On 19 May 2016, the Paris Court of Appeal upheld the decision of
the French Competition Authority ("FCA") imposing fines
on the French telecoms operators Orange and SFR for having abused
their dominant position in the mobile call termination market. The
Court nevertheless granted the operators a 20% reduction of the
fines on account of the complexity and novelty of the test applied
by the FCA when calculating the price differentiation that underlie
the finding of an abuse.
In its decision of 2012, the FCA imposed fines totalling €
183 million on Orange and SFR on the ground that they had applied
rates that excessively differentiated between calls to telephone
numbers within their network ("on net calls") and calls
to telephone numbers linked to a competitor's network
("off net calls") (see VBB on Competition
Law, Volume 2012, no 12,available at
The FCA found that the operators had marketed abusive offers
allowing subscribers to make unlimited "on net" calls
during certain hours or towards specified numbers for the flat-rate
subscription cost only. In contrast, "off net" calls did
not benefit from these advantages.
Although the prices per minute for both "on net" and
"off net" calls were subject to the same flat-rate
subscription and therefore identical, when the FCA calculated the
"on net" price per minute it took into account the
advantages that applied to these calls compared to the "off
net" price per minute. Following this test, the FCA found that
the price of "on net" calls, which included the
advantages, amounted to price differentiation which negatively
impacted the mobile telephone market.
Orange and SFR sought the annulment of the FCA's decision.
One of their claims was that the FCA did not find any below-cost
sales. The Court, however, held that the FCA was not required to
establish whether the offers proposed by Orange and SFR were below
cost. Rather, the test carried out by the FCA to compare the price
differentiation between "on net" and "off net"
calls was considered appropriate to assess the potential negative
effects on competition.
The Court nevertheless accepted the claimants' argument that
the test applied by the FCA was new and therefore lacked
predictability. According to the Court, past case-law on abusive
price differentiation was based on an explicit difference in prices
between "on net" and "off net" calls. The
test applied by the FCA, however, which considered the benefits
granted to subscribers making "on net" calls was found to
be very complex and novel. The Court held that the complexity and
novelty of the test should give rise to a 20% reduction of the
fines imposed on Orange and SFR.
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