Being the incumbent operator and owner of the fixed telephone network in the Netherlands, KPN has a dominant position on the retail market for access to fixed public telephone networks in The Netherlands (with a market share of 90-100%). In order to win back ‘lost’ customers who had switched to retail providers of carrier pre-select (“CPS”) fixed telephone services, KPN selected those subscribers identified as having reduced their usage of its service, as evidenced by their telephone invoice (the ‘traffic data’), and approached them by an advertising campaign. In making this selection, KPN used its billing system with data of all customers with fixed connection to the KPN network.

A CPS provider, Pretium, having failed to obtain interim measures from the Director General of the NMa (the Dutch Competition Authority), attempted to obtain an injunction against KPN in proceedings for interim relief before the District Court, on the basis of abuse of a dominant position. The Court judged that KPN did not abuse its dominant position against competitors by using data which were generated as a result of its own telephone traffic. The fact that KPN is the only operator that can offer fixed connections does not change this. The Court considered itself supported by the fact that the Dutch Telecom Authority (“OPTA”) was informed of KPN’s selection procedure, but did not object.

Pretium then requested the NMa to honour its complaint against KPN on the following grounds: KPN uses one billing system for both its customers on the access market (where it has no competitors) and its customers on the telephone services market (where it competes with CPS providers) and also issues one invoice for the costs. By selecting from this database, customers that are invoiced for access to the network only but who do not (or no longer) use KPN’s telephone services, KPN made an inventory of customers lost to CPS providers like Pretium, and tried to win back these customers by targeted advertisements. The NMa concluded from this that KPN, for the purpose of the advertising campaign addressed to its former customers, had to sort out to whom it previously sent an invoice for both the access and service costs, but subsequently sent an invoice only for the access costs.

The NMa further considered whether KPN had an obligation to deliver the NADT data (name, address, domicile and telephone number) to its competitors. Although the use of a service (like a customer database) for activities on an adjacent market by a dominant undertaking does not in itself constitute abuse, refusal to deliver the product to a competitor could result in an abuse of a dominant position under the conditions mentioned in the Bronner case of the European Court of Justice. The NMa considers that for a prohibition to use a certain product a delivery obligation is necessary. The NMa took into account that CPS providers do not have up-to-date NADT data of their former customers like KPN and that KPN could obtain a benefit compared to its competitors. In the first place the NMa assessed whether the delivery of the up-to-date data was essential. In accordance with the Bronner criteria it considered whether competition was completely eliminated on the telephone service market, whether or not the refusal of delivery could be objectively justified and whether the NADT data were indispensable to being active on the market, in the sense that no actual or potential alternative exists. The NMa considered the supply not to be essential to CPS-providers, because the providers had been active on the market for quite some time and had obtained an increasing market share at the expense of KPN. The NMa therefore concluded that KPN should not be obliged to supply the data.

The NMa concluded that KPN’s attempts to win back its former customers through direct advertising constituted normal competitive behaviour and did not constitute abuse of a dominant position in itself. Since KPN only used the data known from its activities on the services market, and not from the network access market for this customer selection, KPN did not abuse its dominant position on the access market.

The fact that KPN has a competitive advantage over CPS providers like Pretium, because it could offer customers both access services and telephony services, was no reason to conclude that KPN abused its dominant position on the market for access services. In its selection of ‘lost’ customers, KPN only used information that was available to it as a result of its activities on the market for telephone services, not from its activities on the access market.

Written by Pauline Kuipers and Natalie Vreeburg.

Authors

Kuipers-Pauline

Pauline Kuipers

Managing Partner
Netherlands

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