Soft Law and the Margin of Appreciation of the National

JudgeThe Dutch FTA-MTA-case

Heico Kerkmeester | University of Antwerp, Administrative Court of Appeal for Trade and Industry (CBb), The Hague

Background of the case

• Commission Recommendation of 7 May 2009 on the Regulatory Treatment of Fixed and Mobile Termination Rates in the EUR (2009/396/EC): recommending ”pure BULRIC” (rather than plus BULRIC);

• 2012: CBb annulled decision by ACM, replacing pure by plus BULRIC, in spite of recommendation;

• 2013: new regulatory round; ACM applies pure BULRIC again; CBb refersquestion to Court of Justice;

• 15 September 2016: judgment of the Court (case C-28/15), afterConclusion AG Mengozzi on 28 April 2016;

• 11 January 2017: hearing at the CBb, discussing the implication of theCourt judgment;

Question 1

• 1. Article 4(1) of [the Framework Directive], read in conjunctionwith Articles 8 and 13 of [the Access Directive], must be interpretedas meaning that a national court, hearing a dispute concerning thelegality of a tariff obligation imposed by the national regulatoryauthority for the provision of fixed and mobile call terminationservices, may depart from Commission Recommendation2009/396/EC (…) advocating the ‘pure Bulric’ (Bottom-Up Long-Run Incremental Costs) cost model as the appropriate price regulationmeasure in the termination market only where it considers that this is required on grounds related to the facts of the individual case, in particular the specific characteristics of the market of the Member State in question.

Question 2

• EU law must be interpreted as meaning that a national court hearing a dispute concerning the legality of a tariff obligation imposed by thenational regulatory authority for the provision of fixed and mobile call termination services can assess the proportionality of that obligation in thelight of the objectives set out in Article 8 of [the Framework Directive] andArticle 13 of [the Access Directive] 2, and take into account the fact thatthe obligation has the effect of promoting the interests of end-users on a retail market which has not been earmarked for regulation. A nationalcourt may not, when carrying out a judicial review of a decision of thenational regulatory authority, require that authority to demonstrate thatthe obligation actually attains the objectives set out in Article 8 of [theFramework Directive].

What is clarified

• Deviation from pure BULRIC requires a motivation on the basis of theindividual facts of the case;

• Effects on the retail market for mobile telephony (allthough regardedas competitive and therefore not regulated) can be taken into account by the NRI;

• The standard of proof for the NRI regarding the realization of theobjectives of Article 8 of the Framework is not extremely high.

What was discussed on 11 January 2017

• How to reconcile the judgment with national procedural law?• CBb did not ask whether ACM should demonstrate that the objections of Article 8 FD are

“actually attained”; Dutch administrative procedure requires demonstration of “plausibility”;• E.g. relevant effects on the internal market may not be plausible (while differences in the WACC are

accepted: CBb 19 January 2017);• Dutch administrative procedure is not familiar with a notion of a presumption of

proportionality, to be rebutted by the regulated party (suggested by the AG, pt 65 and 66);• As to “to the facts of the individual case, in particular the specific characteristics of the

market of the Member State in question”, it might require too much form the regulatedparties to proof that the Dutch market is different from others;

• The jurisprudence of CBb is rather strict that “cost orientation” implies that anefficient operator can actually recover its costs; the AG (e.g. pt 71) suggests a lower standard.

• How to weigh the objectives of Article 8 FD against each other?• Parties at least seem to agree that a welfare analysis is important (although they differ as to

the concrete effects of pure versus plus BULRIC).