b data portability is restricted to data provided by the individual and does not apply if it adversely affects the rights and freedoms of others;49
- c automated decision-making, including profiling, is permitted for fraud and tax evasion monitoring and prevention purposes, and to ensure the security and reliability of a service provided by the controller;50 and
- d sanctions are to be proportionate.51
The new rules principally advantage small and medium-sized enterprises, reducing unnecessary administrative requirements such as notification requirements for companies. The right to be forgotten has been reinforced and a right to data portability facilitates transfer of personal data between service providers. Furthermore, the regulation provides that market operators established outside of Europe will have to apply the same rules when offering services in the EU, and it brings forward a ‘one-stop shop’ for companies and users, who will only have to deal with one single supervisory authority, facilitating cross-border operations and business in the EU.
The adoption of the Data Protection Regulation, which replaced Directive 95/46/EC, also affects the e-Privacy Directive,52 which is lex specialis for the electronic communications sector. Thus, in the second half of 2016 the Commission plans to adopt legislation. The review is overdue because most of the articles of the current directive apply to traditional telecoms companies, but not to the growing number of over-the-top providers (that is, providers using the internet to deliver content).53
On 6 July 2016, the Parliament and the Council approved the Network and Information Security (NIS) Directive (EU) No. 2016/1148,54 also known as the Cybersecurity Directive, which was developed within the framework of the Commission’s ‘EU Cyber Security Strategy’.55 The Directive aims to ensure a high common level of network and information security across the EU through a set of wide-ranging measures that will generate cooperation and information-sharing mechanisms, and set minimum requirements for a broad scope of public and private players.56
The DSM Strategy calls for a ‘European free flow of data initiative’ to promote the free movement of data and encourage innovation in the EU, while protecting personal data.57 The Commission will also launch the European Cloud Initiative concerning certification of cloud services, the switching of cloud service providers and a ‘research cloud’.58 This is key, as estimates of the cost of an incomplete DSM for cloud computing are between €31.5 billion and €63 billion per year.59 On the other side, cloud computing can potentially contribute a total of €450 billion to the EU’s GDP between 2015 and 2020, as well as leading to the creation of an additional 1 million jobs and 300,000 companies in the EU, throughout all sectors of the economy.60
IV SPECTRUM POLICY
The DSM strategy considers a European spectrum policy to be necessary to boost investment, as some countries were slow in allocating the 800MHz band used for mobile communications, and lagged behind in rolling out 4G technology for mobile networks as a result.61 On the other side, some Member States have already outpaced EU regulation (e.g., Germany started auctioning spectrum from the 700MHz band for mobiles in May 2015).
On 9 June 2015, the Commission presented the outcome of a public consultation on the September 2014 Pascal Lamy report concerning the UHF band.62 The report discusses how the scarce spectrum resource in the UHF broadcasting band should be used in future. The results of the consultation suggest that there is general backing for spectrum-efficient technologies for digital terrestrial TV equipment. Accordingly, on 2 February 2016 the Commission presented a proposal for a Decision of the Parliament and the Council on the use of the 470–790MHz frequency band in the Union.63
The AVMSD provides for a minimum harmonisation of certain aspects of national legislation related to audiovisual media services (e.g., advertising, protection of minors and promotion of European works) with a view to facilitating the circulation of audiovisual services in the Internal Market on the basis of the country-of-origin principle. According to this principle, audiovisual media service providers must abide only by the rules of the Member State with jurisdiction over them.
The AVMSD applies to all audiovisual media services, whether linear (traditional television) or non-linear (VOD), irrespective of the technology used to deliver the content (the principle of technological neutrality).64
The Commission’s DSM Strategy envisages a ‘regulatory fitness evaluation’ of the AVMSD to gauge whether it still represents a satisfactory regulatory regime, taking account of technological advances, and whether it is effective in attaining its objectives. Namely, the evaluation will assess the current material and geographical scope of the Directive as well as the system of graduated regulation (i.e., the difference in regulatory treatment between linear and non-linear services).
