The Competition Authority recommends to AKEP to regulate the mobile phone retail market

The Competition Authority (CA) recommended today to the Electronic and Postal Communications Authority (AKEP) the regulation of the retail mobile phone market in the country.

The Competition Authority assesses that, in the conditions of the structural changes occurring in the mobile phone market, AKEP should carry out the analysis of the minority market of the mobile phone market in order to undertake the necessary regulatory measures for the regulation of this market.

According to the official announcement of the CA, the recommendations were part of the decision of the Competition Commission no. 1048, dated 16.01.2023 "On giving some recommendations to the Authority of Electronic and Postal Communications in the market of mobile services regarding the issue of the document for public consultation" Analysis of Wholesale Markets for Call Termination in Mobile (Cellular) Telephone Networks”.

Since the beginning of last year, the mobile phone market in the country has only two operators, after the absorption merger between the operators One Telecommunications and Albtelecom, which came as a result of the acquisition of the two companies by the Hungarian group 4iG.

In the analysis of the mobile phone market released for public consultation in November 2023, AKEP states that currently the market of mobile networks and services in Albania is owned by two operators and this situation poses risks for increasing prices for the services they offer, reducing the benefits of the consumer.

AKEP considers that a market with a limited number of players can remain competitive, only if the regulatory role of the AKEP field is strengthened in terms of legal changes for ex-ante interventions, since such a situation, especially the duopoly situation in the mobile market, creates new risks for the presence of concerted behavior between companies in the market to the detriment of concurrence.

According to AKEP, concerted behavior can appear mainly through price strategies and price floor increases for the same service, including the charging of other additional services that directly impact the primary service contracted by the subscriber, services that are outside the scope of regulation and focus of the field regulator's ex-ante interventions.

The potential negative effect on the created duopoly situation is also influenced by the stage of maturity of the mobile market, since the possible battle to change the subscriber base in a market where there is no increase in the subscriber base will be mainly focused on the same consumer base which the two networks currently own.

Basically, AKEP seems to share the same opinion with the Competition Authority, but hints that the current legal framework does not enable the necessary instruments to intervene in the retail market of mobile communications.

The Albanian government submitted for consultation the new law "On electronic communications" last year, but this law has not yet been submitted to the Parliament of Albania for approval.

In 2006, the Telecommunications Regulatory Authority (now AKEP) brought retail mobile phone rates under regulation for the first time, as a response to very high prices and the lack of effective competition between the two operators at the time.

After 2008, with the start of the activity of the third and fourth operator, the competition affected the significant reduction of prices and the need to regulate the market at the minority level was assessed as exceeded. But, the return of the market to a duopoly structure, where it was until 2008, has brought back among the regulatory institutions of the market the dilemma of whether ex-ante intervention in the wholesale market of mobile communications should be considered again.

In general, regulation of retail markets (retail tariffs) is a rare practice among telecommunications regulatory authorities in Europe.

However, the legislation of the European Union provides that an ex ante regulation of the communication markets can be justified in cases where the test of three criteria is met: the existence of entry and non-transitional barriers for the entry of new competitors; a market structure that is not oriented towards effective competition; the inadequacy of competition law to address market problems.

In fact, the Competition Authority has sought several times in the last decade to regulate the mobile retail market. But AKEP has repeatedly opposed such a recommendation (at least until 2020), arguing that the three-criteria test did not justify such an intervention.

However, the decrease in the number of operators and the concerns expressed by AKEP in the latest analysis of the mobile market indicate that perhaps such a move can be considered. Monitor