Picking failures

Picking failures

Mandatory standardisation in electronic communications

The European Commission’s use of competition law powers to require Microsoft to publish information that would allow non-Microsoft work group servers to interoperate with Microsoft Windows PCs and servers was controversial. But this may be only the start of the debate.

Under the telecoms framework directive, the Commission has even more power to intervene: it can mandate interoperability standards in electronic communications networks and services without any prior finding of the abuse of market power, and guidance as to the circumstances in which it will do so is sketchy.

In this bulletin, we examine the economic rationale for such pre-emptive action, in order to determine when the Commission might find this “appropriate” and when it would do better to stand clear.

Picking failures