In May 2016 the Commission announced a proposal to amend the existing AVMSD, including a liberalisation of rules for traditional services, stricter rules for non-linear services, changes in the definition of audiovisual media services and geographical scope.65
VI THE YEAR IN REVIEW
i Adoption of Regulation (EU) 2015/2120 (Open Internet)
On 25 November 2015 the Commission adopted the Open Internet Regulation (EU) 2015/2120, which became effective on 30 April 2016.66 The Regulation amended both Directive 2002/22/EC, with regard to universal service and users’ rights, and Regulation (EU) No. 531/2012, with regard to roaming on networks within the EU.67
On net neutrality, the Regulation provides that ‘[p]roviders of internet access services shall treat all traffic equally, when providing internet access services, without discrimination, restriction or interference, and irrespective of the sender and receiver, the content accessed or distributed, the applications or services used or provided, or the terminal equipment used.’68 Blocking, throttling, degradation or discrimination of internet traffic by ISPs is prohibited. Internet access providers can still adopt different traffic management measures without being discriminatory, but only for ‘objectively different categories of traffic’ (e.g., services like e-medicine), rather than for commercial reasons.69 Traffic management measures that do not comply with the above requirements are allowed only under three specific exceptions: (1) compliance with EU or national legislation that requires, for example, blocking of specific content, applications or services; (2) protection of the integrity and security of the network; and (3) prevention of network congestions that are temporary or occur in exceptional circumstances.
For a limited number of services, such as high-quality voice calling on mobile networks, linear (live) broadcasting IPTV services with specific quality requirements, and real-time health services (e.g., remote surgery), for which an assured level of access is indispensable to deliver the service, the Regulation allows for the provision of ‘fast lanes’, provided, however, that the network capacity is sufficient.
The Regulation also includes a number of transparency measures for providers to ensure customer awareness of open internet access and provides that national regulatory authorities will monitor providers’ compliance with the minimum service quality standards.70
On roaming, the Regulation envisaged the end of roaming charges from 15 June 2017.71 Nevertheless, providers must be able to charge customers in accordance with a ‘fair use policy’ that, in general, avoids abusive pricing practices.72 If a provider is unable to recover the costs of providing roaming services due to the terms of this Regulation, the company can request authorisation to employ a surcharge.73 On 5 September 2016 the Commission presented an initial draft for implementing measures, which, however, was withdrawn few days later under instruction of President Juncker.
ii The proposed new EU copyright rules
On 14 September 2016, the European Commission proposed new rules to modernise EU copyright rules, including two regulations and two directives.74 The objectives of this set of legislative proposals are to: (1) ensure wider online access to content in the EU as well as to reach new audiences; (2) adapt certain exceptions to the digital cross-border environment; and (3) foster a well-functioning and fair copyright marketplace. The proposed measures should make it easier for content providers to improve their online offers across EU borders by introducing, inter alia, a legal mechanism to obtain more easily authorisations from right holders. Moreover, the improved copyright rules introduce four mandatory exceptions to copyright which are applicable for purposes of education, research, cultural heritage and inclusion of disabled people. Finally, the proposed measures should create a fairer online environment for creators of content and the press by reinforcing the position of right holders to negotiate remuneration for their creative content.
iii The proposed connectivity package
On 14 September 2016, the Commission adopted a set of legislative proposals to update and improve the regulatory framework.75
The Commission proposed a Directive establishing the European Electronic Communications Code (the Code).76 The Code will overhaul the current EU telecoms rules merging into a single piece of legislation the four existing directives. In addition, new rules on access to networks should create incentives to invest, especially in fibre. Moreover, the Code is based on the principle of ‘same service, same rules’, which promises to create a level-playing field for all players providing similar services (including the over-the-top services). The Code provides also for new common rules on the assignment of radio spectrum, particularly in relation to duration of licences and conditions on spectrum use.
