Brussels, 29/03/2012 (Agence Europe) - In a ruling on Thursday 29 March, the EU General Court confirmed the fine of more than €151 million imposed by the European Commission on the Spanish telecommunications company, Telefonica, in July 2007, for abuse of dominant position on the market for access to broadband internet in Spain. In so doing, it rejects the appeal lodged by the company and the Spanish state (Cases T-336/07 and T-398/07), which called for the decision to be cancelled.
Between September 2001 and December 2006, Telefonica marketed retail broadband internet services for individuals. It also provided wholesale broadband products to other telecommunications operators in order to allow them to provide retail broadband services to individuals. As regards those wholesale products, there were three offers available: - (1) unbundling of the local loop; (2) wholesale access at a regional level (GigADSL); and (3) several offers of wholesale access at a national level, by other operators. In 2007, the Commission had imposed on the company a fine of €151,875,000 for having abused, during the whole of that period, its dominant position on the Spanish market for wholesale access at regional and national level. In particular, it imposed on its competitors inequitable prices in the form of a tariff squeeze between prices for retail broadband access and prices for wholesale access. Spain and Telefonica called on the General Court to cancel that decision. The Court dismissed the action, answering their objections point by point as follows: - On the criteria for assessing dominant position, the Court rejects Telefonica's argument, whereby the Commission should not have examined the existence of a margin squeeze for each wholesale product taken separately, since the alternative operators used an optimum combination of wholesale broadband products, including the unbundling of the local loop, allowing reductions in costs. According to the General Court, the unbundling of the local loop, the regional wholesale product and the national wholesale product did not belong to the same product market during the period concerned, so that the possible existence of a dominant position by Telefonica on each of those markets needed separate assessment; - The General Court notes that, during the period considered, Telefonica was in a dominant position in the region and national wholesale markets during the period covered by the infringement. Since 1999, it held a de facto monopoly and a market share above 84%; - Regarding the abusive conduct of Telefonica, the General Court states that a margin squeeze on a relevant market is capable itself of constituting an abuse of a dominant position. The Commission therefore was not required to prove that Telefonica charged excessive prices for its wholesale products with indirect access or that it charged predatory prices for its retail products; - As for the effects of the conduct of Telefonica, the General Court is of the view that the Commission did not make a manifest error of assessment in holding that the conduct of the undertaking had probably reinforced the barriers to the entry and expansion of that market, and that, in the absence of distortion resulting from the margin squeeze, competition would probably have been keener on the retail market; - Finally, as regards determination of the fine, the General Court rejects the arguments of Telefonica that it was not reasonably able to predict the anti-competitive nature of its conduct, given that: - the company had sufficient discretion to determine its pricing policy; - and it must have known that compliance with the Spanish legislation concerning telecommunications did not protect it against an intervention by the Commission the basis of competition law. (FG/transl.jl)