Following a six-year investigation, the EC is finally satisfied commitments made by operators are sufficient to resolve competition issues
Long-running saga reaches its conclusion: The European Commission has concluded its investigation into network sharing in the Czech Republic, accepting commitments from the parties. In 2016, it opened an investigation over concerns that the mobile services agreement between O2 and CETIN (the company that manages O2’s infrastructure) and the network sharing agreement between T-Mobile and CETIN breached EU competition law. Under the agreements, T-Mobile manages the mobile network in the west of the country and CETIN manages the network in the east (excluding Brno and Prague), with the firms providing services to the other within their area. The Commission was particularly concerned about information exchange between the operators and that a charging arrangement between them reduced the incentive to invest outside their own network management zone.
Improved offer needed to address competition concerns: The Commission’s statement of objections (2019) and preliminary assessment (2021) found that the agreements were likely to be in breach of competition rules. T-Mobile, CETIN, O2 and their respective parent companies Deutsche Telekom and PPF Group therefore offered certain commitments, which underwent a market test in October 2021. This led to the parties offering further concessions, which were accepted by the Commission and made legally binding. The final set of commitments includes requirements to:
Modernise mobile network equipment to enable more flexibility and independence (e.g. for the rollout of 4G or 5G);
Amend the financial conditions for unilateral network deployments to remove investment disincentives;
Review contractual provisions and implement measures to minimise information exchange; and
Agree not to extend existing sharing arrangements to Prague and Brno for seven to 10 years.
Commitments carry the threat of financial penalties: According to Commission Executive Vice President Margrethe Vestager, network sharing can deliver efficiencies, such as faster rollouts, cost savings and better coverage in rural areas. However, such cooperation can also have a negative impact on competition and weaken the incentives of mobile operators to independently improve their networks and services. Having been concerned that the agreements in their previous form did not “strike the right balance” for Czech consumers, the Commission now feels comfortable to end the protracted investigation. The operators’ commitments will remain in force until 28 October 2033 and carry the threat of fines worth up to 10% of turnover. T-Mobile, CETIN and O2 should also have the certainty they need to progress respective 5G build-out plans, especially as rival Vodafone currently leads the market in terms of population coverage.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_22_4463