The Commission also proposed a Regulation on the promotion of internet connectivity in local communities and public spaces (WiFi4EU).77 The objective of this proposal is to promote the deployment of local wireless access points in each community (cities or villages) to provide at least one public and free Wi-Fi access point for its citizens. This goal is pursued, inter alia, through a simple financing mechanism for the installation of local wireless access points in and around public buildings, health centres, parks or squares.
iv Merger and antitrust control in telecommunication markets
In response to the increasing consolidation in the mobile telecoms sector, the Commission appears to have raised the bar for potential telecommunication mergers, especially four-to-three mergers in the mobile sector.80
On 11 September 2015, Danish telecommunication operators TeliaSonera AB and Telenor ASA abandoned their plan to merge due to resistance from the Commission, which found ‘significant competition concerns’ that ‘required an equally significant remedy.’ In this case, the necessary remedy was ‘creation of a fourth mobile network operator,’ which the parties did not plan to establish.81
On 11 May 2016, the Commission also blocked CK Hutchison Holding’s proposed acquisition of Telefónica UK. The Commission was concerned about the impact of the acquisition on UK customers, as only three mobile network operators would have remained in the UK following the acquisition. The Commission found that Hutchison’s proposed remedies insufficiently dealt with the loss of competition, as the mobile virtual operators Hutchison planned to help enter the market would ‘have been commercially and technically dependent on the merged entity’.82
The recent conditional approval of a joint venture in Italy between CK Hutchison Holdings and VimpelCom clarifies under which circumstances the Commission is willing to give the green light to mobile telecommunications consolidation. At present, four mobile network operators are active in the Italian mobile market, and other mobile virtual operators are active in the Italian retail mobile market, making these markets competitive. The joint venture between the Italian subsidiaries of Hutchison and Vimpelcom, notified in August 2015, will combine Italy’s third and fourth largest telecommunications companies to create the leading mobile network operator in the country.
The Commission was concerned that this four-to-three consolidation would decrease both the quality of services and the choice for consumers, along with higher retail mobile prices for mobile virtual network operators. The initially proposed deal would have created a market with only three competitors, all with similar market shares, making coordination of competitive behaviour likely. It would also have been harder for mobile virtual network operators to find mobile network operators that could host their services.
After a lengthy approval process, the Commission was persuaded, for the first time since Commissioner Vestager took office, to approve such a four-to-three consolidation only by extensive structural remedies capable of tackling the Commission’s competition concerns ‘once and for all’. The decision clearing the proposed transaction entailed the effective entry of a fourth MNO in Italy, and approval, for the first time before the transaction, of the purchaser of the divested assets under the so-called ‘fix-it-first’ remedy. Hence, the Hutchison/Vimpelcom joint venture will divest both spectrum and mobile base station sites to the French based Iliad, and will also allow Iliad to use its networks to offer nationwide mobile services to Italian customers until Iliad has built its own mobile network.
By contrast, the Commission takes a more benign view of transactions bringing together fixed and mobile operators. Thus, on 4 February 2016, the Commission cleared, subject to conditions, the acquisition of mobile network operator BASE by cable company Liberty Global in Belgium. At the time of this transaction BASE was one of the three Belgian mobile network operators and owned shares in Mobile Vikings, a mobile virtual network operator that uses BASE’s network. Liberty Global offered, in Flanders and parts of Brussels, fixed telecommunications services (TV, fixed broadband and fixed line telephony) and also mobile services as a full mobile virtual network operator, not owning a mobile network infrastructure. The transaction combined Liberty Global’s fixed infrastructure with BASE’s mobile infrastructure. The Commission’s concerns that this merger affecting the fixed and mobile sectors would significantly reduce competition were addressed by Liberty Global’s commitments offered during a Phase II investigation. Liberty Global committed to allow a third independent purchaser to acquire Mobile Vikings and to compete effectively as a full mobile virtual network operator using BASE’s mobile network.83
Similarly on 3 August 2016, the Commission cleared a joint venture between Vodafone and Liberty Global, subject to conditions. The transaction combines Liberty Global’s Dutch unit providing cable services (internet, television and telephony) and Vodafone’s wireless network in the Netherlands. However, due to the overlap in the undertakings’ activities, it would have also affected the markets for the provision of fixed line and fixed-mobile multiple play bundles. Therefore, during the initial Phase I investigation, the Commission expressed concerns that the planned joint venture would eliminate the competitive pressure brought by Vodafone’s recent entry in the fixed line and fixed-mobile multiple play bundles markets. According to the Commission, the transaction would have prevented Vodafone from becoming a strong competitor in these markets.
