In a October 2012 repeated first instance decision, the Competition Authority imposed a fine of approximately Kr93.1 million (approximately €3.7 million) on Telefónica Czech Republic for abuse of its dominant position in the public telephone services market in relation to undertakings through fixed lines. The authority increased the original fine imposed on Telefónica for such anti-competitive conduct by more than Kr11.4 million (approximately €456,320).

Its predecessor (Czech Telecom, as) had breached competition rules in 2001 and 2002, at a time when there was a public interest in liberalising the telecommunications sector and removing barriers to the development of competition. Enterprises that had not concluded pricing plans with Czech Telecom were discriminated against - Czech Telecom contracts obliged customers to pay for a specified minimum amount of calls every month, even if they had not met this threshold. In addition, customers could not terminate contracts before the dates specified in such contracts and were not allowed to use phone services of other providers.

In 2004 the authority imposed a fine of Kr81.7 million (approximately €3.3 million) on Czech Telecom for anti-competitive conduct. Administrative courts have investigated the case for nearly eight years and have issued five judgments. The latest judgment of the Brno Regional Court (in April 2011) confirmed the authority's factual conclusions in relation to abuse of dominance, but suspended the fine as it was not found to be adequately justified.

In its latest ruling, the authority has focused mainly on a detailed calculation of the penalty imposed. The stated reasons for its increase include the severity of the anti-competitive conduct, its duration and Teléfonica's repeated violation of the law. It also transpired that in 2002 Teléfonica had repeatedly reported an incorrect turnover. This figure had subsequently formed the basis of the authority's penalty calculation. The actual turnover for 2002 was almost Kr5 billion higher.

For further information on this topic please contact Martin Nedelka at Schönherr by telephone (+420 225 996 500), fax (+420 225 996 555) or email (m.nedelka@schoenherr.eu).

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