On 13 December 2012, following a complaint by the mobile network
operator (MNO) Bouygues Telecom, the French competition authority,
Autorité de la concurrence (the
"Autorité"), fined the two leading French MNOs,
Orange and SFR, a total of €183.1 million for abusing the
dominant position each of them held in their respective call
termination markets, i.e. the wholesale interconnection service
they offer other operators to terminate' calls on their
In particular, the Autorité came to the view that Orange
and SFR had implemented excessive rate differentiation practices
between 'on net' calls, i.e. calls made within their own
network) and 'off net calls (i.e. calls by their subscribers to
a rival network, when offering unlimited 'on net'
offerings. These offerings had several negative effects
artificially increasing the 'club' effect, i.e. the
propensity for close relatives to regroup under the same operator,
and locking in consumers by significantly raising exit costs, which
restricted competition in the retail market; and
automatically favouring large MNOs, like Orange and SFR, over
small MNOs like Bouygues (through a 'network effect')
which, in order to compete, was forced to offer unlimited
'cross net' call offerings significantly raising its
termination costs and the consequential risk of market exit.
The Autorité was of the view that Orange and SFR had not
demonstrated that the anticompetitive practices could be
objectively justified on the basis of costs differences for the
supply of the two types of calls or that the practices were
indispensible for the achievement of efficiency gains which would
prevail over the identified anticompetitive effects.
It is interesting to note that an abuse was found to have
occurred despite the presence of sector-specific price regulation
with which the MNOs complied. This is unsurprising, as the Court of
Justice of the European Union ("ECJ") has held that it is
only if "anti-competitive conduct is required"
of an undertaking by national legislation, or if the latter creates
a legal framework which itself "eliminates any possibility
of competitive activity" by that undertaking, that
Article 102 TFEU does not apply, see for example Deutsche
Telekom Case C-280/08 P. In the present case, the existing
regulation, i.e. wholesale price caps for termination calls, did
not prevent the MNOs from offering unlimited 'cross net'
calls which would have eliminated or reduced the above negative
However, the presence of sector-specific regulation may lead to
a reduction in fines where it is found to be a contributing factor
to a breach of the competition rules.1 In this case, the
Autorité took the view that existing regulation had the
effect of creating a "transitional economic interest for
operators" to carry out the anticompetitive practices and
so reduced the fines imposed by 50 per cent.
Orange and SFR have appealed this decision to the Paris Court of
This case, which should be of interest to both regulators and
regulated entities, is a further example of how the imposition of
sector-specific rules can facilitate, and even encourage, a breach
of the antitrust rules.
1. At EU level, the Commission's 2006 guidelines on
the setting of fines provide that fines may be reduced where the
anti-competitive conduct "has been authorized or
encouraged by public authorities or by
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