The European Commission imposed a 79-million-euro ($104.96-million) fine Wednesday on Spain’s Telefonica and Portugal Telecom for agreeing not to compete against each other in the Iberian market.
The bulk of the fine, 66.8 million euros, was levied against the Spanish giant, the European Union’s executive arm said in a statement.
The EC said a non-compete clause was included in the sales contract for Telefonica’s July 2010 acquisition of Brazilian wireless operator Vivo, until then jointly owned by the two European telecom incumbents.
The two companies terminated the clause in early February 2011 after the commission launched anti-trust proceedings, the statement said.
“Non-compete agreements are one of the most serious violations of EU competition rules, as they potentially result in higher prices and less choice for consumers,” the EC said.
The commission recalled that Telefonica in 2011 earned roughly half of all revenue generated by Spain’s telecoms sector.
Telefonica said it will appeal the EC’s decision to the European Court of Justice, insisting that “at no time did it break the law” with the agreements reached with PT for the sale of Vivo.
In a press release, Telefonica expressed its “complete disagreement” with the commission’s decision, saying that the clause was conditioned on verification of its legality and was never applied.
It added that once the the clause was assessed and found not to be in compliance with EU law it was scrapped from the agreement.