04 June 2015

Spanish Supreme Court upholds €29.95 million fine against Orange

The Spanish Supreme Court has issued a judgment stating that there was no violation of the fundamental rights protected by the Spanish Constitution in infringement proceedings brought against the main telecoms companies in Spain.

The origin of the dispute dates back to December 2012, when the Spanish Competition Authority (the now-extinct CNC) issued a decision fining the three big telecommunication groups operating in Spain (the former State telecommunication monopoly, Vodafone and Orange) €120 million for each abusing a dominant position on their networks for short messages (sms and mms).

The Spanish watchdog considered that the conduct of these three undertakings in the wholesale market represented an infringement of the Spanish Competition Act 15/2007. According to the CNC, the wholesale prices for sms charged to virtual operators decreased from 9 cents to 6 cents for sms and remained at around 30 cents for mms. However, voice call prices, which unlike sms and mms are regulated, decreased by around 70% during the last ten years. Accordingly, the companies were deemed to have benefitted from a huge increase in margin of at least 384% and up to 734% for sms, and 922% for mms in 2009. Considering these facts, the CNC concluded that the investigated operators were charging virtual mobile operators uncompetitive prices, hence damaging competition. On this basis, the former State monopoly was fined €46.49 million, Vodafone €43.5 million and Orange €29.9 million.

It is important to note however that the Supreme Court’s judgment does not relate to the competitiveness or anti-competitiveness of the conduct carried out by the mobile operators, but is based on fundamental rights protected by the Spanish Constitution which, according to Orange, were violated by the CNC. The Audiencia Nacional, which is the judicial authority in charge of reviewing the legality of the CNC's (and nowadays, the CNMC's) decisions has already issued a decision finding that there was no breach of the fundamental rights included in the Spanish Constitution and this decision by the Supreme Court strikes out the appeal brought by Orange against that judgment.

The question of the lawfulness or unlawfulness of the conduct is still pending before the Audiencia Nacional, which will issue a judgment confirming or repealing the fine that was imposed by the Spanish watchdog back in September 2012.

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