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Telefónica and Portugal Telecom hit by fines

23 January 2013

European Commission fines Telefónica €66.8m and Portugal Telecom €12.2m for illegal non-compete contract clause

Read more: Telefónica Portugal Telecom European Commission competition fines PT

The European Commission has imposed fines of €66.89m on Telefónica and of €12.29 on Portugal Telecom for agreeing not to compete with each other in the telecoms markets on the Iberian peninsula.

The Commission says the two companies - which are the dominant players in Spain and Portugal respectively - agreed not to compete with one another during 2010 negotiations for Telefónica to buy complete control of Vivo, a Brazilian mobile operator which had been a joint venture.

The companies terminated the non-compete agreement in early February 2011, after the Commission opened antitrust proceedings, says the Commission, but it believes that they still had a deal to stay out of each other's home markets.

Joaquín Almunia, Commission vice president in charge of competition policy, said: "The Commission is committed to ensuring the creation of a genuine single market in the telecoms sector. We will not tolerate anticompetitive practices by incumbents to protect their home markets, as they harm consumers and delay market integration."

The Commission said that the action by the two companies hindered the integration process of the EU telecoms sector and was in breach of article 101 of the treaty that governs the functioning of the European Union. In setting the level of fines, the Commission took into account the four months duration of the infringement and the fact that the agreement was not kept secret by the parties. The early termination of the agreement was also taken into account by the Commission as a mitigating circumstance.

The Commission has warned that any person or firm affected by anti-competitive behaviour may seek damages in national courts.

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