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July 11, 2014

Telefonica loses EU court challenge on record antitrust fine

The operator is found guilty of abusing its dominant position in Spain’s broadband market.

By Amy-Jo Crowley

The European Court of Justice (ECJ) has upheld a record fine levied against Telefonica over an antitrust case first brought by the European Commission’s competition watchdog in July 2007.

Telefonica had appealed an earlier decision by the General Court that it must pay a fine of €152m for abusing its dominant position in Spain’s broadband market from 2001 to 2006.

The EC claimed at the time that the margin between the wholesale price Telefonica charged for access to its network and the retail prices levied on end users had been too small to allow competitors to compete with it.

The fine, which was a record for a European telecoms firm at the time, prompted a series of appeals from Telefonica, which claimed it had at all times acted in compliance with regulations set by the now defunct Spanish regulator CMT.

However, the ECJ yesterday upheld the original decision, dismissing Telefonica’s appeal in its entirety.

"The fine of €151,875,000 imposed by the Commission and upheld by the General Court therefore remains unchanged," it said in a statement.

"The Court points out that, according to the findings of the General Court, the Commission demonstrated that there were potential anticompetitive effects that may have excluded competitors who were at least as efficient as Telefónica, which is sufficient to establish that the practice of squeezing margins was abusive," the statement added.

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The EC welcomed the judgment as it served to "confirm the Commission’s power to enforce competition law against abuses committed on regulated markets and the Commission’s methodology to establish the existence of a margin squeeze".

 

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