Due to weakened retail competition, it said Spanish consumers pay 20% more than the EU average for broadband access, broadband penetration is 20% below the EU average, and its growth is nearly 30% below the average.
Competition commissioner Neelie Kroes said the EC has an obligation to defend the interests of Spanish broadband users against illegal anti-competitive practices. She said that thanks to the Spanish telecoms regulator, the abuse was ended in December 2006 when wholesale prices were reduced by between 22% and 61%.
Telefonica should be grateful: were the abuse continuing today, the fine could have been yet higher, she said. Let me be perfectly clear – I will not allow dominant companies to use their market power to close down markets that the European Union has opened.
Kroes said that for more than five years, from September 2001 to December 2006, Telefonica kept wholesale prices artificially high compared to its retail prices. Because potential competitors were largely dependent on Telefonica’s network to provide broadband access, its price structures raised its competitors’ costs and so restricted competition. Kroes said Telefonica abused its dominant position by structuring its wholesale and retail prices in such a way that the margin between them did not allow competitors to compete in the market without making losses.
In 2003 the EC fined Deutsche Telekom and Wanadoo for similar behavior, and Kroes said she hopes the Telefonica fine will have a greater impact.
