Monthly Archives: July 2003

“Lietuvos telekomas” mokės 2 mln. Lt baudą

Galutinė ir neskundžiama Lietuvos vyriausiojo administracinio teismo nutartis, kurią antradienį gavo Konkurencijos taryba, užbaigė daugiau nei metus trukusį “Lietuvos telekomo” ir Konkurencijos tarybos bylinėjimąsi dėl nustatyto Konkurencijos įstatymo pažeidimo ir paskirtos baudos.

Konkurencijos tarybos atstovė spaudai informavo, kad Lietuvos vyriausiasis administracinis teismas Konkurencijos tarybos priimtą nutarimą paliko nepakeistą, o “Lietuvos telekomas” apeliacinį skundą atmetė. Už nustatytą ir įrodytą Konkurencijos įstatymo pažeidimą – piktnaudžiavimą dominuojančia padėtimi – Konkurencijos tarybos “Lietuvos telekomui” paskirtą 2 mln. 77 tūkst. 154 Lt baudą bendrovė turi sumokėti į valstybės biudžetą.

“Lietuvos telekomas” teismams buvo apskundusi Konkurencijos tarybos 2002 m. vasario 21 d. nutarimą, kuriuo “Lietuvos telekomas” buvo pripažintas pažeidęs Konkurencijos įstatymo 9 straipsnio, draudžiančio piktnaudžiauti dominuojančia padėtimi, reikalavimus.

“Lietuvos telekomas”, užimdamas dominuojančią padėtį bendrojo fiksuoto telefono ryšio ir telekomunikacijų tinklų nuomos rinkose, buvo priėmęs sprendimus užblokuoti nuomojamas linijas internetinės telefonijos paslaugas teikiančioms UAB “Interprova” ir apie 30 kitų įmonių, tokiu būdu eliminuodama konkurenciją ir įtvirtindama savo dominuojančią padėtį internetinės telefonijos paslaugų rinkoje. Tokius “Lietuvos telekomo” veiksmus Konkurencijos taryba įvertino kaip internetinės telefonijos paslaugų ribojimą ir rinkos monopolizavimą pažeidžiant Konkurencijos įstatymą.

Teismo sprendimas tik patvirtino nuostatą, kad internetinės telefonijos rinka visą tą laiką nepriklausė AB “Lietuvos telekomas” monopoliui ir todėl bendrovė nepagrįstai ribojo kitų ūkio subjektų teises teikiant internetinės telefonijos paslaugas.

ELTA
2003 liepos mėn. 16 d.

High-speed Internet: the Commission imposes a fine on Wanadoo for abuse of a dominant position

Reference:  IP/03/1025    Date:  16/07/2003

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IP/03/1025

Brussels, 16 July 2003

High-speed Internet: the Commission imposes a fine on Wanadoo for abuse of a dominant position

The Commission has adopted a decision against Wanadoo Interactive, a subsidiary of France Télécom, for abuse of a dominant position in the form of predatory pricing in ADSL-based Internet access services for the general public. The Commission found that, up to October 2002, the retail prices charged by Wanadoo were below cost. This practice restricted market entry and development potential for competitors, to the detriment of consumers, on a market which is key to the development of the information society. In view of the gravity of the abuse and the length of the period over which it was committed, the Commission is imposing a fine of €10,35 million.

From the end of 1999 to October 2002, Wanadoo, a 72% owned subsidiary of France Télécom, marketed its ADSL services known as Wanadoo ADSL and eXtense at prices which were below their average costs. It emerged from the Commission’s investigations that the prices charged by Wanadoo were well below variable costs until August 2001 and that in the subsequent period they were approximately equivalent to variable costs, but significantly below total costs. Since the mass marketing of Wanadoo’s ADSL services began only in March 2001, the Commission considers that the abuse started only on that date.

Wanadoo suffered substantial losses up to the end of 2002 as a result of this practice. The practice coincided with a company plan to pre-empt the strategic market for high-speed Internet access. While Wanadoo was suffering large-scale losses on the relevant service, France Télécom, which at that time held almost 100% of the market for wholesale ADSL services for Internet service providers (including Wanadoo), was anticipating considerable profits in the near future on its own wholesale ADSL products.

Wanadoo’s policy was deliberate, since the company was fully aware of the level of losses which it was suffering and of the legal risks associated with the launch of its eXtense service. According to in-house company documents, the company was still expecting at the beginning of 2002 to continue selling at a loss in 2003 and 2004.

The abuse on which the Commission has taken action was designed to take the lion’s share of a booming market, at the expense of other competitors. From January 2001 to September 2002, Wanadoo’s market share rose from 46% to 72%, on a market which saw more than a five-fold increase in its size over the same period. This level of market penetration by Wanadoo is roughly what Wanadoo was expecting by 2004. The level of losses required in order to compete with Wanadoo had a dissuasive effect on competitors. At the end of the period during which the abuse was committed, no competitor held more than 10% of the market, and Wanadoo’s main competitor had seen its market share tumble.

