By a decision dated 17 December 2015, the French Competition Authority (“FCA”) fined telecommunications giant Orange EUR 350 Million for the abuse of a dominant position relating to its offering to business clients. This is the largest fine ever issued to a single company by the FCA.
The fine was issued just two days after the FCA fined a group of package delivery companies EUR 670.9 Million for price-fixing (see our January 2016 edition of the Bulletin).
The Orange case arose in the context of the decade-long battle for survival among the three or four main players in the French telecoms sector. In the present case, Orange was found to have implemented several anti-competitive practices in both the fixed-line telephone and mobile telecoms markets between the early 2000s and 2015.
In the fixed-line telecoms sector, the FCA found Orange abused its dominant position resulting from its position as a former public monopoly operating under the name France Telecom, which has enabled Orange to own most of the national network to this day. According to the FCA, Orange withheld from the other telecoms operators crucial information regarding the access to the national network. As a result, Orange could come across as more efficient than other operators to the general public as it was in a better position to identify available telephone circuits.
The FCA issued an injunction to Orange to put an end to this distortion of competition and guarantee the same level of information to all the market players within 18 months of the decision.
In the mobile telecoms sector, the FCA found abuses by Orange relating to customer loyalty programs. Two commercial offerings were singled out by the FCA: (i) Orange offered to replace customer mobile phones for free in exchange for customers subscribing to twelve or twenty-four month plans, and (ii) Orange provided a 10% to 15% discount to subscription plans to customers who committed to an extension of the duration of their initial subscription by one to three years. These practices were found to act as deterrents to turn to other telecom operators, thereby driving competitors out.
The level of the fine partly resulted from Orange’s market size which represents 30% of the French market. Moreover, the fine is proportional to Orange’s turnover (the FCA may not impose fines exceeding 10% of a company’s turnover). The FCA has took into account the recurrence of anti-competitive practices in the telecoms sector. Orange has in fact been repeatedly fined for the abuse of its dominant position (as was the case of its competitor SFR, who was also fined recently on 30 November 2015 in respect of its overseas operations (see our January 2016 edition of the Bulletin).
Orange, which chose to cooperate with the FCA during the investigation, announced it will not challenge the decision before the Paris Court of Appeals.
