Judgments nº T-851/14 of Tribunal General de la Unión Europea, December 13, 2018

Resolution DateDecember 13, 2018
Issuing OrganizationTribunal General de la Unión Europea
Decision NumberT-851/14

(Competition - Abuse of dominant position - Slovakian market for broadband telecommunications services - Access by third-party undertakings to the ‘local loop’ of the incumbent operator on that market - Decision finding an infringement of Article 102 TFEU and Article 54 of the EEA Agreement - Single and continuous infringement - Definition of ‘abuse’ - Refusal to grant access - Margin squeeze - Calculation of margin squeeze - Equally efficient competitor test - Rights of defence - Imputation of an infringement committed by a subsidiary to its parent company - Decisive influence of the parent company over the subsidiary’s commercial policy - Actual exercise of such influence - Burden of proof - Calculation of the fine - 2006 Guidelines on the method of setting fines)

In Case T-851/14,

Slovak Telekom, a.s., established in Bratislava (Slovakia), represented by D. Geradin, lawyer, and R. O’Donoghue QC,

applicant,

v

European Commission, represented initially by M. Farley, L. Malferrari and G. Koleva, and subsequently by M. Farley, M. Kellerbauer, L. Malferrari and C. Vollrath, acting as Agents,

defendant,

supported by

Slovanet, a.s., established in Bratislava, represented by P. Tisaj, lawyer,

intervener,

ACTION under Article 263 TFEU seeking, primarily, the annulment, insofar as it concerns the applicant, of Commission Decision C(2014) 7465 final of 15 October 2014 relating to proceedings under Article 102 TFEU and Article 54 of the EEA Agreement (Case AT.39523 - Slovak Telekom), as rectified by Commission Decision C(2014) 10119 final of 16 December 2014 and by Commission Decision C(20 15) 2484 final of 17 April 2015, and, in the alternative, the reduction of the fine imposed on the applicant,

THE GENERAL COURT (Ninth Chamber, Extended Composition),

composed M. van der Woude, acting as President, S. Gervasoni, L. Madise, R. da Silva Passos (Rapporteur) and K. Kowalik-Bańczyk, Judges,

Registrar: N. Schall, Administrator,

having regard to the written part of the procedure and further to the hearing on 26 April 2018,

gives the following

Judgment

  1. Background to the dispute

    1 The applicant, Slovak Telekom, a.s., is the incumbent telecommunications operator in Slovakia. Deutsche Telekom AG, the incumbent telecommunications operator in Germany and the company at the helm of the Deutsche Telekom group, acquired a 51% stake in the applicant on 4 August 2000, a shareholding which it held throughout the relevant period in this case. The remaining shareholding in the applicant was held by the Ministry of Economy of the Slovak Republic (34%) and the National Property Fund of the Slovak Republic (15%).

    2 On 15 October 2014, the European Commission adopted Decision C(2014) 7465 final relating to proceedings under Article 102 TFEU and Article 54 of the EEA Agreement (Case AT.39523 - Slovak Telekom), rectified by its Decision C(2014) 10119 final of 16 December 2014 and by its Decision C(2015) 2484 final of 17 April 2015, which was addressed to the applicant as well as to Deutsche Telekom (‘the contested decision’). On 24 December 2014, Deutsche Telekom brought an action also seeking annulment of the contested decision (Case T-827/14).

    A. Technological, factual and regulatory context of the contested decision

    3 The applicant, which is the indirect successor of the public post and telecommunications undertaking that ceased to exist in 1992, is the largest telecommunications operator and broadband provider in Slovakia. The legal monopoly it enjoyed on the Slovakian telecommunications market came to an end in 2000. The applicant offers a full range of data and voice services, and owns and operates fixed copper and fibre optic networks as well as a mobile telecommunications network. The copper and mobile networks cover almost the entire territory of Slovakia.

    4 The contested decision concerns anticompetitive practices on the Slovakian market for broadband internet services. In essence, it relates to the conditions set by the applicant for unbundled access of other operators to the copper local loop in Slovakia between 2005 and 2010.

    5 The local loop is the physical twisted metallic pair circuit (also known as ‘the line’) connecting the network termination point at the subscriber’s premises to the main distribution frame or equivalent facility in the fixed public telephone network.