To address the Commission’s concerns, Vodafone offered to divest its retail consumer fixed line business in the Netherlands. Vodafone’s structural commitments entirely removed the overlap between the activities of Vodafone and Liberty Global and should allow the purchaser of the divested assets to keep the competitive pressure currently exercised by Vodafone in these markets. As a final note, although the Commission cooperated closely with the Dutch competition authority in the assessment of the proposed transaction, it rejected the latter’s referral request. The Commission argued that ‘given its extensive experience in assessing cases in the telecommunications sector, and the need to ensure consistency in the application of merger control rules in this sector across the European Economic Area, it was better placed to deal with this case’.84
As regards abuse of dominant position in the telecoms sector, the current trend of tough enforcement in the broadband sector received another judicial endorsement as the General Court upheld the Commission’s decision against Orange Polska (formerly Telekomunikacja Polska).85
In November 2015 the Commission also published on its website the full version of the decision adopted in 2014 against Slovak Telekom.86 The decision confirms the Commission’s reliance on the CJEU’s TeliaSonera case law in cases of margin squeeze.87 In particular, it seems settled that – contrary to the US practice88 – the wholesale input at hand does not have to meet the indispensability test developed for essential facilities cases.89 As to the anticompetitive effects of Slovak Telecom’s conduct, the Commission – in keeping with its well-established practice90 – found that the behaviour was capable of having a restrictive effect, without having to prove any actual impact on the market.91 In this context, a price gap in a dominant undertaking’s products on two vertically related markets may become a prima facie indicator of abusive conduct. The methodology to conduct such a price test remains the ‘equally efficient competitor’ test (EEC test) where a margin squeeze can be demonstrated by showing that the dominant company’s own downstream arm could not operate profitably on the basis of the wholesale price charged to its downstream competitors and the retail price charged by the downstream arm of the dominant undertaking.92
Finally, in April 2015 the Commission sent a statement of objections93 to Google, containing allegations that Google gave favourable treatment to its own comparison shopping online search services within Google’s search results at the expense of competing services.94 On the same day, the Commission opened a formal in-depth investigation against Google to investigate whether the company’s conduct in relation to its Android mobile operating system, as well as applications and services for smartphones and tablets, breached EU antitrust rules.95 In 2016 the Commission continued proceedings against Google as regards its search-related conduct by adopting (1) a supplementary statement of objections in the comparison shopping case and (2) a statement of objections in relation to Google’s conduct in the placement of search advertising on third-party websites.96 The Android-related case also continued with the adoption in April 2016 of a statement of objections;97 however, no decision is expected until 2017.
VII CONCLUSIONS AND OUTLOOK
2016 is the year in which the Commission has delivered on its proposed Digital Single Market Strategy by adopting legislative proposals on: (1) a directive on contracts for the supply of digital content;98 (2) a directive on contracts for the online and other distance sales of goods;99 (3) a regulation on the cross-border portability of online content services in the internal market;100 (4) an amendment to the existing Audiovisual Media Services Directive;101 (5) a regulation on addressing unjustified geo-blocking and other forms of discrimination based on place of residence or establishment, or nationality; (6) a new framework for digital copyright; and (7) a Code on Electronic Communications.102 2017 will be crucial to determine how many of these actually turn into law.
