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
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
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
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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