Spanish telco defiant over huge broadband anti-trust fine

O2 parent company Telefónica has protested innocence after it was slammed by European anti-trust regulators for gaming the broadband market in its Spanish home territory.

The firm was yesterday hit with a €152m fine, the second largest in EU competition history after Microsoft's €280m wrist slap.

Brussels said Telefónica's penalty should serve as a warning to other incumbents that the commission will not stand for anti-competitive behaviour.

Chief regulator Neelie Kroes said: "Telefónica's conduct harmed Spanish consumers, Spanish businesses, and the Spanish economy as a whole, and by extension Europe's economy. I want to send a strong signal to dominant undertakings in all sectors...that I will not tolerate such behaviour."

Over several years, beginning in 2001, the former monopoly hamstrung its competitors by charging a price for wholesale broadband which was so close to Telefónica's retail price that they were forced to take a loss to stay in the market.

Broadband in Spain is 20 per cent more expensive, penetration 20 per cent lower, and growth 30 per cent slower than the western Europe average. More here from the EU.

Telefónica blamed contradictory rules from domestic and European regulators for the anti-competitive broadband market in Spain. It said it plans to lodge an appeal against the fine in the next few days. Full denial here (pdf). Mobile tentacle O2 already has a complaint in with the EU over the enforced cuts in roaming charges.

BT ran into similar anti-trust claims in the UK, particularly over local loop unbundling, once broadband became a mass market proposition in the earlier part of this decade. It was threatened with break up by Ofcom, but was able to dodge that bullet by setting up Openreach, a separate division designed to provide equal access to the national network to competitors. These days it would never be that naughty. ®