As regards its competition enforcement powers, the prohibition decision in the Hutchison/Telefónica case probably signals the end of the era of four-to-three mergers in the mobile telecoms sector, or, at least, that such combinations have become more difficult than in the past. 2017 will also be a test year for the Google cases, as the Commission is likely to attempt to conclude at least some of the ongoing probes.
It is too soon to assess the implications of Brexit for the TMT sector, but this will surely be a major issue in the next year.
1 Maurits J F M Dolmans is a partner, Francesco Maria Salerno is a senior attorney, and Federico Marini-Balestra is an associate at Cleary Gottlieb Steen & Hamilton LLP.
2 These proposals are described in Sections II and III, infra.
3 A Digital Single Market Strategy for Europe – COM(2015) 192 final (available at http://ec.europa.eu/priorities/digital-single-market/docs/dsm-communication_en.pdf).
4 See State of the Union 2016: Commission proposes modern EU copyright rules for European culture to flourish and circulate (available at: http://europa.eu/rapid/press-release_IP-16-3010_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3010_en.htm).
5 See State of the Union 2016: Commission paves the way for more and better internet connectivity for all citizens and businesses (available at: http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm).
6 Commission decision of 6 May 2015 initiating an inquiry into the e-commerce sector pursuant to Article 17 of Council Regulation (EC) No. 1/2003 (HT.4607), C(2015) 3026 final (available at http://ec.europa.eu/competition/antitrust/ecommerce_decision_en.pdf), see point 3 ‘There seem to be several reasons for the trend of trade between Member States relating to the e-commerce sector, including language barriers, consumer preferences and differences in legal frameworks between Member States. There are also indications that undertakings active in the e-commerce sector may be engaged in anticompetitive agreements, concerted practices or abuses of a dominant position.’
7 See Antitrust: Commission publishes initial findings of e-commerce sector inquiry (available at: http://europa.eu/rapid/press-release_IP-16-3017_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3017_en.htm).
8 See Section III.iv, infra.
9 See Directive 2001/29/EC of 22 May 2001, OJ 2001 L 111/16.
10 See Directive 2002/21/EC of 24 April 2002, OJ 2002 L 108/33.
11 See Regulation (EC) No. 1211/2009 of 25 November 2009, OJ 2009 L 337/1.
12 Proposal for a Regulation of the European Parliament and of the Council establishing the Body of European Regulators of Electronic Communications (BEREC) – COM(2016)591 (available at: https://ec.europa.eu/digital-single-market/en/news/proposed-regulation-
13 See Directive 2009/140/EC of 25 November 2009, OJ 2009 L 337/1.
14 See Directive 2009/136/EC of 25 November 2009, OJ 2009 L 337/1.
15 See State of the Union 2016: Commission paves the way for more and better internet connectivity for all citizens and businesses (available at: http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm).
16 See Directive 2010/13/EU of 10 March 2010, OJ 2010 L 95/1. On 25 May 2016 the Commission announced a proposal to amend the existing Audiovisual Media Services Directive COM(2016) 287 final.
17 The respective competences of the Commission and NCAs to assess mergers are defined on the basis of the turnover of the undertakings concerned (See Article 1.2 of Council Regulation (EC) No. 139/2004 (Merger Regulation), OJ 2004 L 24/1–22). The only exception to this rule is that, due to the plurality of the media, a Member State may also review a concentration that falls within the competence of the Commission and adopt the measures needed to protect such interest (see Article 21.4 of the Merger Regulation).
