Mobile operators restricted competition

Chairman of the Office for the Protection of Competition (hereinafter the Office), Mr. Josef Bednář, factually confirmed the Office’s first-stage decisions in the matter of administrative proceedings conducted with the undertakings Eurotel Praha, Český Mobil and T-Mobile Czech Republic.

Prohibited agreements were concluded between the undertakings Český Mobil and Eurotel and between Český Mobil and T-Mobile. Eurotel is obliged to pay a fine in the amount of 22 million CZK, T-Mobile 12 million CZK a Český Mobil totally 10 million CZK(5,5 million for the agreement with Eurotel and 4,5 for the agreement with T-Mobile). The total level of  sanctions levied on the mobile operators amounts 44 million CZK. 

The mentioned undertakings concluded in their inter-connection agreements of the end of 2000 (the agreement between Český Mobil and T-Mobile) and of the beginning of 2001 (the agreement between Český Mobil and Eurotel) and subsequently fulfilled prohibited and void agreements on indirect determination of business conditions. In this way competition was distorted on the market of public telecommunications network operation. The agreements obliged signatories, except for sporadic cases (non-existence of a direct interconnection between the parties‘ to agreement networks or an insufficient capacity of the interconnection), to interconnect their networks exclusively by a direct form. For example, a call from Český Mobil network to Eurotel network could not be realized through services of third parties – the undertaking Český Telecom, some of alternative operators or the third mobile operator T-Mobile. Thus, the commitment consequently prevented signatories from using for interconnection of their networks other telecommunications operators‘ services. In this way the parties‘ to the agreement independent will to decide on the most favourable model of interconnection was restricted. The anti-competitive effects of the prohibited agreements affected also end consumers because they influenced the price the consumers had to pay to their provider of telecommunications service for termination of a call in a called network. Thus, in the case of indirect interconnection each of the parties to the proceedings (for example Český Mobil) would have had to pay for transfer of a call not only to a third party providing transit services (for example Český Telecom), but also a fixed price agreed in compliance with Agreements on interconnection to the second one of the parties to the agreement (for example Eurotel). This very fact creates a barrier for using indirect interconnection, which would be more expensive than direct interconnection. 

The given case concerns agreements concluded between the undertakings operating on the same level of the market, which constitute one of the most serious distortion of competition. Negative impacts were found not only in relation to other operators of telecommunications networks providing transit services but also in relation to end consumers in the form of price which they pay to their telecommunications services provider. 

In stipulating the level of imposed fines the Office took account of the gravity of distortion of competition rules, extend of responsibility and mitigating and aggravating circumstances. Český Mobil and T-Mobile referred in their appeals to the application of a so-called Leniency Programme (the program of a more lenient regime related to imposing fines in case of prohibited agreements distorting competition). However, the conditions for application were not fulfilled. The parties to the proceedings didn’t provide the Office with proofs concerning the prohibited agreement themselves from a decision of their own in the time when the Office hadn’t been aware of its existence. However, on the other hand, Český Mobil received a lower amount of the fine comparing with its competitors. It is reasoned by mitigating circumstances, for example by the fact that Český Mobil submitted to the Office a proposal for determination whether the concluded agreements were subjected to the prohibition of agreements distorting competition and, comparing with its competitors, it did not insist on performance of anti-competitive provisions. On the contrary, Eurotel in 2002 directly blocked incoming calls from the Český Mobil network for which the undertaking used transit through the Český Telecom network. Also T-Mobile proclaimed an intention to block transit through a third party.

Press and Information Department