Spain’s competition body fined Telefonica (BME) 6 million euros ($6.35 million) on Friday.TEF) for commercial practices, such as permanence clauses in smartphone rentals, which violated the terms of a 2015 takeover agreement between cable TV operator DTS, the former Sogecable.
The CNMC, as the regulator is known, said Telefonica’s commercial offerings, which included smartphone leasing, with so-called permanence clauses preventing customers from switching providers, breached commitments it had made to get the merger approved.
Telefónica had promised not to hinder pay-TV customers who changed providers for at least five years to ensure free competition, according to the CNMC. The period was extended for another three years in 2020, he added.
The CNMC said that customers who contracted the Movistar Fusion package from April 11, 2021 and took advantage of a smart mobile phone rental contract, were subject to conditions of permanence and a penalty for early withdrawal for a period of three years. With these contracts, Telefónica restricted the ability of customers to contract similar services with other competing operators.
The fine may be appealed to the National High Court within two months.
A spokesman for Telefonica said the company would appeal because it did not consider that it had breached commitments on conditions of permanence in pay-TV services.
Telefónica is the largest cable television operator in Spain by number of customers. Acquired control of DTS from Spanish media company Prisa (BME:PRS) for €724.6 million ($769.6 million).
The agreement with DTS was part of the telecom operators’ strategy at the time to bundle offerings to customers, including cable TV, mobile telephony, internet services and fixed telephony.
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