Spanish court overturns CNMC’s decision on excessive SMS termination prices

Audiencia Nacional, a Spanish high court, has today overturned the Spanish Commission on Markets and Competition’s (CNMC) €120 million fine to mobile operators Vodafone, Telefonica and Orange for abusing their dominant position by passing on excessive prices for the termination of Short Message Service (SMS). Frontier advised Vodafone on this matter.

Most mobile operators provide a text messaging service to their users via SMS. The termination rate is the price paid by the network originating the SMS to another operator for terminating messages on its network, when the message exchange is between customers of different mobile operators. The CNMC in 2012 had said that the three biggest mobile operators had exploited their dominant position between 2000 and 2009 and passed on overpriced SMS termination rates to consumers through high charges for text messages.

The court found that the CNMC did not properly demonstrate the existence of a dominant position of the operators in the termination market. It also cast doubts regarding the market definition. As the dominance position was not properly justified, the ruling does not discuss whether the prices can be considered excessive.

To read a recent article in El Pais about the case, 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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Related Sectors:
Telecoms
Media
Related Disciplines:
Competition
Regulation