• Professional News
  • 06 February 2013

Telecoms operators fined for including a non-competition clause in a merger agreement

The European Commission fines telecoms operators EUR 79m for including a non-competition clause in an acquisition agreement.

On 23 January 2013, the European Commission imposed fines of nearly EUR 67m on Telefónica and EUR 12m on Portugal Telecom. The event giving rise to the significant fines was Telefónica’s acquisition of Portugal Telecom’s shares in the Brazilian mobile operator, Vivo.

The acquisition agreement between the parties – signed in July 2010 – contained a non-competition clause in which the parties deliberately agreed not to compete on each other’s respective home markets, thus preventing competition on the said markets.

The Commission opened it’s investigation in January 2011 and on 25 October 2011, the Commission sent a statement of objections to the two telecoms operators holding that their mere repeal of the disputed non-competition clause did not erase it’s initial existence.

On 23 January, the procedure came to an end as the Commission rendered it’s decision holding that the two undertakings had violated article 101 TFEU by preventing competition on the two operators’ home markets. Furthermore, the Commission noted that the non-competitive behavior of the undertakings also hindered the integration process of the EU telecoms sector. As a result, the Commission imposed significant fines of EUR 67m on Telefónica and EUR 12m on Portugal Telecom.

Commission’s press release of 23 January 2013

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