EU court should reassess Telefonica fine for abusing dominance in broadband sector

27 Sep 2013

The European Union’s (EU’s) second-highest court has been told by an adviser to the EU’s top court that it should reconsider the EUR151 million (USD204 million) fine imposed on Spain’s Telefonica (Movistar) in 2007 for abusing its dominance in the provision of broadband internet access.

As noted in TeleGeography’s GlobalComms Database, the European Commission (EC) in Brussels accused the telco of charging wholesale rates that were too close to retail prices, thus preventing rival internet service providers (ISPs) from making a profit; the fine was several times larger than previous antitrust penalties against other European telcos. In March 2012 Movistar’s appeal against the 2007 fine was rejected, with the EU’s General Court at that date turning down the appeal, asserting that the EC ‘rightly held that Telefonica had abused its dominant position’, while the court also backed Spanish telcoms regulator the Comision del Mercado de las Telecomunicacinoes’ (CMT’s) view that deliberately overpricing wholesale services with a view to hindering rivals was a form of monopoly abuse.

In the latest twist in the saga, Reuters cites Advocate General Melchior Wathelet as saying: ‘The General Court has manifestly failed to conduct a full review, as it was required to do’. Wathelet referred to a ‘manifest disproportion’ specifically between the Telefonica fine and those imposed on Wanadoo Interactive in France and Deutsche Telekom (DT) in Germany in 2003.

Spain, Telefonica Espana (Movistar)