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35 Common Market L. Rev. 901 (1998)
Cross-Subsidization and EC Law

handle is hein.kluwer/cmlr0035 and id is 915 raw text is: Common Market Law Review 35: 901-945, 1998. @ 1998 Kluwer Law International. Printed in the Netherlands. CROSS-SUBSIDIZATION AND EC LAW LEIGH HANCHER and JOSE-LUIS BUENDIA SIERRA* 1. Introduction This article examines problems raised by the phenomenon of cross- subsidization and analyses, how if at all, these can be addressed under EC competition principles. Cross-subsidization can be briefly defined as the misallocation of common costs between different product or geographic markets. Such misallocation arises because an undertaking allocates all or part of the costs of its activity in one product or geo- graphic market to another market (see further section 2 below). The issues raised by the problems of cross-subsidization, although at first sight somewhat technical and specialized in their nature, in fact high- light a number of more general competition law-related problems. Firstly such issues are becoming more prominent as a result of the liberalization of a number of sectors, often collectively referred to as the regulated sectors, of the European economy. Community, and/or national, legislative programmes have been adopted (or are in the course of being adopted) with the aim of removing the various exclu- sive rights, traditionally conferred on these sectors. These monopoly rights have prevailed in industries concerned with what are usually known as utility services. These include telecommunications, where monopoly rights to provide voice telephony and other related value- added services, as well the requisite infrastructure, have been gradu- ally removed by a complex body of directives; the post sector, where monopoly rights will be restricted in general to the provision of basic postal services; the rail and bus transport sectors; as well as the gas * Administrator at the European Commission. The opinions expressed are purely personal. Professor of European Law, University of Tilburg. Copyright © 2007 by Kluwer Law International. All rights reserved. No claim asserted to original government works

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