Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canada Competition Commissioner provides final submission on wireless industry, (Oct 21, 2014)

By Greg Hammond, J.D.

Canadian Commissioner of Competition John Pecman has filed his final written submission with the Canadian Radio-television and Telecommunications Commission (CRTC) in response to its consultation on the review of wholesale mobile wireless services. Pecman reiterated his recommendation that the CRTC adopt effective measures to remove incumbent wireless companies’ ability and incentives to raise costs for new entrants to the wireless market.

According to Pecman, the incumbent service providers have retail market power, and therefore have an incentive to enact strategies to protect their market power by ensuring that entrants are not, and do not become fully effective competitors. In line with Pecman’s view is Telecom Decision CRTC 2014-398, which found that Rogers Communications Partnership engaged in “clear instances of unjust discrimination and undue preference” with regard to the imposition of exclusivity clauses in its wholesale mobile wireless roaming agreements with new entrants, and with regard to its wholesale mobile wireless roaming rates. The CRTC consequently prohibited exclusivity provisions in wholesale mobile wireless roaming agreements between Canadian carriers for service in Canada.

“The evidence in this proceeding clearly indicates that targeted regulatory measures are needed to restore competitive market forces,” Pecman said. Specifically, he noted that, “the incumbents’ raising rivals’ costs strategies insulate them from competition because they increase barriers to entry and expansion above and beyond the technological hurdles imposed by economies of scale and scope.” Pecman therefore suggests that regulatory measures be imposed to restore competitive entry conditions.

An additional nationwide carrier that is not inhibited by the incumbent wireless companies could result in gains of approximately $1 billion per year to the Canadian economy, Pecman’s submission notes. Restoring competition and allowing an additional nationwide carrier to enter the market could also increase consumer choice, reduce prices, and expand mobile wireless penetration in Canada. “By restoring competitive entry conditions, targeted regulatory measures will restore the competitive discipline that market forces would have otherwise imposed on incumbents,” Pecman stated.

News: Antitrust