EU sends "Statement of Objections" to mobile operators for their network sharing agreement

The European Commission has informed Czech operators of mobile telephony O2 CZ and T-Mobile CZ, as well as the Czech telecom infrastructure provider CETIN of its preliminary view that their network sharing agreement restricts competition in breach of EU antitrust rules.

Commissioner Margrethe Vestager, in charge of competition policy, said: "Operators sharing networks generally benefits consumers in terms of faster roll out, cost savings and coverage in rural areas. 

"However, when there are signs that co-operative agreements may be harmful to consumers, it is our role to investigate these and ensure that markets indeed remain competitive. In the present case, we have concerns that the network sharing agreement between the two major operators in Czechia reduces competition in the more densely populated areas of the country."

O2 CZ and T-Mobile CZ are major operators in the Czech retail mobile telecommunications market. O2 CZ's mobile infrastructure and wholesale business have been transferred to CETIN, a network infrastructure company belonging to the same corporate group.

The network sharing cooperation between O2 CZ/CETIN and T-Mobile CZ started in 2011 and has been increasing in scope. Currently it covers all mobile technologies (i.e. 2G, 3G and 4G) and the entire territory of Czechia with the exception of Prague and Brno, thus amounting to around 85% of the population.

Network sharing is a widespread practice that can facilitate the roll out of electronic communications networks by reducing costs. In most cases, network sharing is a source of efficiencies. However, in some circumstances it may have a negative impact on competition.

The Commission assessed a number of specific circumstances in the present case, including the fact that:

the Czech mobile communications market is highly concentrated with only three mobile network operators,

the sharing parties O2 CZ/CETIN and T-Mobile CZ are the two largest operators, with their networks serving approximately three quarters of subscribers.

The Commission, therefore, has reached the preliminary conclusion that the network sharing agreement between the two main mobile operators in Czechia restricts competition and thereby harms innovation in breach of EU antitrust rules.

The Commission holds the view that in this instance, instead of leading to greater efficiencies and higher service quality, the network sharing agreement is likely to remove the incentives for the two mobile operators to improve their networks and services to the benefit of users.

If confirmed, this would infringe article  101 f the Treaty on the Functioning of the European Union, which prohibits anti-competitive agreements.

The sending of a Statement of Objections does not prejudge the outcome of the investigation.

The Commission opened a probe in October 2016.

O2 CZ is a mobile communications subsidiary of the PPF Group, with more than six million lines, both fixed and mobile.

T-Mobile CZ is a mobile communications subsidiary of the Deutsche Telekom group, operating in the Czech Republic since 1996.

The Czech mobile communications market is highly concentrated, with three mobile network operators (O2 CZ, T-Mobile CZ and Vodafone) accounting for almost the whole market. Together, O2 CZ/ CETIN and T-Mobile CZ serve approximately three quarters of subscribers. Vodafone is smaller and, unlike the network sharing parties, has no meaningful presence in the fixed telecoms segment.

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Martin Banks

Martin Banks

Martin Banks is a highly qualified journalist with many years experience of working within the EU institutions. He is an occasional, and highly valued, contributor to EU today, writing on a wide variety of issues.

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