The Directorate-General for Competition, in cooperation with National Competition Authorities, ensures that telecoms networks and services can expand and innovate by safeguarding a level playing field in IT and telecoms markets and access to them. This means applying the general EU competition rules across Antitrust, Mergers and State Aid.
The Broadcom (AT.40608) case concerns potential exclusionary conduct by Broadcom in the form of exclusivity restrictions in the field of components for TV set-top boxes and modems.
Interim Measures: By decision of 16 October 2019, the Commission imposed interim measures upon Broadcom, the world leader in the supply of chipsets for TV set-top boxes and modems. The measures ordered Broadcom to stop applying certain provisions contained in agreements with six of its main customers. Broadcom needed to comply with these measures within 30 days.
The Commission’s interim measures decision in the Broadcom case is the Commission’s first interim measures decision under Article 8 of Regulation (EC) No 1/2003 and the first interim measures decision since the IMS Health decision of 2001.
Commitments: In April 2020, Broadcom offered commitments to address the Commission’s concerns. The Commission consulted stakeholders to verify the appropriateness of Broadcom’s proposed commitments, in light of which Broadcom amended and improved its proposed commitments in July 2020. In October 2020 Broadcom’s final commitments offer was made legally binding by the Commission under EU antitrust rules. Broadcom will suspend all existing agreements containing exclusivity or quasi-exclusivity arrangements and/or leveraging provisions concerning systems-on-a-chip for TV set-top boxes and Internet modems, and refrain from entering into new agreements comprising such terms for a period of seven years. The Commission found that these commitments address its concerns and ensure that other companies can compete on the merits in the relevant markets and that consumers can benefit from lower prices and innovative products. Broadcom was obliged to comply with the commitments within 30 days.
On 25 October 2016, the Commission opened an investigation into a network sharing agreement between two of the largest Czech operators of mobile telephony, O2 CZ/CETIN and T-Mobile CZ (AT.40305). The network sharing agreement covers all mobile technologies (i.e. 2G, 3G and 4G), over the entire territory of the Czech Republic with the exception of the two largest cities (Prague and Brno), and approximately three quarters of all subscribers. The Commission investigated, in particular, whether the cooperation between O2 CZ/CETIN and T-Mobile CZ risked slowing down quality improvements in existing infrastructure, and delaying or hindering the deployment of new technologies and future technologies, and new services based on them, in particular in densely populated areas. On 7 August 2019, the Commission sent O2 CZ/CETIN and T-Mobile CZ a Statement of Objections and informed the two Czech operators of its preliminary view that their network sharing agreement restricts competition and thereby harms innovation in breach of EU antitrust rules.
On 6 March 2020, the Commission announced that it had approved a joint venture (INWIT) created by Telecom Italia Mobile (TIM) and Vodafone bundling their towers after a Phase I merger investigation in which the parties submitted a full package of commitments. In addition to the creation of the joint venture, the parties decided to extend their passive sharing to cover the whole country, actively share their 2G, 4G and 5G network, and share their backhaul. The package of remedies approved in the merger clearance gave competitors access to sites in Italian municipalities with more than 35,000 inhabitants, where the competitors could install, operate, maintain and use their equipment for the provision of current and future mobile telecommunications services.
The Commission also carried out a preliminary investigation into the network sharing. In the framework of this investigation, TIM and Vodafone decided to scale down their active sharing, leaving out the most densely and highly populated cities and centres of economic importance, corresponding to over 30% of the Italian population and more than 33% of data traffic.
Considering that the Italian telecommunication markets were less concentrated than in other Member States, with only five mobile network operators, and that concerns in relation to the network roll-out of recent entrants were being addressed by the merger decision, the Commission held that the adjustments seemed prima facie appropriate to alleviate possible concerns stemming from the network sharing agreements between TIM and Vodafone in Italy. The Commission continues to monitor developments in this area.
