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EU slaps 79-mn euro fine on Telefonica, Portugal Telecom

European Union anti-trust authorities announced on Wednesday a fine of 79 million euros ($105 million) against Telefonica and Portugal Telecom for breaching EU competition rules in Portugal and Spain.

The European Commission said it had slapped a fine of 66.9 million euros on Telefonica and 12.3 million euros on Portugal Telecom “for agreeing not to compete with each other on the Iberian telecommunications markets.”

The EU executive said that the breach occurred after the July 2010 acquisition by Telefonica of Brazilian mobile operator Vivo, until then jointly owned by both companies, as Telefonica and Portugal Telecom each became the biggest telecoms operators in their respective countries.

“The parties inserted a clause in the contract indicating they would not compete with each other in Spain and Portugal as from the end of September 2010” but terminated the non-compete agreement in February 2011 after the Commission opened antitrust proceedings, a statement said.

“We will not tolerate anticompetitive practices by incumbents to protect their home markets, as they harm consumers and delay market integration,” said the EU Commissioner for Competition Joaquin Almunia.

Portugal Telecom said that the fine, of which it has yet to be formally notified, “is unjustified and inappropriate to any possible unworthiness of its conduct.”

The company said that the clause in question didn’t have the intent or effect to limit competition, that steps were taken to ensure it didn’t and that it was eliminated after several months.

Portugal Telecom said it would study seeking an annulment of the fine before the EU’s Court of Justice once it had received and reviewed the decision.