On 23 January, the European Commission imposed fines of more than 79 million on Telefonica of Spain and Portugal Telecom for anti-competitive behaviour. The two operators had agreed not to compete with each other on the Iberian telecommunications markets. The operators both hold a strong position on their markets of origin and were each handed a heavy fine: 66,894,000 for Telefonica and 12,290,000 for Portugal Telecom.

In July 2010, in the context of the acquisition by Telefonica of the Brazilian mobile operator Vivo, which was until then jointly owned by both parties, 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. The parties terminated the non-compete agreement in early February 2011, after the Commission opened anti-trust proceedings.

In setting the level of fines, the Commission took into account the early termination of the agreement as a mitigating circumstance - in line with its guidelines on fines. Conversely, the seriousness of the infringement was a deciding factor in the final sum of the fine. Indeed, non-compete clauses are one of the most serious violations of fair and healthy competition. As such, Article 101 of the Treaty on the Functioning of the EU (TFEU) lists amongst the agreements that are prohibited those that...

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