On November 20, 2023, the National Communications Commission (hereinafter "Communications Commission") in order to initiate public consultations, submission of comments, and holding of oral hearing published a notice regarding the ongoing public administrative proceeding. The oral hearing of the matter is scheduled for February 14, 2024, at 3:00 p.m. The public administrative proceeding concerns the approval by the Communications Commission of the methodology (hereinafter - "methodology") for determining market competitiveness and authorized persons with significant market power.

An in-depth study of the electronic communications market, identification of a person and/or group of persons with significant market power ([Single/Joint] SMP), and the application of appropriate ex-ante regulation are part of EU regulation and should be implemented. In addition, it is important that the implementation process should not be chaotic and be carried out in accordance with the current constitutional legal order of the country, so as not to damage the electronic communications market and the process of harmonization with EU law.

Electronic communications market study and identification of SMPs is an obligation under the Association Agreement (“Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part” 2014, Article 105). According to Annex XV-B of the same Agreement, Georgia must implement this obligation in accordance with the EU’s so-called Electronic Communications Regulatory Framework Directive 2002/21/EC.

On December 11, 2018, with the adoption of the European Electronic Communications Code (DIRECTIVE (EU) 2018/1972), the European Union modified the regulatory framework for the electronic communications market. As of December 21, 2020, the Directive, the implementation of which is required by the Association Agreement with Georgia, was repealed in the European Union (see DIRECTIVE (EU) 2018/1972, Article 125).

Based on the factual circumstances presented, it is evident that the identification of persons with significant market power in the field of electronic communications, as well as the elaboration of a methodology for their identification, is a matter regulated by the Association Agreement, and this Agreement should be brought into compliance with the latest EU Directive. Moreover, based on the latest Directive of the European Union, it will be necessary to modify and improve the legal framework of Georgia. For instance, the definition of a person with significant market power determined by Article 2, sub-paragraph z⁶ of the Law of Georgia "On Electronic Communications" should be brought into compliance with Part 3 of the "Guideline" of the European Union (para. 52), as well as Article 22, paragraph 10 of the same law, the main legislative (percentage) criterion for determining significant market power ("Guideline" par. 55).

Against this background, the Communications Commission plans, within the framework of issuing a subordinate normative act to resolve and regulate one of the most sensitive issues related to the regulation of the electronic communications market, to determine persons with significant market power, which will create legal grounds for imposing prior regulation (including various types of restrictions and obligations) on these persons.

Harmonization with the law of the European Union should be carried out consistently, with full compliance with both the requirements of the national legal system and the substantive requirements of the EU Directives. In this case, it is necessary to make appropriate amendments to the Law of Georgia "On Electronic Communications" and the Association Agreement and ensure compatibility with EU directives at the central level. In particular, the subordinate normative act of the Communications Commission is issued on the basis of and to comply with the law, in the conditions where the law itself needs to be brought into line with EU Directives, the Communications Commission takes the risk of receiving illegal and/or non-compliant with EU directives regulation. The current working version of the methodology should be revised after ensuring consistency of the relevant legislative act with the Directives, and the methodology should fully take into account the requirements of the latest EU Directive, including the requirements that cannot be taken into account at this stage, due to the incompatibility of the Law of Georgia  "On Electronic Communications" with the EU Directive.  Without this, the approval of the methodology could significantly harm the healthy competition in the electronic communications market, which is one of the main objectives of the current regulation of the European Union in the field of electronic communications.

Based on all of the above, IDFI believes that until the Law of Georgia "On Electronic Communications" is brought into compliance with the European Electronic Communications Code, the Communications Commission should not approve the methodology for determining market competitiveness and authorized persons with significant market power.