By decision (AT.39711) of 18 July 2019 the Commission imposed a fine of € 242 042 000 on US chipmaker Qualcomm for acting illegally under EU antitrust rules by engaging in predatory pricing. Qualcomm abused its position of dominance in the 3G baseband chipset market between mid-2009 and mid-2011 by selling certain quantities of three of its baseband chipsets below cost with the aim of forcing its competitor, Icera, out of the market. The Commission concluded that Qualcomm’s conduct had a significant impact on competition. It prevented Icera from competing in the market, stifled innovation and ultimately reduced choice for consumers. The Commission’s decision in the Qualcomm (predation) case is the Commission’s first predatory pricing case since the Wanadoo Decision of 2003.
Qualcomm brought an action for annulment of the Commission decision of 18 July 2019. The case is currently pending before the General Court (case T-671/19).
By decision (AT.40220) of 24 January 2018 the Commission imposed a fine of € 997 439 000 on Qualcomm for abusing its market dominance in the market for LTE baseband chipsets between 25 February 2011 and 16 September 2016. Qualcomm prevented rivals from competing in the market by making significant payments to Apple, conditional upon Apple not buying from Qualcomm’s rivals. In 2011 Qualcomm, the world’s largest supplier of LTE baseband chipsets, signed an agreement with Apple committing to make significant payments to Apple on the basis of Apple exclusively using Qualcomm chipsets in its ‘iPhone’ and ‘iPad’ devices. In 2013 this agreement was extended to the end of 2016. The Commission concluded that Qualcomm’s illegal practice had a significant detrimental impact on competition because it excluded rivals from the market and deprived European consumers of genuine choice and innovation.
Qualcomm brought an action for annulment of the Commission decision of 24 January 2018. See the General Court’s judgment here (T-235/18) .
By decision (AT.39523) of 15 October 2014 the Commission imposed a fine of € 38 838 000 on Slovak Telekom a.s. and its parent company, Deutsche Telekom AG, for having pursued an abusive strategy to shut out competitors from the Slovak market for broadband services for over five years. Deutsche Telekom also received an additional fine of € 31 070 000 to ensure sufficient deterrence due to recidivism (it had already been fined in 2003 for a margin squeeze in broadband markets in Germany). As the incumbent telecom operator in Slovakia, Slovak Telekom was under a regulatory obligation to give access to the local loops within its legacy telephone network. Slovak Telekom delayed or prevented the entry of alternative operators into the retail broadband services market through refusal to grant access and margin squeeze, therefore abusing its dominant position in the Slovak wholesale broadband market for Local Loop Unbundling.
An action for annulment of the Commission’s decision was put before the General Court under case T-827/14. On 13 December 2018 the General Court made two judgments in which, inter alia, they largely upheld the Commission’s conclusion that the undertaking formed by Slovak Telekom and Deutsche Telekom had abused its dominant position. Having noted this, the national regulator imposed an obligation to grant access on Slovak Telekom in order to allow the development of effective competition based on the regulatory framework. The General Court confirmed that the Commission was not required to demonstrate that access to Slovak Telekom's copper network was "indispensable" with regard to the Bronner case law on essential facilities. Indeed, the Commission did not impose an obligation to supply, but found an anti-competitive refusal to supply based on the pre-existing national access obligation. The General Court’s judgment further confirmed the Commission’s assessment that Deutsche Telekom and Slovak Telekom were part of the same economic entity and, therefore, Deutsche Telekom, as Slovak Telekom’s parent company, was jointly and severally liable for Slovak Telekom’s abusive behaviour.
However, the General Court’s judgments annulled the Commission’s decision where the Commission had concluded that Slovak Telekom’s behaviour had resulted in a margin squeeze over a four month period in 2005, as determined by the margin squeeze test which produced a positive margin result. Moreover, the General Court found that the Commission’s application of the ‘deterrence multiplier’, one factor used to calculate the size of fine imposed, upon Deutsche Telekom was incorrect. Subsequently, the General Court’s judgment annulled the element of the fines based on the deterrence multiplier, and therefore both fines imposed by the Commission were reduced, from € 38 838 000 to € 38 061 963 and from € 31 070 000 to € 19 030 981.
