Top three telecoms fined for market collusion

PARIS, Dec 1 (AFP) – French regulators fined the three French mobile telecom operators a total of EUR 534 million on Thursday for rigging the market.

The decision, three days after a similar announcement of fines against top hotels in Paris, also faces the telecom operators with a risk of heavy compensation to subscribers.

The Competition Council watchdog took the action against SFR, Bouygues Telecom and France Telecom subsidiary Orange for “particularly serious” collusion in sharing market information which had done “great damage to the economy”.

The biggest fine, a record of EUR 256 million, fell on Orange. SFR, a subsidiary of Vivendi Universal, was fined EUR 220 million and Bouygues Telecom, the smallest of the three, EUR 58 million, the council said.

The operators had exchanged subscriber figures and fixed market shares resulting in increased costs for customers, the council said.

On Monday, the Competition Council announced that it had fined six luxury hotels in Paris a total of EUR 700,000 for colluding over market conditions.

Orange and SFR rejected the telecom fines in vigorous terms and said they would appeal.

France Telecom, which was fined EUR 80 million in November for obstructing access for competitors to the market for high-speed Internet services until October of 2002, systematically appeals against such decisions.

Orange protested that the fine was “unfounded” and “seriously disproportionate”.

Information exchanged by the three operators had been of a “non-competitive nature” and could not cause “prejudice to consumers or the economy or lead to a freeze of market share”, it said.

SFR said its fine was “unfounded”, and “out of proportion to all those already inflicted…in similar affairs”. The exchange of information “did not affect the economy nor the consumer”.

The consumer group UFC-Que Choisir has said that it might pursue the three operators on behalf of customers for civil damages, saying that 30 million subscribers had suffered a prejudice totalling EUR 1.2 billion.

Financial analysts said the fines were small in terms of capitalisations, but brokers Oddo Securities also commented: “It seems to us impossible to estimate precisely the compensation which the operators will have to pay consumers.

“Prudently, we suppose that the amount of compensation could be quite close to the amount of the fines, which could double the amounts to be paid by the operators.”

Meawhile Prime Minister Dominique de Villepin rejected an allegation made in August by the satirical newspaper Canard Enchaîné that current Finance Minister Thierry Breton had attended a meeting in October 2002 shortly after becoming president of France Telecom at which the illicit agreement on market sharing had been mentioned.

Villepin, referring to the investigation and any potential effect on the finance minister, told a monthly press conference Thursday: “I think that there is no connection.”

In September, Breton said he had never heard of any such arrangement.

Stock market circles had expected fines and the price of the shares in the parent companies, which had slipped on Wednesday, firmed in morning trading.

The Competition Council found that between 1997 and 2003, the operators had exchanged confidential information about new-customer and cancellation numbers. Between 2000 and 2002 they had fixed their respective shares of the market.

The collusion had provided the operators with “relative medium-term stability”, pushed up prices, and had enabled them to focus on 24-month customer contracts rather than on pre-paid cards as well as on an obligatory first-minute charge, followed by half-minute increments.

Subject: French news