Anti competitive behaviour could fetch Vodafone Netherlands preliminary damages of Euro 115 million
Vodafone Group today announced that Vodafone Netherlands has commenced legal action against the incumbent telecoms operator in the Netherlands, KPN, alleging anti-competitive behaviour in the Dutch convergent communications market to the detriment of competition and consumer choice.
Vodafone Netherlands’ legal action states that KPN delayed by three years the nationwide introduction of Vodafone’s competing TV, fixed line broadband and fixed line telephone proposition, Vodafone Thuis, by failing repeatedly to meet its commitments to deliver the technology needed.
The former state telecoms monopoly KPN owns and operates the Netherlands’ only nationwide telephone network – using copper lines to connect households and businesses across the country – as well as the country’s largest fibre optic network.
Other operators without the benefits of this nationwide fixed line infrastructure must rely on KPN’s network in order to compete. The delays resulted in Vodafone Netherlands being unable to compete effectively with KPN (and cable providers) in the Dutch telecoms market until 2014.
Although KPN did not deliver the services agreed to Vodafone Netherlands, KPN was able to launch a comparable ‘all-in-one’ package under its own brand and that of its subsidiary, Telfort, thereby preventing Vodafone Netherlands from gaining a significant market share in a crucial period when more than 100,000 households per quarter chose to move to ‘all-in-one’ propositions.
KPN’s refusal to supply Vodafone Netherlands qualifies as abuse of a dominant market position, the operator claimed, and resulted in an estimated Euro115 million in damages for Vodafone Netherlands.
Chief executive of Vodafone Netherlands, Rob Shuter, said: “Markets cannot function without effective competition. Our challenge is that Vodafone relies on its biggest competitor – the incumbent operator – as a supplier in order to provide Dutch consumers with a competitive choice. KPN has repeatedly failed to deliver on its commitments and has instead seriously abused its dominant position. This is bad for consumers, bad for the development of the Dutch telecoms markets and bad for competition. We hope that taking this legal action will help to rectify the harm caused by KPN’s actions and alter its future behaviour.”
Vodafone Netherlands’ legal action against KPN is in line with similar legal actions by Vodafone and regulatory authorities in other European markets where incumbent operators have abused or are suspected of abusing their dominant positions:
In December 2015, Vodafone Ireland, Sky, BT and Magnet entered into a formal dispute with Eir (formerly Eircom) over its repair times on the broadband and fixed line telephone network. In addition, the Irish telecoms regulator announced a review of Eir’s regulatory governance model.
In November 2015, the UK telecoms regulator announced the widening of its investigation into BT Openreach for its use of loopholes to avoid penalties for the late installation of fibre-optic cables for business customers.
In October 2015, Spain’s national competition authority fined Telefonica Euro 5 million for failing to comply with regulations governing the renting of broadband connections to its competitors for more than four years.
In May 2015, the Italian Council of State dismissed Telecom Italia’s appeal against the Euro104 million fine imposed on it in 2013 by the national competition authority for abuse of its dominant position. Vodafone Italy and Fastweb both launched civil actions following the national competition authority’s ruling.
In March 2015, Vodafone Czech Republic launched a Euro 14 million legal action against O2 Czech Republic for abuse of its dominant position.
In October 2014, the European Commission fined Slovak Telekom and its parent company Deutsche Telekom €39 million for abusive conduct in the Slovak broadband market. Deutsche Telekom received an additional fine of €31 million as a repeat offender. 8
Vodafone Netherlands has lodged its claim with the court of justice in The Hague and asks initially for the court to confirm the unlawful behaviour of KPN.