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European Commission Launches Anti-Trust Probe into Telefonica and Portugal Telecom

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The European Commission has opened a formal investigation to ascertain whether the Spanish and Portuguese telecoms incumbents Telef nica and Portugal Telecom have breached EU rules by agreeing not to compete with each other in their respective home markets.

The agreement being investigated under Article 101 of the EU Treaty, which bans restrictive business practices, was concluded last year when Telefónica acquired sole control over their previously-held Brazilian joint venture Vivo. The Commission will also investigate whether the non-compete agreement pre-dates the Vivo deal, which is not concerned by this probe. The Commission has a copy of the agreement and of the non-compete clause, which runs from September 2010 to the end of 2011. The Brazilian deal itself is not affected by the investigation.

The Commission will also investigate the scope and effects of the co-operation between the parties in Spain and Portugal prior to the 2010 Vivo transaction. Telefónica and Portugal Telecom concluded a co-operation agreement in 1997 concerning markets outside the EU, which was notified to the Commission at the time. The Commission said that it will seek to ascertain whether that co-operation may have included a non-compete strategy affecting EU markets, in particular Spain and Portugal, even before the non-compete clause concluded as part of the Vivo deal.

The Commission noted that the opening of proceedings does not imply that it has conclusive proof of an infringement but means that it will deal with the case as a matter of priority.

There is no legal deadline to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.

The Commission informed the parties about the initiation of proceedings before rendering them public. The competition authorities of the Member States concerned have also been informed.

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Tags: telefonica   vivo  portugal telecom  european commission  telecom  Spain  Portugal