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When regulation fails - EC fines Polish telecoms incumbent €128 million for abuse of dominance
5 December 2011
In a salutary reminder that regulatory obligations do not trump competition law, the European Commission recently imposed a fine of €127,554,194 on Telekomunikacja Polska for actions that prevented or delayed competitors from gaining access to its network. Commission Vice-President Joaquín Almunia was quoted as saying:
"the Commission cannot allow the development of the Internet and of the digital economy to be put at risk by anticompetitive practices. This case shows our determination to ensure that dominant telecom operators do not systematically hinder competitors who can make a real difference in the market to the benefit of consumers and businesses".
Abusive conduct
TP is the owner of the only nationwide telecom access network and is the only supplier of LLU (Local loop unbundling) and BSA (Bitstream access) in Poland. Given its incumbent position, TP is obliged by competition law to allow remunerated access to its network so as to allow effective competition on the downstream markets. While this is already provided for by Polish national regulation, the Commission found that the regulation had not been effective in opening up competition in the Polish market, which has one of the lowest broadband penetration rates in the EU, with low connection speeds and high prices.
Following a 2008 dawn raid, the Commission found "extensive evidence" that TP deliberately sought to limit competition on the broadband markets in Poland by placing obstacles in the way of alternative operators. While we await further details in the full decision, the Commission found that TP had been guilty of:
- imposing unreasonable conditions for access to the wholesale broadband products, such as excluding or modifying contractual clauses and extending deadlines to the detriment of alternative operators;
- delaying the negotiation process: for example, in 70% of negotiations, Telekomunikacja Polska did not meet a 90-day regulatory deadline for concluding negotiations;
- limiting access to its network: including by rejecting alternative operators' orders on unreasonable grounds;
- limiting access to subscriber lines: for example by rejecting alternative operators' orders to activate subscriber lines on unreasonable grounds; and
- refusing to provide reliable and complete General Information on TP's network – this information was indispensable to allow alternative operators to take business decisions.
FRAND
This case is a reminder not only to incumbent monopolists but to all dominant companies that their dealings with customers and competitors should be on fair, reasonable and non-discriminatory terms. While each aspect of TP's behaviour may not seem extreme, together the effect of this unreasonable conduct has been to foreclose competition – which has ultimately led to the imposition of hefty fines.
The case also illustrates the Commission's willingness to step in where it considers national regulation is failing consumers.
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