Despite the veto, the MCA’s market review proposals have been welcomed by some as a challenge to the EC’s broader deregulatory agenda
The MCA has two options: renotify the market review or appeal to the General Court
On 2 April 2024, the EC adopted a decision that vetoes planned regulation of the wholesale broadband market in Malta. The Malta Communications Authority (MCA) identified GO, the incumbent, as having significant market power (SMP) and intended to impose access remedies – both active and passive – exclusively on GO’s network. Following an in-depth investigation, the EC determined that the MCA should have taken into account the role of alternative physical infrastructures and the competitive constraints they impose, and found the proposal incompatible with EU law. The decision now compels the regulator to retract its proposed draft measure outlining the rules for wholesale physical and virtual infrastructure access, which was initially notified to the EC on 28 December 2023. The MCA can either revisit its findings in light of the EC’s objections and renotify the market review, or it can lodge an appeal with the EU’s General Court.
BEREC disagreed with the EC’s findings, considering that at least three networks were needed to ensure effective competition
The EC’s concerns were initially raised in a serious doubts letter on 29 January 2024, prompting it to launch the detailed review. In light of ongoing investments, falling retail prices, increasing satisfaction with telecoms services and the presence of infrastructure-based competition, the EC felt the market appears to tend towards effective competition. The Body of European Regulators for Electronic Communications (BEREC) subsequently issued an opinion that disagreed with the EC’s findings – a move that has been praised by some stakeholders, including ECTA, for seemingly offering resistance to the EC’s apparent eagerness to deregulate the telecoms sector. BEREC considered, in particular, that the presence of at least three network operators in a given area is needed for effective competition. According to the EC, the market scenario in Malta is unique, with two nationwide networks (GO and Melita) that provide extensive coverage through fibre and coaxial cable networks. A third network, owned by Epic, also contributes to the competitive landscape, albeit with partial coverage of fibre. In addition to developing its own network, Epic relies on access to GO’s infrastructure.
The EC has emphasised the role of regulators in driving both sustainable competition and investment
As such, the EC considered that the MCA's justification for identifying GO as having SMP at the wholesale level was insufficient. The EC’s own analysis suggests that the competitive pressure from Melita's coaxial cable network, which has a higher retail market share than GO, must be assessed properly before any SMP designation is made. Its veto decision seeks to highlight 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 EC has also emphasised the responsibility of national regulators to establish conditions that promote sustainable competition and facilitate efficient infrastructure investments, without undermining the incentives for such investments by any player.
