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On 29 March 2012, the General Court dismissed in their entirety
two appeals brought against the European Commission decision which
found that Telefónica had abused its dominant position in
the market for access to broadband internet in Spain by engaging in
a margin squeeze. Appeals had been brought by both
Telefónica and the Kingdom of Spain. The General Court also
upheld the fine levied against Telefónica of over
€ 151 million.
The judgment follows closely the General Court's judgment in
the Deutsche Telekom case. In particular, the General Court
reiterated the position taken in Deutsche Telekom that EU
competition law can be applicable to a regulated market when under
the national regulation the dominant undertaking has a margin of
discretion in determining its action and can therefore avoid
abusing its dominant position.
In addition, the General Court noted that a margin squeeze is a
distinct abuse from a refusal to supply, repeating the position
taken by the Court of Justice of the European Union in the
Telia Sonera case that the Bronner test for
refusal to supply is not necessarily applicable to margin squeeze
cases.
The General Court also rejected the argument put forward by the
Kingdom of Spain that the Commission was in breach of its duty of
sincere cooperation by not sufficiently involving the Spanish
Telecommunications Market Commission in the administrative
proceedings against Telefónica. According to the General
Court, the duty of sincere cooperation does not impose an
obligation on the Commission to consult the national regulatory
authorities, nor does it provide for the Commission to undertake
"joint action" with them in proceedings conducted by the
Commission pursuant to Articles 101 TFEU and 102 TFEU.
It is worth noting that the fine imposed by the European
Commission on Telefónica (over € 151 million)
is much higher than that imposed on Deutsche Telekom
(€ 12.6 million). Unlike Deutsche Telekom, where the
Commission defined the margin squeeze as only a "serious"
infringement for the period from the beginning of 1998 to the end
of 2001 and a "minor" infringement for the period since
the beginning of 2002, in Telefónica the Commission
defined the margin squeeze as a "very serious"
infringement (a finding which was upheld by the General Court). In
this respect, the Commission distinguished Deutsche
Telekom on the grounds that a margin squeeze had not
previously been the subject of a formal Commission decision at the
time of its decision in that case. This distinction is interesting
insofar as Telefónica's "very serious"
infringement started in September 2001, more than 18 months prior
to the Deutsche Telekom decision.
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