18 Article 5 of the Authorisation Directive.
19 See, e.g., the recent CJEU judgment of 17 December 2015, C-454/13, Proximus, para. 19.
20 See Regulation (EU) No. 2015/2120 of 25 November 2015, OJ 2015 L 310/1.
21 See Commission Communication of 23 November 2011, COM(2011) 795 final, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0795:FIN:EN:PDF. In March 2014, the Commission started the fourth review of the scope of universal service. In July 2014, BEREC provided a report including the views of NRAs. See http://berec.europa.eu/eng/document_register/subject_matter/berec/reports/4479-ec-questionnaire-on-the-implementation-and-application-of-the-universal-service-provisions-8211-a-synthesis-of-the-results. The Commission is expected to issue its determination in 2015.
22 See European Parliament resolution of 19 January 2016 on Towards a Digital Single Market Act (2015/2147(INI)) para. 56 (www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN &reference=P8-TA-2016-0009).
23 See ‘Broadband Communication’, ‘Recommendation on NGA Networks’ and ‘Access Recommendation’, below.
24 Communication from the Commission, EU Guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks (2013/C25/01).
25 Case C-1/14, Base Company NV and Mobistar NV v. Ministerraad, ECLI:EU:C:2015:378.
26 Commission Recommendation of 20 September 2010, OJ 2010 L251/35.
27 For more details on the applicable remedies, see this chapter in the fourth edition of this publication.
28 The measure follows Commissioner Kroes’ policy statement of July 2012 (available at http://europa.eu/rapid/press-release_MEMO-12-554_en.htm?locale=en)'>http://europa.eu/rapid/press-release_MEMO-12-554_en.htm?locale=en).
29 The EoI model ensures that the incumbent’s and the competitor’s downstream access product use exactly the same physical upstream inputs (e.g., same tie-cables, same electronic equipment, same exchange space, etc.). Conversely, the Equivalence of Outputs (EoO) ensures that the access products offered by the incumbent operator to alternative operators are comparable to the products it provides to its retail division in terms of functionality and price, but they may be provided by different systems and processes.
31 BEREC issued its Report on the Regulatory Accounting in Practice 2013, according to which data from NRAs generally confirms the ongoing trend toward an increasingly consistent approach to regulatory accounting obligations among NRAs.
32 See for example the recommendation issued against Italy on 11 December 2013.
33 See Section 4, Articles 12 to 15.
34 Cases C-70/10, Scarlet Extended v. SABAM; and Case C-360/10, Sabam v. Netlog NY.
35 The Court upheld the same arguments in the Netlog case.
36 Case C–314/12 UPC Telekabel Wien GmbH v. Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft mbH.
37 Directive 2001/29/EC, OJ 2001 L 167, p. 10.
38 Case C-131/12, Google Spain SL, Google Inc/Agencia Española de Protección de Datos, Mario Costeja González, paragraphs 28 and 41.
39 The Directive grants individuals the right to obtain from the controller ‘rectification, erasure or blocking’ of personal data (Article 12(b)) and to object to processing on ‘compelling legitimate grounds’ (Article 14). The Court affirmed that these rights can also be invoked against search engines since ‘it is the search engine operator which determines the purposes and means of that activity and […] must, consequently, be regarded as the ‘controller’ in respect of that processing pursuant to Article 2(d)’ (paragraph 33).
40 Paragraphs 89, 93 and 96, Google Spain.
41 On protection for children, see this chapter in the fourth edition of this publication.
42 Directive (EC) No. 1995/46 of 24 October 1995, OJ L281/1 on the protection of individuals with regard to the processing of personal data and on the free movement of such data.
43 Commission Decision of 26 July 2000 pursuant to Directive 95/46/EC of the European Parliament and of the Council on the adequacy of the protection provided by the Safe Harbor privacy principles and related frequently asked questions issued by the US Department of Commerce.
44 Case C-362/14 Maximillian Schrems v. Data Protection Commissioner.
45 In the meantime, Article 26 of Data Protection Directive applies. The latter provides for some alternative grounds on which specific data transfers may take place absent an Article 25 adequacy decision. In particular, transfers may be carried out where the entity responsible for determining the purposes and means of the processing of personal data adduces appropriate safeguards, including contractual clauses binding the exporter and the importer of the data.
