The MCA’s draft measure, which was initially notified on 28 December 2023, sought to impose wholesale regulation on the specific market. However, after a thorough investigation, the Commission found that MCA should take into account the role of alternative physical infrastructures and the competitive constraints they impose. Therefore, the Commission has determined that the draft measure is not compatible with EU law and has issued a veto.
Promoting sustainable competition
The Commission’s concerns were initially raisedon 29 January 2024, prompting an in-depth investigation into the compatibility of the draft measure with EU law. During this period, the Body of European Regulators for Electronic Communications (BEREC) issued an opinion which disagreed with the Commission’s findings. BEREC considered in particular that the presence of at least three network operators in a given area is conducive to effective competition. Nevertheless, after careful consideration, the Commission has decided to veto the MCA’s draft measure and has closed the investigation accordingly.
The Commission believes that the MCA should take into account the role of alternative physical infrastructures and the competitive constraints they impose. Furthermore, the MCA’s justification for identifying GO, one of the two nationwide networks, as having significant market power at the wholesale level was found to be insufficient. The Commission’s veto decision highlights the importance of a competitive analysis that considers all market dynamics but does not prejudge the presence of a competition problem at the retail level, which still should be proven by the regulator.
The Commission has emphasised the responsibility of national regulatory authorities to establish conditions that promote sustainable competition and facilitate efficient infrastructure investments, without undermining the incentives for such investments by any market player.
Background
The market scenario in Malta is unique, with two nationwide networks, GO, the incumbent, and Melita, providing extensive coverage through fibre and coaxial cable networks. A third network, owned by Epic, also contributes to the competitive landscape albeit with partial coverage. The MCA’s draft measure targeted GO, identifying it as having significant market power (SMP) and therefore proposed to regulate it. However, the Commission’s analysis suggests that the competitive pressure from Melita’s coaxial cable network, which has a higher retail market share, must be assessed properly before any market power determination is made.
Next steps
The Malta Communications Authority must revisit its findings in light of the Commission’s objections and re-notify the market review. In the meantime, the current regulation will remain in place. The Maltese regulator can also appeal the decision to the General Court.
More Information
Source – EU Commission