The 'Regulatory Authority Dixit' Defense in European Competition Law Enforcement

The European Commission (EC) and the European Courts have being reaffirming in the Deutsche Telekom and Telefónica cases that guide-prices established by sector regulators upon electronic communications incumbents cannot per se exclude that conducts with anticompetitive foreclosure effects, such as margin squeeze, undertaken within the boundaries of those pre-established prices, can be considered abusive under Article 102 TFEU.The paper aims at showing that the reasoning put forward by the EC and the Courts not only dismantles the defensive reasoning put forward by the incumbents before the EC and on appeal before the Courts but actually reaffirms the centrality of the enforcement activity of the EC. The paper examines the reasoning behind the “regulatory authority's instructions defence” – the argument of the incumbents stating that their actions were justified because they had set their wholesale access prices and retail prices in line with the guidelines imposed by the sectorial regulators. Recalled in this context were also the principles of proportionality, subsidiarity and fair cooperation between the EC and individual Member States.The affirmation of the “heliocentric” doctrine that puts the EC at the hearth of competition law enforcement vis á vis national regulators and domestic legislation (provided decisions of the regulatory authorities can be considered secondary law sources) should take into consideration the important precedent of Consorzio Industrie Fiammiferi. The latter affirms that competition authorities can automatically put aside legislation that goes against Article 101 TFEU. However, they cannot impose pecuniary fines when certain behaviours are imposed by national legislation (while they can impose fines if those behaviours were suggested or facilitated by national legislation)