EC fines Telefónica and Portugal Telecom for non-compete clause

EC fines Telefónica and Portugal Telecom for non-compete clause

European Union regulators have fined Spanish operator Telefónica €66.8 million and Portugal Telecom €12m for illegally agreeing not to compete in their domestic market.

The non-compete clause for Spain and Portugal, which was allegedly inserted into a contract from July 2010 as part of Telefonica’s €7.5 billion acquisition of Brazilian mobile operator Vivo, has been found illegal under EU law.

The two parties are said to have scrapped the agreement in February 2011 after the European Commission began antitrust proceedings.

In a statement, the EU competition commissioner, Joaquín Almunia, said the commission is “committed to ensuring the creation of a genuine single market in the telecoms sector”.

“We will not tolerate anti-competitive practices by incumbents to protect their home markets, as they harm consumers and delay market integration,” he added.

Telefónica plans to appeal the decision to the European Court of Justice. The company has claimed that it did not breach the law on the grounds that the clause was subject to compliance with regulation and was never applied.

It has also said that the agreements had no effect on consumers at any stage and did not alter the development of the market.

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