Corporate Political Strategies Related to Decisions of European Competition Commission on Regulatory Issues in the European Telecommunications Industry

Abstract

The European regulatory institution has the tasks to protect fair competition and equal opportunities for all companies in the European telecommunications industry and to protect the welfare of the consumers. This regulator is responsible for the adherence of telecommunications companies to competition rules. It can oblige companies to change their behavior and follow the new rules of the game, and it can also sanction telecommunications companies which have abused their market power. These telecommunications companies can decide to comply with the decision or they can response actively to the decision of a sanction. These decisions and responses are part of their corporate political strategies. This study aims to explore and provide more conclusive empirical evidence with regard to the corporate political strategies used by telecommunications companies to influence issues and decisions in their political and regulatory environment. This study analyzes how five large former state owned companies in the European telecommunications industry responded to the decisions of the European regulator, the European Competition Commission, on regulatory issues. The evidence shows that when the European regulator decided to sanction the companies with a fine for a regulatory issue, the companies responded with a recalcitrant corporate political strategy. However, when the regulator obliged the companies to adapt or change their behavior, then the companies responded with a responsive corporate political strategy.

Key Words:

• regulatory institution
• recalcitrant and responsive approach
• incumbents
• nonmarket environment