Since its very beginning, European electronic communications policy has been strongly shaped by the use of ‘soft law’. Reasons for this can be found in the tensions within the institutional structure implementing European telecommunications regulation. The pursuit of creating competition as one of the main regulatory objectives is assigned exclusively to National Regulatory Agencies (NRAs). A local enforcement of regulatory policies is seen as a way to better take into account different levels of competition and market development in the Member States. The European case law has recognised a broad discretion to the NRAs in determining the appropriate regulatory approach. In recent years, however, the European Commission has begun placing increasing emphasis on the role of harmonised rules for trans-European telecommunication networks and services, an area that it regards as not sufficiently addressed by the NRAs. Since legislative initiatives changing the distribution of regulatory power and assigning a bigger role to European bodies – Commissioner Thierry Breton’s proposal of a European Digital Networks Act being just the last one in a long row – are regularly met with fierce resistance of the Member States, the Commission repeatedly resorted to the use of soft law instruments to promote its agenda.

What makes a review of soft law in the telecommunication sector especially worthwhile is the fact that the use of soft law is not only determined by the discretion of the Commission, but explicitly by secondary law. Alongside provisions that empower the Commission or other European bodies such as BEREC to adopt certain soft law instruments, the secondary law usually contains an obligation of NRAs “to take the utmost account of” these instruments.

1. Legal Bases for Soft Law

The centerpiece of today’s regulatory framework – the European Electronic Communications Code (EECC)-Directive – contains three categories of legal bases for soft law instruments, all of which use this structure.

Firstly, it authorises the Commission to issue any Recommendation on the harmonised application of the regulatory framework and obliges Member States to ensure that NRAs take the utmost account of those Recommendations in carrying out their tasks. Where an NRA chooses not to follow a Recommendation, it shall inform the Commission, giving reasons for its position.

Secondly, the Commission is required to adopt a Recommendation on relevant product and service markets that shall identify a list of markets susceptible to regulation. It is to be accompanied by Guidelines for market analysis and the assessment of significant market power (SMP-Guidelines). NRAs are obliged to take the utmost account of both instruments when defining the relevant national markets as the first step of the regulatory process. In regulatory practice, the list of markets contained in the Market Recommendation is the starting point for all market definitions carried out by NRAs.

Thirdly, the EECC contains eleven specific legal bases for the adoption of different BEREC Guidelines. All these provisions not only authorise BEREC to issue Guidelines but explicitly create an obligation to adopt them within a certain timeframe. Supplementing these provisions, the BEREC Regulation authorises BEREC to issue any Guidelines ensuring the consistent implementation of the regulatory framework. Both the EECC and the BEREC Regulation require the NRAs to take the utmost account of such Guidelines.

2. Significance of soft law in regulatory practice

All these soft law instruments are subject to the same obligation “to take the utmost account of” them. Nevertheless, regulatory practice and EU case law reveal very different intensities of the legal effect of this obligation. In Koninklijke KPN, the ECJ commented on the legal effect of general Recommendations adopted according to the EECC. It noted that to take the utmost account of Recommendations means “to follow, as a rule, the guidance contained in [these] Recommendation[s]. […]”. On top of this, it applied the well-known Grimaldi–formula to the case of judicial review of an NRA decision based on such a Recommendation. For the first time, the ECJ put this in more precise terms: a national court may depart from a Recommendation only “where it considers that this is required on grounds related to the facts of the individual case, […]”. An extension that has so far remained limited to Recommendations adopted pursuant to the EECC. The Market Recommendation plays an even more significant role in NRA regulatory practice. The EECC explicitly assigns it the role of starting point for any regulatory decisions adopted by NRAs. Although, NRAs may decide not to regulate markets identified in the Market Recommendation or define different markets, such a decision is subject to a consultation procedure with the Commission, BEREC and other Member States’ NRAs. In this process, the Commission has a veto right and may require the NRA to amend certain decisions.

