The new spectrum trading regime in Ireland has the potential to
enable valuable spectrum to be used more efficiently and to enable
operators to get their hands on spectrum without having to wait
until the next spectrum auction or release of spectrum.
Efficient use of spectrum should also help Ireland meet its
broadband targets set by the European Digital Agenda 2020.
However, given the amounts paid by existing operators in the last
spectrum auction for spectrum in the 800 MHz, 900 MHz and 1800 MHz
bands and spectrum needed for 4G services, it is uncertain whether
any operators will have spare capacity to be sold-off.
The Wireless Telegraphy (Transfer of Spectrum Rights
of Use) Regulations 2014) (the Transfer
Regulations) were signed into law on 29 January
2014. A few days later on 31 January, ComReg published its Spectrum Trading framework and guidance on the
new trading regime (the Framework). The
Transfer Regulations and Framework reflect the European
Parliament's decision establishing a multiannual Radio
Spectrum Policy Programme (RSPP). This decision
set out policy objectives for spectrum planning and the
harmonisation of spectrum use across the EU. Importantly, the
decision mandated the trading of spectrum in the RSPP
bands.
The Framework outlines the notification procedures for
undertakings intending to transfer rights of use to spectrum to
ComReg. It also contains guidance on how ComReg will determine
whether or not a proposed transfer should be permitted. The
substantive test applied by ComReg is whether the proposed transfer
would (in ComReg's opinion) distort competition. Those familiar
with the Irish merger control regime will note similarities between
the distortion of competition test to be applied by ComReg and
proposed two-phase review process, with the substantial lessening
of competition test (SLC) and two phase merger
review process applied by the Irish Competition Authority.
Some good news for operators however - the notification regime
will not apply to transfers which form part of a wider transaction
ie, a merger which is notifiable to the Competition Authority
or to the European Commission. In such circumstances the
Competition Authority or the European Commission will have
responsibility for analysing the transfer from a competition
perspective (as part of their review of the overall transaction)
and a separate competition assessment by ComReg is not
required. In these circumstances, all that is required is for
the parties to inform ComReg of the transfer at the same time as
notifying the merger to the Competition Authority or the European
Commission.
The Procedure
ComReg has published a specific Notification Form. The
notification fee to accompany the Form is €5,000 (€3,000
less than the current €8,000 fee for non-media related
mergers).
A table summary of the timelines for the two-phase review process
is set out at the end of this article.
Phase I review
ComReg will initially conduct a 'Phase I' investigation
of the transfer within 35 working days of commencing it assessment
(referred to as the Commencement Date). This is longer than
the period allowed for Phase 1 review of mergers by the Irish
Competition Authority, which is currently one month flat, but will
be extended to 30-45 working days under the Competition and
Consumer Protection Bill (published on 31 March) (the
Bill). A link to a recent Matheson update on the
Bill is available here.
Again similar to Irish merger control, third parties can make
submissions in respect of the proposed transfer. ComReg may
also request further information from the notifying parties and
from other sources to aid its assessment.
Where competition concerns arise all is not lost – as with
merger control cases, there is provision for ComReg to discuss with
the notifying parties measures which would 'ameliorate' any
effects of the notified transfer on competition ie, remedies.
Having considered the information provided and submissions
received, if ComReg is of the opinion that the transfer will not
distort competition, it will determine that the transfer may be put
into effect (with or without conditions). As mentioned, a
Phase I decision must be made within 35 working days of the
Commencement Date. ComReg will publish a notice of its
determination on its website.
Phase II review
If at the end of Phase I however ComReg is unable to form a view
that the transfer will not result in a distortion of competition
(or if any remedies offered are not sufficient), ComReg will carry
out a full Phase II investigation. Within five working
days of determining to carry out a Phase II investigation, ComReg
will publish a provisional time period for the Phase II review
– where practicable this should not exceed 105 working
days.
The notifying parties (and third parties) are entitled to make
submissions within 15 working days from the date of the publication
of the notice to conduct a Phase II investigation (referred to as
the determination). ComReg then has 40 working days from the
date of the determination to make its decision (this is much
shorter than the Competition Authority's current Phase II
review period which is an additional three months, but which
will soon be extended under the Bill to between 120-135 working
days).
Once ComReg has made its assessment, it will furnish a copy to the
parties. There is then another opportunity for the parties
to reply. Within 15 working days from furnishing the
assessment, ComReg may enter into discussions with the notifying
parties regarding possible 'remedies' to ameliorate the
effects of the notified transfer on competition. Once the
assessment is delivered to the parties, they have 15 working days
to respond.
ComReg has identified a number of factors which it may take into
account in reaching any decision. These include the likely
concentration of spectrum holdings, the effect on wholesale and
retail market shares, and incentives to increase prices
post-transfer owing to unilateral effects. Other factors that
will be considered include: incentives to coordinate; barriers to
entry; changes in potential service quality (eg speeds)
post-transfer that could be replicated by competitors, absent
increased costs to competitors; and efficiencies arising from the
transfer.
At the end of its Phase II investigation, ComReg shall determine
either: (a) the transfer may be put into effect; (b) the transfer
may not be put into effect; or (c) the transfer may be put into
effect subject to conditions (ie, remedies).
When a right of use is transferred, it will remain in effect only
for the remainder of the term of the transferor's licence. The
Transfer Regulations do not amend an existing licence condition, or
enable a licensee to avoid a licence condition – unless
ComReg's consent is obtained. If ComReg is reviewing the
amendment of a licence condition, the time periods mentioned above
can be suspended until it has made a decision on this.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.