46 Regulation (EU) No. 2016/679 of 27 April 2016, OJ 2016 L 119/1.
47 Directive (EU) No. 2016/680 of 27 April 2016, OJ 2016 L 119/1.
48 See recital 4 of Regulation (EU) No. 2016/679 of 27 April 2016, OJ 2016 L 119/1.
49 See Article 20 of Regulation (EU) No. 2016/679 of 27 April 2016, OJ 2016 L 119/1.
50 See recital 71 of Regulation (EU) No. 2016/679 of 27 April 2016, OJ 2016 L 119/1.
51 See recital 152 of Regulation (EU) No. 2016/679 of 27 April 2016, OJ 2016 L 119/1.
52 Directive (EU) No. 2002/58 of 12 July 2016, OJ 2002 L201/1.
53 Commission’s DSM Strategy, pillar II, action 12.
54 Directive (EU) No. 2016/1148 of 6 July 2016, OJ 2016 L194/1.
55 Joint communication on cybersecurity strategy of the European Union – JOIN(2013) 1 final (available at www.europarl.europa.eu/meetdocs/2009_2014/documents/join/com_join (2013)0001_/com_join(2013)0001_en.pdf).
56 Paul Waszin, Nauta Dutilh, ‘Network and information security NIS: EU Strategy and Directive’ (available at www.lexolosv.com/librarv/detail.asox?s=fbOffQ7d-09c8-4add-aa58-7daf780eSd6f).
57 Commission’s DSM Strategy, pillar III, action 14.
59 European Parliament Research Service, Mapping the cost of Non-Europe, 2014–19.
60 The International Data Corporation, Uptake of Cloud in Europe: Follow-up of IDC Study on Quantitative estimates of the demand for Cloud Computing in Europe and the likely barriers to take-up, 2015.
61 Commission’s DSM Strategy, pillar II, action 9.
62 Summary report, Brussels, 9 June 2015 DG CONNECT/B4.
63 Proposal for a Decision on the use of the 470-790 MHz frequency band in the Union – COM(2016) 043 final (available at http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2016%3A43%3 AFIN); see also the Commission press release available at: http://europa.eu/rapid/press-release_IP-16-207_en.htm.
64 Article 1(1)(a) and the explanatory note provided by the Commission.
65 Proposal for a Directive amending Directive 2010/13/EU on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services in view of changing market realities – COM(2016) 287 final (available at https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-287-EN-F1-1.PDF)'>https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-287-EN-F1-1.PDF).
66 Regulation (EU) 2015/2120.
67 Regulation (EU) 2015/2120, recitals.
68 Regulation (EU) 2015/2120, Article 3.
69 Regulation (EU) 2015/2120, paragraph 9.
70 Regulation (EU) 2015/2120, Articles 4 and 5. In June 2016, BEREC launched a public consultation on the Guidelines on the Implementation by National Regulators of European Net Neutrality Rules contained in the Regulation to harmonize the actions of NRAs (BoR (16) 94).
71 Regulation (EU) 2015/2120, paragraph 21.
72 Regulation (EU) 2015/2120, paragraph 22.
73 Regulation (EU) 2015/2120, paragraph 23.
74 See Regulation laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes – COM(2016) 594 (available at: https://ec.europa.eu/digital-single-market/en/news/proposal-regulation-laying-down-rules-exercise-copyright-and-related-
rights-applicable-certain); Regulation on the cross-border exchange between the Union and third countries of accessible format copies of certain works and other subject-matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print disabled - COM(2016) 595 (available at: https://ec.europa.eu/digital-single-market/en/news/proposed-regulation-cross-border-exchange-between-union-and-third-countries-accessible-format); Directive on copyright in the Digital Single Market – COM(2016) 593 (available at: https://ec.europa.eu/digital-single-market/en/news/proposal-directive-european-parliament-and-council-copyright-digital-single-market); Directive on certain permitted uses of works and other subject-matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print disabled and amending Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society – COM(2016) 596 (available at: https://ec.europa.eu/digital-single-market/en/news/proposal-directive-permitted-uses-works-and-other-subject-matter-protected-copyright-and).
