On 17 January 2012, the French Supreme Court upheld a judgment of the Paris Court of Appeal of 27 January 2011, which had annulled fines of € 18 million and € 2 million imposed on 2004 on France Télécom and SFR, respectively, for an alleged margin squeeze on the market for fixed-to-mobile telephony services (see VBB on Competition Law, Volume 2011, No. 2, available at www.vbb.com). This is the third time that the French Supreme Court issued a judgment in this case (see VBB on Competition Law, Volume 2009, No. 3, available at www.vbb.com).
In its first two judgments, the French Supreme Court had annulled the judgment of the Paris Court of Appeal in response to what the Supreme Court found to be deficiencies in the Court of Appeal's description of the appropriate test in margin squeeze cases. In its judgment of 27 January 2011, the Paris Court of Appeal had applied the test specified by the French Supreme Court and had found that the French Competition Authority's initial decision in the case lacked adequate proof concerning the anti-competitive object and effect of the alleged margin squeeze. As regards France Télécom, the Paris Court Appeal had considered that there was no evidence of coordination of the pricing policies of the fixed-line and mobile branches of France Télécom, and that the Competition Authority could not infer such coordination from an alleged integration of France Télécom's activities of fixed and mobile telephony. In the Paris Court of Appeal's view, this integration did not exist, as France Télécom's mobile branch (France Télécom Mobile) was the only undertaking competent to determine both the mobile call termination fees of France Télécom (i.e., fees charged by France Télécom for connecting calls to its mobile customers) and the fixed-to-mobile retail prices of France Télécom (i.e., prices for calls from France Télécom's fixed telephony installations to its mobile customers).
The President of the French Competition Authority subsequently appealed this judgment before the French Supreme Court, claiming, inter alia, that the Paris Court of Appeal did not state reasons for concluding that France Télécom Mobile could be considered to be an autonomous enterprise and not an integrated branch of France Télécom.
The French Supreme Court rejected these arguments, considering that the Paris Court of Appeal was right to conclude that France Télécom's tariff structure did not necessarily result from coordination between its fixed-line and mobile branches, but could have been determined solely by France Télécom Mobile in an attempt to pursue an objective other than limiting competition between fixed-line operators. Accordingly, it was not established that the tariff structure amounted to a margin squeeze having an anti-competitive object.
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