    6 Unbundled access to the local loop allows new entrants - usually called ‘alternative operators’, as opposed to the incumbent operators of the telecommunications networks - to use the pre-existing telecommunications infrastructure belonging to those incumbent operators in order to offer various services to end users, in competition with the incumbent operators. The different telecommunications services that can be provided to end users through the local loop include high bit-rate data transmission services for fixed internet access and for multimedia applications based on digital subscriber line (DSL) technology.

    7 Local loop unbundling was organised at EU level by, inter alia, Regulation (EC) No 2887/2000 of the European Parliament and of the Council of 18 December 2000 on unbundled access to the local loop (OJ 2000 L 336, p. 4), and Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (OJ 2002 L 108, p. 33). Regulation No 2887/2000 required operators holding ‘significant market power’ to give access to unbundled local loops (ULLs) and to publish a reference unbundling offer. Those provisions were implemented in Slovakia by the Zákon z 3. decembra 2003 č. 610/2003 Z.z. o elektronických komunikáciách, v znení neskorších predpisov (Law No 610/2003 of 3 December 2003 on electronic communications), as amended, which entered into force, with certain exceptions, on 1 January 2004.

    8 In essence, that regulatory framework required the operator identified by the national regulatory authority as the operator with significant market power, which is generally the incumbent operator, to grant alternative operators unbundled access to its local loop and to related services under transparent, fair and non-discriminatory conditions, and to maintain an updated reference offer for such unbundled access. The national regulatory authority was required to ensure that charging for unbundled access to the local loop, set on the basis of cost-orientation, fostered fair and sustainable competition. To that end, the national regulatory authority was entitled inter alia to require changes to be made to the reference offer.

    9 Following a market analysis, on 8 March 2005 the Slovakian national regulatory authority for telecommunications (‘TUSR’) adopted a first-instance decision - Decision No 205/14/2005 - designating the applicant as an operator with significant power on the wholesale market for unbundled access to the local loop within the meaning of Regulation No 2887/2000. Consequently, TUSR imposed a number of obligations on the applicant, including requiring it to submit a reference offer within 60 days. That decision, which the applicant challenged, was confirmed by the Chairman of TUSR on 14 June 2005. Pursuant to that confirmatory decision, the applicant was required to grant all reasonable and justified requests for unbundling of its local loop in order to enable alternative operators to use that loop with a view, on that basis, to offer their own services on the ‘retail mass market’ for broadband services at a fixed location in Slovakia. The decision of 14 June 2005 also ordered the applicant to publish all intended changes to the reference unbundling offer at least 45 days in advance and to submit them to TUSR.

    10 The applicant published its reference unbundling offer on 12 August 2005 (‘the reference offer’). That offer, which was amended on nine occasions between that date and the end of 2010, sets out the contractual and technical conditions for access to the applicant’s local loop. On the wholesale market, the applicant offers access to unbundled local loops in or next to a main distribution frame on which the alternative operator seeking access has rolled out its own backbone network.

    11 According to the contested decision, the applicant’s local loop network, which could be used to supply broadband services after the lines concerned have been unbundled from that operator, covered 75.7% of all Slovakian households between 2005 and 2010. That coverage extended to all local loops in the applicant’s metallic access network that could be used to transmit a broadband signal. However, during that same period, only very few of the applicant’s local loops were unbundled, as from 18 December 2009, and used only by a single alternative operator to provide retail broadband services to undertakings.

    B. Procedure before the Commission

    12 The Commission opened an investigation on its own initiative, inter alia, the conditions for unbundled access to the applicant’s local loop. Following requests for information sent to alternative operators on 13 June 2008 and an unannounced inspection at the applicant’s premises which took place on 13 and 15 January 2009, the Commission decided, on 8 April 2009, to open a procedure against that operator, within the meaning of Article 2 of Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles [101] and [102 TFEU] (OJ 2004 L 123, p. 18).

    13 Further steps were taken in the investigation consisting of additional requests for information sent to alternative operators and TUSR, as well as an announced inspection at the applicant’s premises on 13 and 14 July 2009.

    14 In several discussion documents sent to the Commission between 11 August 2009 and 31 August 2010, the applicant argued that there were no grounds for finding that it had infringed Article 102 TFEU in the present case.

    15 In the course of the investigation, the applicant objected to...

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