15 September 2008

MADRID -- Spain's two biggest mobile phone operators are set to face each other in court after Vodafone filed a claim for EUR 670 million in damages against larger rival Telefonica Moviles citing unfair practices.

The amount sought is the largest claim Telefonica has faced in court and more than quadruples the EUR 152-million fine imposed on the former monopoly by the European Commission in 2007 for abusing its dominant position in the Spanish market.

Vodafone accuses Telefonica of using its position as Spain's leading telecoms provider to hinder the growth of Airtel, a mobile operator acquired by Vodafone in 2000.

It claims that Telefonica's coercion of mobile phone retailers into signing exclusivity contracts prevented Airtel from acquiring new clients via a channel that in the late 1990s accounted for more than 50 percent of mobile phone sales.

Vodafone argues that if Telefonica had not illicitly prevented it from gaining clients, the company would have earned an additional EUR 529 million over the period. It would also have saved EUR 141 million in costs during Airtel's initial years of service.

Vodafone's claims are based on a 2006 Supreme Court ruling that found Telefonica guilty of violating competition rules between October 1995 and December 1999. Analysts say Telefonica may seek to settle out of court.

[El Pais / Ramon Munoz / Expatica]