Bird & Bird wins historic competition case for 9 Telecom

23 February 2005

France Telecom fined €40 million after four year battle with Neuf Telecom

The Paris office of international law firm, Bird & Bird has won an historic competition case for Neuf Telecom, France’s third largest alternative fixed line operator, against France Telecom. The case concerns a four year dispute relating to France Telecom’s reluctance to open access to its network for broadband services despite being requested to do so by competition authorities. Bird & Bird has been at the forefront of this liberalisation process.

Earlier this month, in a landmark case brought against France Telecom by Neuf Telecom, the Paris Court of Appeal doubled the fine already imposed by the Competition Council on France Telecom from €20 million to €40 million. This is the first case where the Court of Appeal has doubled a fine and the largest one a company has ever been forced to pay to date for breach of an interim measure. Bird & Bird’s Olivier Fréget, co-head of the firm’s international competition group, has been representing Neuf Telecom, with the assistance of Hubert de Boisse, senior associate.

The case itself relates to the provision of bit-stream access prior to the start of local loop unbundling, following an interim measure decision ordered by the Competition Council in 2000. Although the Council has yet to decide on the merits of the case, it considered that conditions offered by France Telecom, do not comply with its interim measure decision and further, that France Telecom was preventing effective competition on broadband internet access. France Telecom was fined €20 million for damages to the economy – a decision which they then appealed arguing that this amount vastly overestimated the damage caused and that the effect of this decision would only encourage private enforcement action by competitors before the commercial courts. The Court of Appeal responded by rejecting this appeal earlier this month and by doubling France Telecom’s fine to €40million.

This recent judgment is particularly important because this is the first time the Court has increased, on appeal, a fine imposed by the Competition Council. In fact, by doubling the amount and by rejecting France Telecom’s appeal, the Court has highlighted the particularly damaging nature of the practice concerned, aggravated by France Telecom ignoring the council’s interim measure decision.

The Court has, in effect, issued a formal approval of the French Competition Council’s consistent policy over the last five years, of adopting interim measures to deal with cases of this kind. Further, by rejecting France Telecom’s argument that the fine could encourage private enforcement claims, the Court is in line with current EU competition policy. This decision is a landmark case as it should promote the greater use of private litigation claims by market players impacted by breaches of competition law when evidenced by a Court decision. Indeed, private litigation is an effective and complementary method of deterring anticompetitive behaviour because even though a fine tries to reflect the actual damage to the economy, it does not compensate competitors for the damage they actually suffered. In fact, a study carried out by Neuf Telecom during the case, proved that potential damage to the market, including market players and consumers could be very high, estimating hundreds of millions in loss.

For more information, please contact Larry Cattle, Director of Marketing, on +44 20 7415 6156.