The legal framework for electronic communications markets, which was essentially laid down in five EU directives and became legally binding at the European level in 2002, was implemented under Austrian law in the Telecommunications Act (TKG) 2003. In 2009, the EU directives were amended, and as a result the TKG 2003 was also subjected a comprehensive revision in the year 2011. This amendment also concerned market analysis activities.
The TKG 2003 already brought substantial progress toward the convergence of sector-specific regulation with general competition law in Austria. Despite the partial harmonisation of methods involved, sector-specific regulation still differs from general competition law mainly in that companies identified as having significant market power (SMP) are subjected to specific obligations in advance (i.e. ex ante) with due consideration of the principle of proportionality.
In contrast to general competition law, sector-specific ex ante regulatory instruments can be imposed without any previous abuse of market power.
In many cases, it is only through the identification of significant market power and the resulting imposition of ex ante obligations that new providers are enabled to launch and maintain their business activities. The regulatory consequences associated with the identification of significant market power are thus asymmetrical in their effects, and they are designed to support the process of liberalisation and competitive orientation in the Austrian communications markets.
Since the TKG 2003 went into effect, competition regulation has followed a three-stage process which begins with market delineation (market definition). In this process, it is the regulatory authority's duty to define the markets subject to sector-specific regulation. Until the 7th amendment to the TKG 2003, RTR issued ordinances defining the relevant markets subject to sector-specific regulation (TKMVO 2003, TKMV 2008).
In the second step, the defined markets are analysed. The purpose of this market analysis is to determine whether effective competition prevails on the market in question or one or more companies possess significant market power.
In the third step, specific ex ante obligations (regulatory instruments) are to be imposed on any companies identified as possessing significant market power. These instruments must be capable of eliminating or mitigating the competition problems identified in the market analysis in order to ensure functioning competition on the relevant market. These specific obligations are market-based and can include the following measures to encourage competition under the TKG 2003: non-discrimination obligations, transparency obligations, accounting separation obligations, obligatory access to network facilities and functions, obligations regarding price regulation and cost accounting for access, obligations regarding retail customer rates, and functional separation.