Telefónica fined for broadband fiddle

The EC said the firm had committed "very serious abuse" of its dominant position in Spain.

Telefónica, which ownes UK network O2, imposed unfair prices in the form of a margin squeeze between the wholesale prices it charged to competitors and the retail prices it charged to its own customers, the EC said in a statement. In so doing, the firm weakened its competitors, making their continued presence and growth difficult: competitors were forced to make losses if they wanted to match Telefónica's retail prices

As a result, Spanish consumers pay 20 per cent more for broadband access and the Spanish broadband penetration rate is 20 per cent below the EU-15 average.

Competition Commissioner Neelie Kroes said the margin squeeze that Telefónica imposed on its competitors "not only raised their costs, but also harmed customers significantly. When consumers and businesses are harmed in such a major market, the entire economy suffers."

Telefónica said it would appeal against the ruling.

The firm said it "considers the Commission decision unjustified and disproportionate."

"Telefónica has legitimate reasons to believe it has strictly adhered to the regulations governing fair competition and has acted in good faith," it said in a statement in a pdf, here. µ