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• Spain: The Comisión Nacional de la Competencia fines Telefónica, Vodafone and Orange for abusing their Dominant Position in Wholesale Telephone Short Messaging MarketsIn its resolution of 19 December 2012, the Comisión Nacional de la Competencia (CNC) Council found that the three mobile network operators Telefónica Móviles de España, S.A.U. (TME), Vodafone España, S.A.U. (VODAFONE) and France Telecom España, S.A. (ORANGE) committed an exploitative abuse of their individual dominant positions in the wholesale markets for termination of short messages and multimedia message (SMS and MMs) in their respective networks, thereby infringing the Spanish and EU competition rules.

Consequently, the CNC Council imposed a fine of € 46 490 000 on TME, € 43 525 000 on VODAFONE and € 29 950 000 on ORANGE. The CNC Council, however, did not consider it appropriate to impose regulatory measures on the parties as had been recommended by the Investigations Division, in view of two considerations: (i) the conduct has only been proven through the year 2009 and (ii) the CNC Council believes the Spanish Telecommunications Market Commission (CMT) is better positioned to design the ex-ante regulation of these markets.

In January 2011, the Investigations Division of the CNC opened infringement proceedings against the above mentioned companies based on indicia of abusive practices prohibited by Article 2 of the Spanish Competition Act 15/2007 of 3 July 2007 and Article 102 TFEU in relation to short text and multimedia messages (SMS and MMS) sent via mobile telephones. The CNC Investigations Division based its investigations on data requested from the companies by the CMT, including the regulatory costs accounting the operators must file with their regulator.

The CNC Council has found that each of the three mobile network operators holds a monopoly position in SMS and MMS termination services in their respective networks. Contrary to the situation for wholesale termination services for voice calls, the markets for the wholesale short messaging termination services provided by each of these operators were not regulated during the period examined (2000-2009). This allowed the three mobile network operators to freely price the termination of short messages at very high levels throughout the reference period. Given that termination is a cost that is passed on to retail prices, the overpriced termination services allowed them to maintain higher retail prices for users of SMS and MMS services. This was compounded by the fact that the three operators, to whom the CNC Council attributes a collective dominant position in the wholesale markets for access and origination services, applied a pricing policy in these markets for access and origination services consistent with the policy in the termination markets; that is, the high origination and access wholesale prices contributed to keeping retail prices for short messages higher and to generating larger barriers to entry and expansion for virtual mobile operators.

See proceedings S/0248/10 (in Spanish)