The European Commission has informed Czech operators of mobile telephony O2 CZ and T-Mobile CZ, as well as domestic telecom infrastructure provider CETIN, of its preliminary view that their network sharing agreement restricts competition in breach of EU antitrust rules.
European Commissioner for Competition Margrethe Vestager said in a statement on Tuesday that operators sharing networks generally benefits consumers, both in terms of cost savings and coverage in rural areas.
“However, when there are signs that co-operative agreements may be harmful to consumers, it is our role to investigate these and ensure that markets indeed remain competitive,” she said.
The Commission said the deal, struck in 2011 and subsequently expanded, may breach the bloc’s competition rules.
“In the present case, we have concerns that the network sharing agreement between the two major operators in Czechia reduces competition in the more densely populated areas of the country,” Vestager said.
Along with Vodafone, O2 CZ and T-Mobile CZ are major operators in the Czech retail mobile telecommunications market. O2 CZ’s mobile infrastructure and wholesale business have been transferred to CETIN, a company belonging to the same PPF corporate group owned by Czech billionaire Petr Kellner.
In early 2016, Vodafone launched a complaint against CETIN over its latest package of wholesale prices for fixed Internet connection, claiming it would lead to a sharp rise in charges and amounted to an abuse of CETIN’s dominant position. It added that the charges would only suit phone operators with bigger volumes of business, such as O2 CZ.
In October that year, the EU competition enforcer, which opened an investigation in October 2016 and can hand out fines up to 10 percent of a company’s global revenue, said the deal may remove the incentives for O2 CZ and T-Mobile CZ to improve their networks and services.
The EC said in a press release on Wednesday, “If confirmed, this would infringe Article 101 of the Treaty on the Functioning of the European Union, which prohibits anti-competitive agreements. The sending of a Statement of Objections does not prejudge the outcome of the investigation.”
The network sharing cooperation between has been increasing in scope since 2011. Currently it covers all mobile technologies (i.e. 2G, 3G and 4G) and the entire territory of the Czech Republic with the exception of Prague and Brno, thus amounting to around 85 percent of the population.
The Commission assessed a number of specific circumstances in the present case, including the fact that: the Czech mobile communications market is highly concentrated with only three mobile network operators, the sharing parties O2 CZ/CETIN and T-Mobile CZ are the two largest operators, with their networks serving approximately three quarters of subscribers.