By resolution issued September 3, 2007 Procompetencia ruled that the Caracas firm Consorcio El Recreo, C.A. (Consorcio) violated Venezuela’s Law to Protect and Promote the Exercise of Free Competition (the Competition Law) when it refused to allow lessees of its business properties to install equipment that would provide a choice among providers of telecommunications services. Procompetencia held that a specific provision in the lease agreements requiring its business tenants to purchase telephone and Internet services through a designated provider constituted an unlawful abuse of dominance and exclusionary practice.
Siding with the petitioners, Procompetencia ultimately concluded that Consorcio had violated the Competition Law, harming competition within the relevant market for telecommunications services. Specifically, the agency found that Consorcio’s acts to prohibit providers from installing necessary telecommunications equipment and its restrictive commercial leases constituted an unlawful exclusionary practice and an abuse of dominance through an unlawful tying arrangement (commercial leases with telecommunications services). To remedy the violations, Procompetencia ordered Consorcio to: (i) cease its anticompetitive practices; (ii) refrain from entering into lease agreements containing clauses that imply conditioned-sales or exclusivity; (iii) submit to Procompetencia a proposed model lease provision to replace the offending provision; (iv) publish in the national press a notice indicating that the offending provision of its lease agreements has been rendered void by Procompetencia; and (v) pay a fine of VEB$475,944,080 (approximately US$220,000).