Contrastingly, there is no such rules regarding Guidelines adopted by BEREC or the SMP Guidelines of the Commission. Regarding the latter, the ECJ explicitly noted in Commission v. Germany and Polska Telefonia Cyfrowa that they only serve as guidance for NRAs. On top of this, the ECJ does not seem to consider BEREC Guidelines as relevant for its jurisdiction. When provided with the chance, it not only refrained from using them as interpretative support, but also delivered decisions that directly contradicted the BEREC Guidelines without giving any justification for this deviation (in Vodafone, vzbv v. Vodafone and Telekom Deutschland).

3. Different hard law foundations

This brief overview raises the question of the source of these quite different legal effects linked with the soft law instruments mentioned in the regulatory framework. To answer it, one needs to dive deeper into the rules of the EECC. A closer look at the legal bases for adoption of the aforementioned soft law instruments reveals some key differences justifying differences in legal effects.

(a) Specific role in the regulatory process

The importance of the Market Recommendation is based on its role for identifying markets as the starting point for market definitions by NRAs. It is the regulatory framework shaped by the EECC that assigns this role to this very specific soft law instrument. In this case, directive-level hard law identifies a need for regulatory legislation but leaves it to the European administration to supplement the legislative framework and subsequently assigns the ensuing soft law instrument a specific position in the regulatory process, where it is to be considered by NRAs. This is further reinforced by not only conferring authority on the Commission (or BEREC) to adopt this (or other) instruments, but also by imposing an obligation to do so, usually within a certain timeframe making sure that this legislative gap is indeed filled.

(b) Soft wording

By contrast, a legal basis may also include wording that clarifies that no such effect is intended. This is shown by the SMP-Guidelines that – according to their legal basis – shall only include “guidance” to the NRAs. The same applies to certain BEREC Guidelines that are intended to only give assistance to NRAs or third parties by their legal bases. In earlier case law – especially FCD and FMB – the ECJ concluded that soft law instruments might not have any legislative effect whatsoever because their legal basis only assigned the task of providing guidance to the issuing institution.

(c) Rules for adoption

The substantive and procedural requirements for the adoption of the relevant soft law instruments differ considerably. The adoption of general Recommendations is subject to a threshold of fulfilling several substantive conditions. Among others, it requires a finding of divergences in the implementation of the regulatory tasks that may create a barrier to the internal market and need to ensure the harmonised application of the regulatory framework. This purpose of harmonisation suggests an interpretation of the obligation “to take the utmost account of” applicable to such Recommendations that not only makes it a starting point for legal evaluation but includes a stronger level of legal effect. On top of that, the adoption is subject to the examination procedure of the Comitology Regulation. This means a majority vote of representatives of the Member States can prevent the Commission from adopting certain Recommendations strengthening their democratic legitimation.

By contrast, the legal bases for the SMP-Guidelines and BEREC Guidelines not only explicitly indicate their non-bindingness but also contain no such conditions for adoption and no further specified adoption procedure. The democratic legitimation of BEREC Guidelines is particularly low: BEREC consists of Member States’ NRAs that not only have no link to European democratic legitimation but also need to be independent of their national governments and therefore have only a very weak link to national democratic legitimation.

4. Corresponding hard law rules and legal effects of soft law

These differences correspond to the different level of legal effect observed above. Therefore, the more intense legal effect attributed to Recommendations adopted pursuant to the EECC has its roots not only in the obligation “to take the utmost account of” them but also in the legislative intent that is reflected in the wording of their legal basis as well as the higher threshold for adoption and stronger democratic legitimation. The weaker legal effect of the SMP-Guidelines and the BEREC Guidelines corresponds to the wording of their legal bases, the simpler adoption procedure and weaker democratic legitimation of these instruments.

Thus, to assess the legal effects of soft law instruments based on hard law provisions, not only the mere existence of a specific legal basis is of significance, but also the explicit obligations enshrined therein as well as the intention of such a legal basis as expressed by its wording and the conditions and process for adoption that it stipulates.

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Posted by Emanuel Kollmann (German Monopolies Commission and University of Mannheim)

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Suggested citation: Emanuel Kollmann, “Hard Rules for Soft Law – The case of European Union telecommunications law”, REALaw.blog, available at https://realaw.blog/?p=2905