One ADSL service provider (Mangoosta) went out of business in August 2001. The effects of Wanadoo’s conduct were not confined to competitors on the ADSL segment, but extended to cable operators offering high-speed Internet access.

The abuse came to an end in October 2002, with the entry into force of new wholesale prices charged by France Télécom, more than 30% down on the previous prices charged. Since then, the French high-speed Internet access market has been growing much more rapidly and in a more balanced way as far as the various competitors are concerned. Between December 2000 and September 2002, the market had seen a five-fold increase in size. Market growth picked up strongly subsequently, with the ending of the abuse, and the number of Internet subscribers grew more between September 2002 and March 2003 (seven months) than between March 2001 and August 2002 (seventeen months).

The Commission’s decision marks the end of an investigation initiated in September 2001 on the basis of information obtained as part of the sector enquiry into local loop unbundling. Although the abuse has been discontinued, the Commission felt it important to adopt a decision because of the risk of the abuse being repeated.

The Commission considers that practices designed to capture strategic markets such as the high-speed Internet access market call for particular vigilance.

The decision follows on from the decision of 21 May in which the Commission fined Deutsche Telekom for the prices it charged for access to the local loop. The two decisions reflect the Commission’s determination to prevent exclusionary practices by incumbent operators on strategic markets.

The Commission may undertake investigations in other Member States of the same type as that carried out in the Wanadoo case.

Background

High-speed Internet access allows download speeds ten times faster than those possible with low-speed Internet access. The ease of Internet use and the volumes of data exchange which it allows mean that it is a strategic market which is key to the development of the information society. ADSL (assymetric digital subscriber line) provides high-speed Internet access using a telephone line. Cable modem technology, which uses cable television networks, is an alternative to ADSL technology in areas served by cable networks.

The decision relates to two ADSL services provided by Wanadoo, both allowing download speeds of 128 kbit/s and upload speeds of 512 kbit/s: the first is the Wanadoo ADSL service, launched in November 1999, while the other is the eXtense service, launched in January 2001. The two services are very comparable. However, in the case of the ADSL service, the subscriber concludes two separate contracts, one with France Télécom for the supply of the ADSL access service known as Netissimo, the other with Wanadoo for the supply of the Internet access service proper. In the case of the eXtense service, the subscriber concludes a single contract, with Wanadoo, which provides the whole of the service (ADSL access + Internet access) The inception of the abuse coincided with the deployment of the eXtense facility, which came at the same time as the stepping-up of Wanadoo’s commercial efforts.

Community case law(1) applies two tests to establish whether an abuse in the form of predatory pricing has been committed: where variable costs are not covered, an abuse is automatically presumed; where variable costs are covered, but total costs are not, the pricing is deemed to constitute an abuse if it forms part of a plan to eliminate competitors. The two tests have been applied in the Commission’s decision, for the periods before and after August 2001.

In this instance, the Commission carried out adjustments to costs and revenue so as to take account of the characteristics of a strongly growing market. In particular, customer acquisition costs were spread and written off over a number of years.

The investigations began in September 2001. An initial statement of objections was sent to Wanadoo in December 2001. Following an inspection on the company’s premises carried out in April 2002, a further statement of objections was sent to Wanadoo in August 2002.

(1)Case C-62/86 Akzo v Commission [1991] ECR I-3359; Case C-333/94 Tetra Pak II [1996] ECR I-5951.

Europe.eu.int

OVER TWO MILLION LITAS TO REACH THE STATE BUDGET FROM A FINE IMPOSED UPON AB ‘LIETUVOS TELEKOMAS’ BY THE COMPETITION COUNCIL

The owners of Lattelekom have reduced the company share capital by 50,202 million lats

Gundars Strautmanis, president of Lattelekom (Latvian telecom provider) informed BNS on that the owners of Lattelekom have reduced the company share capital by 50,202 million lats – from 196,281 to 146,079 million lats.

He told that the company share capital had been reduced under the provisions of so called Frame Agreement sealed by Lattelekom, on a pro rata basis, in proportion to the respective stocks held by each owner, by way of issuing loans to both co-owners – the Latvian state and a consortium Tilts Communication (TC).

Thus, in connection with this reduction of share capital the Latvian state will obtain a loan totaling 25,6 million lats and state-held stake un the company’s share capital will be go down from 100,1 to 74,498 million lats, while TC will receive 24,6 million lats, and its respective stake will reduce from 96,181 to 71,581 million lats.

