French Competition Council imposes new record fine for mobile phone operators

13 April 2006

Orion Berg

December 2005

On 30 November 2005, the French Competition Council found the three mobile operators Orange France, SFR and Bouygues Telecom guilty of having engaged in anti-competitive practices infringing Article 81 of the EC Treaty and Article L.420-1 of the French Code of Commerce. In view of the seriousness of the breach, the Council imposed the highest fines ever imposed so far, amounting to a total of EUR 534 million (Orange France: EUR 256 million, SFR: EUR 220 million, Bouygues Télécom: EUR 58 million). The Council also ordered the publishing of the decision in two of the most popular national daily newspapers.

The Council decided to initiate proceedings ex officio on 28 August 2001. The consumer association UFC Que Choisir also joined the proceedings after filing a complaint against the companies on 22 February 2002.

The Council found the mobile operators guilty of having exchanged on a monthly basis between 1997 and 2003 confidential and strategic information on their respective customers (new subscriptions and cancellations). The Council considered that these practices had largely contributed to distorting competition in the retail market for the provision of mobile phone services by enabling the operators to share information on their respective business strategies and ensuring each other’s compliance with an agreement the operators had entered into on their respective market shares. The Council also indicated that these information exchanges had serious detrimental effects to competition since they took place in an oligopolistic market limited to three operators with very high entry barriers and in the context of a decrease in the growth of demand since 2000.

The Council also found that the mobile operators had infringed competition law by entering into an agreement for the purpose of stabilising the development of their respective market shares between 2000 and 2002. The investigation uncovered serious evidence pointing towards the existence of written agreements concluded at the highest level of each mobile operator’s representatives. The Council also found that the mobile operators implemented similar commercial policies regarding acquisition costs and call charges rates. The Council considered that, as from 2000, the three operators engaged in a collusive strategy to consolidate their respective customer bases, inter alia by decreasing simultaneously their call charges and by promoting pay-monthly call plans over pay-as-you-go cards. Such a strategy would have affected the market shares of each operator had it not been adopted simultaneously by the three operators. The Council also considered that the said practices caused very serious harm to consumers, which explains why it decided to impose such high fines. It is worth mentioning that the consumer association UFC Que Choisir has expressly stated its intention to bring a claim on behalf of consumers for damages resulting from the anti-competitive practices.

Source: Competition Council decision of 30 November 2005, available at:
http://www.conseil-concurrence.fr/pdf/avis/05d65.pdf