Telefónica and Spain’s lose challenges to €151 million fine for telecom margin squeeze

The General Court has dismissed Telefónica and Spain’s challenges to the European Commission’s fine against the telecoms operator for a margin squeeze in the Spanish broadband market. Telefónica was fined 151 million euros in 2007 for setting its wholesale and retail prices at levels so that competitors were forced to take losses to match Telefónica’s retail prices. 

Telefónica appealed, claiming that the Commission had committed errors in not using a margin squeeze test based on an optimal mix of available wholesale products. Spain, in turn, claimed that the Commission had violated its duty to cooperate with the Spanish telecommunications regulator and upset the balance between ex ante regulation and ex post enforcement.

The European Commission, in its press release, welcomes the judgments, as they “confirm the Commission’s methodology for determining the existence of a margin squeeze and the Commission’s power to intervene ex post against abuses committed on regulated markets.”

Full content: EC Press Release

Related content: In the EU the Court of Justice Rules (Again) on Margin Squeeze (Javier Ruiz Calzado & Gianni De Stefano, Latham & Watkins)