Thursday, September 30, 2010

France Telecom Fined For Anti-competitive Behaviour in the French West Indies

On September 23, the Paris Court of Appeal upheld a decision by the French Competition Authority, which convicted France Telecom and its wholly-owned subsidiary, Orange Caraïbe, of anti-competitive behaviour in the Guadeloupe, Martinique and French Guyana.

This case dates back to July 2004, when Bouygues Télécom Caraïbe (later acquired by Digicel, in 2006) lodged a complaint against France Telecom and Orange Caraïbe.  Outremer Telecom followed suit with a similar complaint in 2005.  In their complaints, Bouygues and Outremer alleged that Orange Caraïbe, the incumbent operator with a market share in mobile telephony services of more than 75% (at the times of these events), implemented a series of practices designed to hinder the entry of new competitors in these markets.  These practices included the establishment of exclusive relationships with independent retailers and setting a price difference between on-net and off-net calls. Bouygues and Outremer also complained that France Telecom gave volume-based discounts to business customers for land-line calls going only to the Orange Caraïbe network. In addition, they alleged that France Telecom marketed "land-line to mobile" products to business customers, at costs below what an equally efficient operator would be able to bear in order to offer the same service (a.k.a. margin squeeze).

In December 2009 decision, the Competition Authority ruled that these practices breached articles L420-1 and L420-2 of the Commercial Code and  articles 101-102 of the Treaty on the Functioning of the European UnionOrange Caraïbe and France Telecom were jointly and severally fined in the amount of EUR 52.5 million.  Further, the Authority imposed a fine of EUR 10.5 million for the practices carried out specifically by France Telecom.  In last week's decision, the Paris Court of Appeal confirmed the EUR 52.5 million fine, but reduced the France Telecom fine from EUR 10 million to EUR 7.5 million.
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Update (September 30, 2010, 12:44 EST):  Yesterday, Outremer Telecom issued a news release indicating that it intends to sue
Orange Caraïbe and France Telecom in damages as a result of the Paris Court of Appeal's decision.

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