Competition advice in network industries

As competition and regulatory authorities actively promote competition in network industries, the boundaries between regulation and competition policy have become blurred.

Competition authorities are playing an increasingly active role in network industries - as shown for example by the European Commission's recent Energy Sector Inquiry in 2007, followed by various competition proceedings under Article 102, new legislative proposals on network unbundling, and competition investigations relating to payment systems. Competition is being introduced in regulated network industries throughout Europe, with direct reference to the principles of European competition law, and recent mergers in the telecoms and energy sectors have attracted close regulatory scrutiny, with complex remedy packages designed to accelerate liberalisation.

CRA combines recognised strength in competition analysis with detailed knowledge of network industries - from telecoms to broadcasting, energy, financial services, transport, postal and airport services.

Telecoms and broadcasting
Our competition team brings together an understanding of relevant economic and regulatory theory with detailed practical knowledge of fixed, mobile, cable and satellite networks. We regularly provide advice to clients in the telecoms and broadcasting sectors on a range of competition and regulatory issues including:

• Appraisal of allegations of anti-competitive conduct, including allegations of anti-competitive bundling, price discrimination, discounting and margin squeezes
• Regulatory design, including design related to local loop unbundling, mobile termination rates, MVNO access, national and international roaming, network sharing and international benchmarking
• Advice on spectrum trading and liberalisation issues
• Bid strategy and bidding support in relation to spectrum auctions
• Advice on pricing issues, e.g. design and implementation of retail minus pricing arrangements

We have advised leading telecoms operators and broadcasters in Europe and beyond, including T-Mobile, Vodafone, Orange, Telefónica, eircom, Deutsche Telekom, KPN, Telecom Italia, Ceský Telekom, BTC, SFR, Vivendi Universal, Telkom SA, MTN, Vodacom, Digicel, BSkyB, Sky Italia, Premiere, TF1 and the M Group.

Our recent assignments in the telecoms and broadcasting sectors have included:

• Merger analysis in the telecoms sector including T-Mobile/tele.ring and Telefónica/O2 before the European Commission, Sonaecom/Portugal Telecom before the Portuguese Competition Authority, and Telkom/BCX before the South African Competition Tribunal
• Work on mobile termination rates including for T-Mobile before the UK Competition Appeal Tribunal and Competition Commission, and for MTN in South Africa
• Advice to Apple Europe in relation to the exclusive arrangements between Apple Europe and Orange France
• Advice to the M Group in South Africa in relation to ICASA's ongoing inquiry into the application of an ex ante regulatory framework to the pay-TV sector
• Work for BSkyB and Sky Italia on vertical foreclosure, regulated access to the satellite platform and commercial terms for wholesale channel supply to third parties
• Advice to Premiere (a German pay-TV provider) on re-pricing of TV packages
• Advice to TF1 (the main French free-to-air TV channel) in its acquisition of two digital TV channels TMC and NT1

See our Telecoms Brochure for more information.

Energy
Competition concerns are becoming increasingly central in the European energy sector. Complex competition issues have been raised by the recent wave of energy mergers in Europe as well as by several antitrust investigations undertaken by European and national authorities.

Our team has extensive experience in applying economic techniques to competition policy in the energy sector, coupled with a detailed knowledge of the institutional aspects of the energy industry. Our work for some of the major electricity and gas companies in Europe has ranged from the evaluation of possible horizontal and vertical effects of mergers to the assessment of measures to mitigate market power and the analysis of allegations of anti-competitive conduct in the industry.

We regularly provide economic support to firms in the energy sector on antitrust investigations (under both Article 101 and Article 102); market design issues (including the design of Virtual Power Plant schemes); assessments of market definition and dominance; and regulatory review processes. Our recent competition work for European energy clients includes assignments in the UK, Ireland, Italy, Spain, Portugal, Germany, Belgium and the Netherlands.

We have advised companies on high profile energy mergers that have recently been reviewed by the European Commission and national authorities including:

• Centrica/EDF/British Energy, assisting Centrica in the acquisition of a 20% stake in British Energy's nuclear assets from EDF
• Gas Natural/Union Fenosa, advising ENI on the assessment of this transaction by the Spanish competition authorities
• Essent/Nuon, advising the Dutch competition authority (NMa) on the competitive effects of the proposed transaction in the Dutch generation market through merger simulation techniques
• Gaz de France/Suez, supporting an intervener during the European Commission investigation
• Gas Natural/Endesa, advising EDP on the proposed merger between the largest gas and electricity operators in Spain
• EDP/GDP (CFI appeal), advising EDP on its appeal to the CFI of the European Commission's decision to prohibit the joint acquisition by EDP and ENI of Gas de Portugal (GDP)
• Centrica/Dynegy, advising Centrica throughout the OFT/Ofgem and UK Competition Commission investigations into the purchase of the Rough storage facility, the UK's largest gas storage asset

See our Competition and Energy Brochure for more information.

Post
As European postal and parcel markets are liberalised competition policy is playing an increasingly important role in place of historic regulatory controls. For example, CRA recently prepared a report for Posten (the Swedish postal incumbent) in support of its application for exemption from the European Commission's Procurement Directive. Our report observed that competition in Sweden (one of the first countries to liberalise) had developed sufficiently to ensure efficiency and the absence of any national preference in Posten's procurement practices, making the Directive's onerous procurement regulations redundant.

Postal liberalisation has also been associated with the start of a process of pan-European consolidation, as national operators come together to take advantage of economies of scale and scope and the transfer of best practice. CRA advised Post Danmark and Posten on the first European merger of incumbent postal operators, cleared by the European Commission with remedies at Phase I. The case involved detailed analysis of potential horizontal effects in relation to parcel distribution and vertical issues in relation to the combination of printing and enveloping services with mail delivery services.

Financial services
CRA has deep expertise in competition and regulatory issues which have been the focus of increasing scrutiny and intervention by competition authorities and regulators worldwide - issues that are a key input into strategic decision-making by financial services firms. Our experience covers:

• payment systems: advice to banks during investigations into interchange fees on credit cards in the UK, and interchange fees on ATMs, electronic payments and payment cards in South Africa; analysis of the impact of payment card regulatory intervention in Australia; and advice to the European Payments Council regarding interchange fees in the Single European Payments Area
• competition issues in retail banking for personal and business customers raised by mergers, including Lloyds TSB/Abbey National and Lloyds TSB/HBOS, and by competition inquiries in the UK, Northern Ireland, Ireland and South Africa
• competition issues in insurance markets, including the UK inquiry into Payment Protection Insurance
• clearing houses and exchanges, including advice to ICE Clear in becoming a Recognised Clearing House
• state aid advice to government bodies during the recent economic crisis, and advice to banks and government bodies regarding bank restructuring and compensatory measures as a result of state aid

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