Deutsche Telekom and Slovak Telekom appealed to the Court of Justice against the General Court’s judgment. On 9 September 2020 the Court of Justice’s Advocate General Saugmandsgaard Øe released his Opinion focusing on two elements of the appeal: the refusal to supply and parental liability. Advocate General Saugmandsgaard Øe recommended that the Court of Justice dismiss both of these grounds of appeal.
By decision (AT.39839) of 23 January 2013 the Commission imposed a fine upon Telefónica and Portugal Telecom totalling € 79 000 000 for an illegal non-compete contract clause. Telefónica and Portugal Telecom were fined € 66 894 000 and € 12 290 000 respectively for illegally agreeing not to compete with each other in Spain and Portugal from the end of September 2010. The Commission took the view that the clause amounted to a market-sharing agreement with the object of restricting competition in the internal market and thereby breached EU antitrust rules. The illegal non-compete clause was inserted in July 2010 in Telefónica and Portugal Telecom’s share-purchase agreement for the exclusive acquisition of Vivo, the Brazilian mobile operator, by Telefónica. The parties terminated the non-compete agreement in early February 2011, after the Commission opened antitrust proceedings in January 2011.
In April 2013 Telefónica and Portugal Telecom appealed against the Commission’s judgment (case T-216/13). Consequently, on 28 June 2016 the General Court issued two judgments wherein it confirmed the unlawfulness of the non-compete clause between Telefónica and Portugal Telecom and upheld the Commission’s reasoning in its decision of 23 January 2013. However, the General Court annulled the fine and ruled, inter alia, that only the sales linked directly or indirectly to the infringement should be considered in the calculation of the fine. On 13 December 2017, following Telefónica’s appeal against the elements of the General Court’s judgment separate to the fine, the Court of Justice issued its judgment dismissing Telefónica’s appeal.
The Commission cleared Vodafone’s acquisition of Liberty Global’s cable business, subject to remedies (M.8864). In July 2019, the Commission approved Vodafone’s proposed acquisition of Liberty Global’s cable business in Czech Republic, Germany, Hungary and Romania after an in-depth investigation. The approval was conditional upon Vodafone providing a remedy taker with access to the merged entity’s cable network in Germany, among other remedies.
The Commission unconditionally cleared T-Mobile NL’s acquisition of Tele2 NL (M.8792). Following an in-depth investigation, the Commission cleared the proposed acquisition of Tele2 NL by T-Mobile NL in the Netherlands in November 2018. The Commission’s in-depth investigation found that the acquisition would not change prices or quality of mobile services for Dutch consumers.
The Commission cleared a joint venture between Hutchinson and VimpelCom, subject to remedies (M.7758). Following an in-depth investigation, the Commission approved a proposed telecommunications joint venture between Hutchinson and VimpelCom in Italy in September 2016. The approval was conditional upon the divestment of sufficient assets (spectrum and sites) that would allow a new operator to enter the market. Subsequently, the Commission cleared Hutchinson’s acquisition of sole control over this joint venture in August 2018, which was conditional upon Hutchinson assuming full responsibility for complying with the commitments that were submitted jointly with VimpelCom (now VEON) in 2016.
Although private sector investment will often provide broadband infrastructure, State intervention may sometimes be necessary. The State aid rules provide a framework that ensures that State intervention is justified and properly targeted.
The Commission therefore monitors the awards of telecoms licences and state support for telecoms companies to ensure that:
- support for broadband is justified;
- support does not harm commercial broadband providers; and
- alternative operators are not discouraged from entering the market
State aid is crucial to achieving the Commission's objective of providing broadband to all European citizens. Many public initiatives at national, regional and local level are driving the development of broadband networks, but in rural and remote regions, telecoms firms often do not offer broadband because it is not profitable. State aid can help bring broadband to these areas.
> Guidelines for applying state aid rules on rapid deployment of broadband network