Spanish court finds that Telefónica’s contracts to SME business mobile users are legal and overturns CNMC’s €25 million fine

Audiencia Nacional, a Spanish high court, has today overturned the Spanish Commission on Markets and Competition’s (CNMC) €25 million fine to mobile operator Telefónica in 2014 for anti-competitive behaviour in the mobile markets. Frontier advised Telefónica on this matter.

Telefónica’s contracts implied minimum term commitments for small and medium enterprises (SMEs) in exchange for discounts in the prices of mobile services. If the SME terminated the contract early, they had to pay a penalty equivalent to all the discounts applied during the term, which meant that the penalty for switching to an alternative mobile supplier increased over time. The CNMC had found that the only purpose of these contracts was to avoid customer switching and distort competition.

The court’s decision refers to Frontier’s report and testimony to conclude that these contracts have an economic rationale consistent with a competitive market, and as such, did not have a detrimental effect on consumers

To read a recent article in El Pais about the recent findings, please click here.

Frontier regularly advises organisations and regulators on competition and policy issues in the telecommunications and media sector.

For more information, please contact Saskia Nett on s.nett@frontier-economics.com, or call +44 (0)20 7031 7000.

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