The Romanian Competition Council (RCC) recently finalized its investigation concerning an alleged infringement of the Romanian Competition Law by the Romanian National Audio-visual Council (CNA), as a result of the issuance by CNA of a decision which allegedly limited the commercial autonomy of undertakings and established discriminatory conditions regarding their activity.

The RCC decision is relevant as it results from a first-time competitive assessment of the obligation to retransmit certain radio and television channels (i.e., the must-carry obligation). The RCC assessed the existence of potential differences between the retransmission of audio-visual programs through satellite platforms, such as direct-to- home (DTH ) and the retransmission through co-axial cables. More specifically, the must-carry obligation was incumbent on cable operators, but not on DTH operators as well.

The analysis also concerned the criteria for granting must-carry status to certain TV channels.

The RCC assessment will likely change the rules of the game on the market for audio-visual channels retransmission services, given that, following the RCC’s recommendations, the must-carry obligation should be applied in a non-discriminatory fashion to both DTH and cable.

THE INITIATION OF THE INVESTIGATION

In 2012, CNA issued a decision which interpreted the provisions of the Audio-visual Law regarding the rules for the application of the must-carry obligation to the effect that only DTH platforms are exempted from such must-carry obligation.

The must-carry obligation provided by the Audio- visual Law transposes the provisions of art. 31 of Directive 2002/22 on universal service and users’ rights relating to electronic communications networks and services, which allows member states to impose must-carry obligations on undertakings providing electronic communications networks used for the distribution of radio or television broadcasts to the public (“operator”), where such obligations are necessary to meet general interest objectives and provided that there is no discrimination in the treatment of the operators. The Audio-visual Law only exempts from the application of the must-carry obligation the operators exclusively using the radio spectrum for the distribution.

Pursuant to the CNA decision, several operators complained to the RCC that some of the broadcasters started to charge increased rates for the retransmission of certain TV channels on DTH platforms, although such TV channels had a must-carry status and, therefore, were free-to-air on Cable platforms.

The RCC initiated the investigation, based on specific provisions of the Romanian Competition Law, which are not mirrored at EU level, but which allow the RCC the possibility to open an investigation against a public authority with respect to any acts of such authority which may have as an object or effect a limitation of competition.

THE ASSESSMENT OF THE RCC

The RCC defined the relevant market in line with the EU-level approach and established that the provision of the retransmission services through a DTH platform is substitutable with the provision of such services through a cable platform.

In this context, the RCC found that, as a result of the CNA decision, operators using DTH platforms cannot equally compete with operators using cable platforms, as the latter do not have to pay for the retransmission of must-carry channels.

Moreover, the RCC reached the conclusion that DTH platforms do not exclusively use the radio spectrum and, therefore, do not fall under the scope of the exemption provided by the Audio-visual Law. In conclusion, the RCC established that all the operators have the obligation to retransmit must-carry channels, regardless of the platform used.

Furthermore, the RCC analysed the list of must-carry channels which comprises the channels declared as free- to-air based on their national rating index. In this regard, the RCC concluded that the very large number of must- carry channels on the list (ie approximately 39) defeats the purpose of having a must-carry obligation for selected channels in view of certain general interest objectives and places a high burden on the operators, especially on those who are technically limited from providing a larger number of channels to their subscribers.

CONCLUSIONS OF THE INVESTIGATION

The RCC decided to close the investigation given the fact that the CNA decision was based on a viewpoint expressed by ANCOM, the Romanian telecom regulator.

However, the RCC provided key recommendations for CNA which will likely have a significant impact on channel retransmission services. The RCC indicated that CNA must take all necessary measures to amend the Audio-visual Law within six months as of the RCC decision.

Firstly, the RCC recommended the application of the must-carry obligation based on technological neutrality principles, irrespective of the platform used for the retransmission of channels.

Secondly, the RCC recommended the granting of must- carry status only to channels with a global content of general interest (i.e., public channels) following a competitive procedure. The RCC took the view that such status may also be granted to private channels only if the granting is strictly necessary for the achievement of a general interest. As a result, the number of channels holding the must-carry status would likely be reduced.

The RCC decision can be expected to have multiple implications. On the one hand, it should lead to the elimination of discrimination between operators, resulting in the limitation of potential abuses from the broadcasters of must-carry channels. On the other hand, it should relax the barriers for potential new entrants on the market, since they would no longer be obliged to retransmit a large number of must-carry channels.

In the aftermath of the RCC decision, it is expected that modifications to the Audio-visual Law will be enacted. Such modifications will need to be assessed considering the recommendations of the RCC. Moreover, the RCC decision may also have an impact on the prices charged to final customers, depending on the legislative amendments which may be implemented in the future as regards the must-carry status.