Bloomberg News

Telefonica, Portugal Telecom Get Antitrust Complaint From EU

October 25, 2011

(Updates with EU comment from second paragraph.)

Oct. 25 (Bloomberg) -- Telefonica SA and Portugal Telecom SGPS SA, Spain and Portugal’s biggest telephone companies, got a European Union antitrust complaint for agreeing not to compete in each other’s home country.

The European Commission sent the statement of objections because it “believes that the object of the agreement was to partition markets, resulting in potentially higher prices and less choice for customers,” it said in an e-mail today.

Telefonica and Portugal Telecom’s cancellation of the non- compete deal in February “does not erase the fact that the agreement existed in the first place,” the Brussels-based antitrust regulator said. The EU opened a probe in January into the pact linked to their former joint venture in a Brazilian mobile operator.

Regulators can fine companies up to 10 percent of annual revenue or require them to change the way they do business if they strike deals that unfairly block rivals or harm competition. Telefonica and Portugal Telecom can reply to the EU’s charges in writing and ask for a hearing to defend themselves.

Telefonica declined to comment and Portugal Telecom declined to immediately comment on the EU complaint.

Telefonica agreed last year to buy Portugal Telecom’s stake in Brazil’s Vivo Participacoes SA after raising its bid to 7.5 billion euros ($10.5 billion), ending almost three months of wrangling in which the Portuguese government sought to block the deal. That acquisition isn’t part of the probe, the commission said.

The non-compete clause concluded between the two companies originally ran from September 2010 to the end of 2011, the commission said.

--With assistance from Anabela Reis in Lisbon and Manuel Baigorri in Madrid. Editors: Peter Chapman, Robert Valpuesta

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Christopher Scinta at cscinta@bloomberg.net


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