The two decisions recently delivered by the Swedish regulatory authority form part of a series of litigation resulting from transposition in EU Member States of Directive 98/10/CE which envisages in its article 6.3 that “Member States shall ensure that all organisations which assign telephone numbers to subscribers meet all reasonable requests to make available the relevant information in an agreed format on terms which are fair, cost oriented and non-discriminatory”.
The former incumbent operators, or the part of the business charged with provision of lists of subscribers, have generally sought to impose conditions on provision of subscription lists which are as protective as possible, some say in order to postpone liberalisation of the market in directory services (both paper and electronic) and directory information.
In some countries (Italy, Sweden, Netherlands, Spain) the regulatory authorities have sanctioned practices which are an abuse of a dominant position (particularly discriminatory behaviour or tariffing which constitutes a barrier to entry) adopted by these businesses. In other countries, either complaints are pending and are likely, if they succeed, to result in competitive tariffs (France, Germany), or tariffs are not, as far as we know, being opposed (UK, Belgium, Denmark, Finland).
In France, the historical operator, France Telecom, is a case in point. Despite the fact that the French Competition Council first considered in 1998 the anti-competitive level of tariffs offered by France Telecom for access to its list of subscribers, the former incumbent operator continues to offer tariffs which have been determined to be discriminatory and not cost orientated.
To start with, following the Competition Council’s first consideration of the matter in 1992, the Competition Council imposed on France Telecom a penalty payment in the sum of 10 million francs (1.5 million euros) on the basis that the tariffs offered constituted an abuse of a dominant position (decision 98-D-60 of 28 September 1998).
The Competition Council at the same time imposed an injunction on France Telecom requiring it to provide its list of subscribers to anybody requesting it on conditions which were transparent, objective, non-discriminatory and cost oriented.
This decision was annulled by the Paris Court of Appeal for procedural reasons but its substance was repeated in a decision of 29 June 1999. The appeal made by France Telecom against this decision was rejected by the Cour de Cassation (a supreme appeal court) in a decision of 4 December 2001.
Secondly, two complainants both of whom were active in the business of providing telephone information services, FONECTA - former subsidiary of the former incumbent operator in Finland, Sonera, which was acquired by the venture capitalists 3i – and SCOOT (France), a subsidiary of Vivendi Universal, brought a complaint before the Competition Council in respectively July 2000 and July 2001 in an action to enforce the injunction imposed by the Court of Appeal against France Telecom.
In a decision delivered on 26 June 2002, the Competition Council found that France Telecom had failed to respect the Court of Appeal’s injunction by:
- Offering discriminatory tariffs for access to its database
- Offering tariffs which were not cost oriented for online access to its lists of subscribers (Intelmatique)
Because it did not have sufficient information to understand the costs of collection and provision of directory information, the Competition Council called for an expert opinion to understand on the one hand the level of costs and on the other what would be cost oriented tariffs on the part of France Telecom for provision of the complete database.
This expert analysis is currently taking place and the Council is expected to give its new decision before the end of 2003.
At the heart of the dispute is the level of costs incurred by France Telecom for provision of directory information. According to the complainants, the former incumbent is adding to the costs of providing directory information to third parties, its own costs incurred for the collection of information for its own enquiry database, a significant proportion of which is common to both cases.
Having already established the abuse of its dominant position, the Council is expected to impose a fine, based on the expert’s conclusions about the other complaints which have been put to it. In the case of France Telecom, the fine could amount to as much as 5% of the relevant turn over for the business in question. It should be noted that since this is a repeat offence, the Council could double the fine to 10% of the turn over in question.
In the Netherlands, the price of access to the data base of directory information has been fixed by a decision in September 1999, taken as a result of a dispute brought by Denda, a company publishing directories on CD-rom on the Dutch market against the operator KPN.
This dispute concerned both the conditions for transfer of the database (KPN would only agree to provide part of the data and that was subject to usage restrictions) and the price for transfer which was considered excessive by Denda. This had been fixed at 0.39 euros per request by KPN.
Considering the dispute, the Competition Authority (NMa) and the Dutch regulator (OPTA) required KPN, in addition to imposing conditions for transferring the data, to fix the price of access at 0.0023 Euros per request. This decision was confirmed by the Court of Appeal of Rotterdam in June 2001.
In reaching the decision, the Dutch authorities relied on an economic analysis developed by NERA which sought to establish the price for transfer by reference to two components:
- the cost of putting together the database
- payments to KPN for the loss of revenues resulting from the arrival of a new entrant in the market for distribution of directory enquiries by CD Rom.
In essence, this decision established that the costs of constructing the database are as a whole indistinguishable from the costs of managing the customers’ needs. As a result, only the costs of providing the database were taken into account for calculating the cost of transfer.
The starting point is a decision of the Competition Authority (AGCOM) authorising the acquisition of Seat Pagine Gialle (the Italian Yellow Pages) by Telecom Italia.
This transaction which took place in July 2000 was subject to various conditions designed to uphold competition rules (including in the market for directories and telephone information). AGCOM imposed on Telecom Italia an obligation to transfer its directory information for free to operators, ISPs and providers of information and directory services. All other demands had to be paid for (775,000 euros) on the following terms:
“Telecom Italia must transfer the database of subscribers to the telephone service (both business and private numbers excluding ex-directory subscribers) including information provided by local operators concerning their subscribers, with updating every ten days. The transfer will be without charge for local operators, ISPs, or those who make requests for the purposes of producing directories of telephone numbers and professional directories including online or for the provision of electronic business services for telephone information activities (directory assistance) of any type.”
In Spain, the regulatory authority for competition, the CMT, has required every operator providing a telephone service to the public to provide monthly data to it so that these can be passed on to a third party which is in charge of the universal directory. This was in a decision dated 27 June 2002. The CMT defined the format which the data had to be provided in, in a document annexed to its decision.
On the question of charges for making information available, the CMT decided that the collection costs should remain the responsibility of each operator and that the beneficiary of the information should only have to pay the cost of transferring it on to a CD-rom. This was to ensure efficient transfer, cost orientation and to ensure that only relevant costs were passed on by the information provider (II.6 of the decision).
In Germany, a decision making process began in 2001 by the regulatory authority for telecommunications (RegTP). This resulted in a referral to the competition authority (BundesKartellamt). This procedure has yet to conclude.
Telegate AG, at the outset of the referral to the German regulatory authorities complained of the ‘squeeze effect’ of the tariffs proposed by Deutsche Telekom which commercialises its list of subscribers at an excessive tariff (0.15 euros per request) whilst consultation of information online is free.
This dispute resolution is expected to be completed before the end of 2003.
For more information, the European Commission has published a report drafted by Conduit. This is available by clicking here: