Commission Fines Mobile Operators For Non-Compete Clause

On 23 January 2013 the European Commission ("Commission") announced its decision to fine Telefónica and Portugal Telecom a total of €79 million for the implementation of a non-compete contract clause contrary to Article 101 TFEU, which, broadly, prohibits anti-competitive arrangements between 'undertakings'. The clause, inserted into a contract concluded between the parties in the context of Telefónica's 2010 acquisition of sole control over the Brazilian mobile operator Vivo, previously jointly owned by the parties, confirmed that the parties would not compete with each other in their respective home markets, Spain and Portugal, from September 2010 until the end of 2011.

Market partitioning, which is considered to have as its 'object' the restriction of competition, is viewed by antitrust regulators as one of the most serious types of violations as it delays market integration to the ultimate detriment of consumers. In the present case, the Commission noted that