75 See State of the Union 2016: Commission paves the way for more and better internet connectivity for all citizens and businesses (available at: http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm)'>http://europa.eu/rapid/press-release_IP-16-3008_en.htm).
76 Directive establishing the European Electronic Communication Code – COM(2016) 590 final (available at: https://ec.europa.eu/digital-single-market/en/news/proposed-directive-
77 See Proposed Regulation on the promotion of Internet connectivity in local communities – COM(2016) 589 (available at: https://ec.europa.eu/digital-single-market/en/news/proposed-regulation-promotion-internet-connectivity-local-communities-and-
78 See the Communication from the Commission ‘5G for Europe: An Action Plan’ – COM(2016) 588 and Staff Working Document – SWD(2016) 306 (available at: https://ec.europa.eu/digital-single-market/en/news/communication-5g-europe-action-plan-and-
79 See Communication – Connectivity for a Competitive Digital Single Market – Towards a European Gigabit Society – COM(2016) 587 and Staff Working Document – SWD(2016) 300 (available at: https://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-single-market-towards-european-gigabit-society).
80 Comment: Hutchison, VimpelCom deal sets high bar for wireless mergers in EU (Mlex Global Antitrust).
85 Case T-486/11, Judgment of the General Court (Eighth Chamber) of 17 December 2015.
86 Case No. 39523, Deutsche Telekom/Slovak Telekom. For a fuller comment on this case, see Federico Marini-Balestra, ‘Margin Squeeze Overstretched? A comment on the European Commission’s decision in Slovak Telekom’, E.C.L.R., 37, 5, 2016.
87 Decision of the European Court of Justice, case TeliaSonera  E.C.R. I-527.
88 See US Supreme Court, judgment 25 February 2009, Pacific Bell Telephone Co v. linkLine Communications Inc 555 U.S. 438 (2009) (‘If there is no duty to deal at the wholesale level and no predatory pricing at the retail level, then a firm is certainly not required to price both of these services in a manner that preserves its rivals’ profit margins.’)
89 Oscar Bronner GmbH & Co KG v. Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co KG (C-7/97)  E.C.R. I-7791.
90 Deutsche Telekom  E.C.R. II-477 at ; TeliaSonera  E.C.R. I-527 at ; Telefónica I  5 C.M.L.R. 20 at ; Telefónica II  5 C.M.L.R. 1 at .
91 SLOVAK TELEKOM, para. 1046 et seq. See also Clearstream Banking AG v. Commission of the European Communities (T 301/04)  E.C.R. II-3155;  5 C.M.L.R. 24 at .
92 SLOVAK TELEKOM, paras. 828–830.
98 Proposal for a Directive on certain aspects concerning contracts for the supply of digital content – COM(2015) 634 (available at http://ec.europa.eu/justice/contract/files/digital_contracts/dsm_digital_content_en.pdf).
99 Proposal for a Directive on contracts for the online and other distance sales of goods – COM(2015) 635 final (available at http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?
100 Proposal for a Regulation on the cross-border portability of online content services in the internal market – COM(2015) 627 (available at https://ec.europa.eu/transparency/regdoc/rep/1/2015/EN/1-2015-627-EN-F1-1.PDF).
101 Proposal for a Directive amending Directive 2010/13/EU on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services in view of changing market realities – COM(2016) 287 final (available at https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-287-EN-F1-1.PDF)'>https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-287-EN-F1-1.PDF).
102 Proposal for a Regulation on addressing geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market and amending Regulation (EC) No. 2006/2004 and Directive 2009/22/EC – COM(2016) 289 final (available at https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-289-EN-F1-1.PDF).