Strautmanis noted that TC will immediately repay the loan in order not to pay loan interest, but the Latvian state will convert the loan into bonds and thereupon will be able to receive funds from selling the bonds at a closed auction. In the event that the selling is a failure, the challenge to Lattelekom will be to repurchase the bonds. Under the provisions of the Frame Agreement, the Latvian state has to repay the loan until 2013 -end.
Lattelekom’s Board of Directors has previously taken such a decision with the written consent of the two co-owners, he said. According to BNS, such a decision was taken at the meeting of Lattelekom’s co-owners after the Latvian government had approved the decision at their closed meeting.

“As the Frame Agreement provides for such an opportunity, therefore the owners’ decision was to seize it, ” added Lattelekom’s president.

He emphasized that Lattelekom had to communicate the information concerning this deal to every single bank the company teams up with, and none of them had any objections.
Viesturs Shutko, who is a representative of the Latvian state in Lattelekom Board of Directors, reminded that at one time, Lattelekom’s co-owners issued loans that in turn were invested in the company’s share capital; the loan to the Latvian state made part В in the share capital, while the loan to TC made part C. Now, along with the repayment of the loans, it is essential to reduce the share capital accordingly.

In his viewpoint, the provisions of the Frame Agreement covering the procedure of loan repayment are inexpedient for the Latvian government. “To put it mildly, the terms and conditions of the Frame Agreement are not fair as far as they concern this issue. Equally, they are unfair overall. I have no idea whether the officials having sealed the agreement acted honestly,” added Shutko.

Apart from that, he expressed his bewilderment in connection with that such a crucial mistake could have entered in the Lursoft database. “Taking into consideration that any person, including any person outside Latvia, may have a free access to the database of the Register of Companies of the Republic of Latvia, this is more than a mere mistake,” reckons Shutko. According to Lursoft data, currently Lattelekom’s share capital only totals 146 079 lats, but Strautmanis says that this information is erroneous. Actually, these are millions rather than thousands.

In 2002, Lattelekom’s net profit was 21,888 million lats, net turnover – 143,86 million lats. Versus the year 2001, in 2002 Lattelekom’s profit shrank by 2,8 million lats, or 11,4%, net turnover showed a slight change. In 2001, Lattelekom’s profit made 24,717 million lats, net turnover – 143,92 million lats, the 2000 and 2001 aggregate earned and non-appropriated profit – 27,4 million lats.

The Latvian state holds a 51% controlling stake in Lattelekom, while TC, owned by Finnish telecom provider TeliaSonera, holds a 49% stake.

BalticInternational Bank

TeliaSonera aiming for Baltic dominance

Nordic telecoms giant TeliaSonera [Nasdaq:TLSN] has said it plans to bolster its portfolio of Baltic telecoms interests by taking control of Latvian mobile operator LMT. TeliaSonera currently holds 49% of LMT with the remaining shares owned by Digitalais Latvijas Radio and Television (23%), fixed line operator Lattelekom (23%) and the Latvian Ministry of Transport (5%). It has yet to detail which of these shareholdings it is looking to target, saying only that it is exploring ‘every opportunity’ to take majority control of LMT, which shares the Latvian mobile sector with pan-European rival Tele2. TeliaSonera is also keen to increase its other Baltic shareholdings; these include a 49% stake in Latvia’s fixed line monopoly Lattelekom, 60% of Lithuanian fixed line provider Lietuvos Telekomas, 55% of Lithuanian mobile operator Omnitel and 49% of Estonian fixed line and mobile operator Estonian Telecom.

Its first target, LMT, was established in 1991 as an analogue NMT-450 operator and launched the country’s first GSM network in 1995. By the end of 2002 the GSM service covered 96.4% of the population and had just over 458,000 subscribers, a rise of 100,000 over the year, while its analogue network had around 16,000 customers. The two figures together gave LMT a 52% share of Latvia’s mobile market, ahead of its sole rival Tele2, which had 443,000 subscribers to its GSM network at the end of 2002. LMT’s battle to keep ahead of Tele2 was aided by a decision by the Latvian Public Utilities Commission in December 2002 which amended its licence to allow it to sell subsidised handsets – a practice already used by its competitor. The threat from Tele2 has also prompted LMT to introduce new services. It launched nationwide GPRS services in 2002, claiming 45,000 users by the start of 2003.

TeleGeography

Telia subject to SEK400mn Stenbeck claim

The administrative court of appeal in Stockholm has ruled that TeliaSonera is liable for transit charges of a third party operator through its mobile telecoms network. TeliaSonera has claimed, in a long running dispute with Stenbeck-owned Tele2, that it is the third party operator that should stand liable for the charges.

The ruling allows Tele2 to demand compensation from TeliaSonera and they have already submitted a claim for SEK 800mn «US$ 103.34mn» in the city court. TeliaSonera has so far paid only half this sum.

The Post and Telecom Authority «PTS» decides on the issue of charges payable by TeliaSonera to Tele2.

TeliaSonera has not yet decided whether to appeal to the Supreme Administrative Court.

Dagens Industri