European Commission blocks Austrian regulator from introducing measures, which would unduly favour the national broadcaster

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15 January 2018

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Following a two months indepth investigation the European Commission today required the Austrian broadcasting regulator (KommAustria) to withdraw plans for continued regulation of the wholesale market for analogue terrestrial radio broadcasting transmission in Austria, as such plans would place the national radio broadcaster (ORF) at an undue competitive advantage over other broadcasters.
The Austrian broadcasting regulator KommAustria proposed to the Commission, to continue regulating the market for analogue terrestrial radio broadcasting. KommAustria states that the market situation is largely unchanged since it last assessed the market in 2013. The Commission is particularly concerned by the fact that despite the lack of competitive developments in Austria under the current regulatory regime, KommAustria proposed to impose a practically unchanged set of regulatory obligations but excludes from the regulated market the supply of radio transmission services by the main operator (ORS) to its parent company, the national broadcaster (ORF). As a result, ORF would receive a different and arguably better service than its direct competitors and, as the majority owner of its supplier (ORS), can influence the latter's decisions concerning infrastructure developments (such as where to build radio transmission masts etc.). Furthermore, under the plans of KommAustria, ORF is also subject to different price conditions than competing radio broadcasters.

The Commission therefore questions the compatibility of KommAustria's proposals with the EU telecoms rules and principles of competition law and decided to block their implementation.

Background

In 2007 the Commission recommended to all national regulators that the markets for broadcasting transmission services should no longer be regulated due to increased competition in these markets.
However, the market for analogue radio broadcasting in Austria is still dominated by one operator (ORS), which operates the only nationwide terrestrial broadcasting transmission network. Contrary to other broadcasting markets, the analogue radio broadcasting market has not seen growing infrastructure competition or inter-platform competition, due to the importance of analogue radio devices particularly in cars. The only notable competitor of ORS in Austria operates with a limited regional footprint and only few broadcasting sites.

ORS, which is proposed to be designated as having significant market power (SMP) is a subsidiary of the Austrian public service broadcaster ORF, who holds a controlling block of 60% of ORS's shares. ORS holds a steady market share of over 90 % excluding self-supply (and over 99% including self-supply).

The Commission is particularly concerned about the fact that KommAustria excludes from the relevant market the supply of transmission services by ORS to ORF, which in turn does not subject them to the regulatory measure proposed. As a result, the national public radio broadcaster (ORF) receives a different and arguably much better service than its direct private competitors. In addition, as the majority owner of its supplier (ORS), it also can influence the latter's decisions concerning infrastructure developments (such as where to build radio transmission masts etc.). Furthermore, under the plans of KommAustria ORF is also subject to different price conditions than competing private radio providers.

A second point of concern is the fact that the overall market structure of the market has remained largely unchanged over the last regulatory period, which means that the currently imposed remedies have not led to any development of infrastructure competition. Despite this, and due to the fact that promoting infrastructure competition is not regarded as a relevant regulatory goal in the draft measure, KommAustria proposes to continue regulation of the market with largely unchanged remedies, failing, however, to explain how the same set of remedies will lead to a different market outcome.

In the light of this and failing a new regulatory approach the Commission is concerned that the current, uncompetitive market structure will remain unchanged in the medium to long term.
As a result of all of the above the Commission decided to veto the plans of KommAustria in accordance with Article 7 of the Telecoms Framework Directive, which requires national telecoms regulators to notify the Commission, the Body of European Regulators for Electronic Communications (BEREC) and telecoms regulators in other EU countries, of the measures they plan to introduce to solve market problems.

Where the Commission has concerns as to the compatibility of the proposed regulatory obligations with EU law, it can open an in-depth, or so-called Phase II, investigation. If, at the end of this investigation, involving cooperation with the relevant regulator and BEREC, the doubts around the compatibility of the proposal with EU law persist, as in this case, the Commission may take a decision requiring the national regulatory authority concerned to withdraw its proposed measure.
In this case, the Commission opened the Phase II investigation on 13.11.2017. During the Phase II, BEREC has issued its opinion on the Commission's serious doubts, fully supporting the Commission's position. KommAustria has not submitted further material or explanations to the Commission.
The Commission's letter sent to the Austrian regulator will be published at CIRCABC

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