Spanish telecoms operator Telefonica has failed to help rivals enter the German mobile market, breaking a promise made five years ago in return for the European Commission’s approval of its acquisition of E-Plus, the institution said on Friday (22 February) in a landmark case.
“We need full compliance and take very seriously any case where companies may have failed to comply with their commitments, which is why we have sent today’s statement of objections,” commissioner for Competition, Margrethe Vestager said in a statement.
This is the first case where a company broke its merger pledge, the Commission said.
The institution sent the company a statement of objections, the first formal step in an investigation.
Telefonica has until April 5 to respond.
In 2014, the Commission had waved through the €8.6 billion E-Plus deal after Telefonica agreed to sell some radio spectrum and rent out capacity on its network to smaller rivals.
The company did what it had promised with one exception.
“The Commission’s preliminary view is that Telefonica did not properly implement its obligations under the wholesale 4G access obligation,” the EU executive said.
It said this restricted the ability of third parties to compete in the German mobile phone market.
Telefonica said it had complied with its promise.
“We are confident that we can dispel the Commission’s current concerns,” the company said in a statement.
The duration of the case will depend on the complexity of the case, on whether Telefónica co-operates with the Commission and how it will exercise of the rights of defence.
The ‘telecom’ firm could be fined up to 10% of its German subsidiary’s global turnover if found guilty of breaking its pledge.
Vestager has taken a tough line against companies breaching procedural rules or pledges and levied million-euro fines against companies including Facebook in recent years.
The EU executive fined the social media with €110 million for providing incorrect or misleading information during the investigation for its acquisition of WhatsApp.
More recently, the Commission imposed a €124.5 million fine on Altice, a Dutch telecommunications company, for implementing its acquisition of the Portuguese telecom operator PT Portugal before the Commission’s blessing.