In an apparent crackdown over infringement of EU competition laws, Telefonica S.A. (ADR) (NYSE:TEF) and Distribuidora de Television Digital (DTS) have been asked to pay a fine EUR 15.5 million. Spanish communications and competition regulator CNMC fined the two companies for alleged infringement of football broadcast rights for the 2012-2013 and 2014-2015 seasons.
The regulator is of the view that the companies allegedly conspired to acquire, resell, and exploit the broadcast rights of football as against the EU competition laws. The two companies namely signed two agreements, three years ago in August 2012. The agreement was for the commercialization of the channels Canal+ Liga and Canal+ Champions League.
The spokesperson from CNMC stated that DTS had drafted the conditions of the auction in such a way that they favored Telefonica S.A. DTS’s strategy was to limit the competition between pay-TV operators and market the Champions League rights to a single telecom operator. The same was the case with Canal+ Liga, where DTS formulated the wholesale offer in such a manner that it favored Telefonica S.A. (ADR) (NYSE:TEF). The company was aware of this strategy and placed its bids accordingly, leaving behind other bidders.
Last year Telefonica S.A. (ADR) (NYSE:TEF) made an attempt to acquire DTS also known as Digital+ and CNMC had approved the acquisition after putting in certain conditions. The company agreed to pay EUR 750 million for the purchase of Prisa, which held 56 percent stake in the pay-TV platform and EUR 295 million initially for the purchase of Mediaset’s 22 percent stake.
Telefonica S.A. (ADR) (NYSE:TEF) got the acquisition rights only after it fulfilled the conditions laid down by the CNMC which mainly included offering 50 percent of the premium channel content to the rivals. The premium channels Moviestar TV and Canal+ currently broadcast content that include La Liga football, Champions League, Moto GP, Formula 1 and some other exclusive live sports events.
The outcome of the fines imposed to the tune of EUR 10 million and EUR 5.5 million on Telefonica S.A. (ADR) (NYSE:TEF) and DTS, respectively is yet to be seen as the CNMC does not entertain any appeal. However, the two companies can lodge a contentious-administrative appeal against CNMC in Spain’s National High Court, within two months.
Telefonica, S.A., incorporated in 1924, is an integrated and diversified telecommunications group operating in Europe and Latin America. The Company’s services and products include Mobile business, Fixed-line telephony business and Digital services. The Company operates the following segments: Telefonica Spain, Telefonica Brazil, Telefonica Germany, Telefonica UK and Telefonica Hispanoamerica. These segments are engaged in activities relating to wireline, wireless, cable, Internet, television businesses and other digital services in accordance with each location.
Mobile business
The Company offers a range of mobile and related services and products to personal and business customers. It provides mobile voice services; value added services, including voice mail, call hold, call waiting, call forwarding and three-way calling; mobile data and Internet services that include short messaging services (SMS), multimedia messaging services (MMS), mobile broadband connectivity and Internet access; wholesale services; corporate services, including mobile infrastructure in offices, private networking and portals for corporate customers that provide flexible online billing; roaming that allows its customers to use their mobile handsets when they are outside their service territories, including on an international basis; fixed voice telephony services through mobile networks in Brazil, Venezuela, Argentina, Peru, Mexico, Ecuador, El Salvador, Guatemala and Nicaragua; and trunking and paging, which provides digital mobile services for closed user groups of clients and paging services in Spain and most of its operations in Latin America.
Fixed-line telephony business
The services offered by the Company in its fixed businesses in Europe and Latin America are: traditional fixed telecommunication services, which includes PSTN lines, ISDN accesses, public telephone services, local, domestic and international long-distance and fixed-to-mobile communications services, corporate communications services, supplementary value added services (including call waiting, call forwarding, voice and text messaging, advanced voicemail services and conference-call facilities), video telephony, business oriented value-added services, intelligent network services, leasing and sale of handset equipment and telephony information services; Internet and broadband multimedia services, which include Internet service provider service, portal and network services, retail and wholesale broadband access through ADSL, naked ADSL (broadband connection without the monthly fixed line fee), narrowband switched access to Internet for universal service and other technologies. It also offers high-speed Internet services through fiber to the home (FTTH) in certain markets (primarily Spain, Brazil and Chile) and VDSL-based services (primarily Spain and Germany). It also offers VoIP services in some markets.
The data and business solutions services, which include leased lines, virtual private network (VPN) services, fiber optics services, the provision of hosting and application (ASP) service, including web hosting, managed hosting, content delivery and application and security services, outsourcing and consultancy services, including network management (CGP), and desktop services and system integration and professional services; the wholesale services for telecommunication operators, which include domestic interconnection services, international wholesale services, leased lines for other operators’ network deployment and local loop leasing under the unbundled local loop regulation framework. It also includes bit stream services, bit stream naked, wholesale line rental accesses and leased ducts for other operators’ fiber deployment.
Digital services
The digital services offered by the Company are: Video/TV services, which include IPTV services (Internet protocol), over-the-top network television services, cable and satellite TV, advanced Pay-TV services, such as high-definition TV (HDTV), multi-room (allowing clients to watch different TV channels in different rooms) and digital video recording (DVR); M2M connectivity services and end-to-end products, including in-house developments; e-Health services, which allows tele-assistance through connectivity services to chronic patients and other eHealth services; financial services and other payment services, which allows customers to make transfers, payments and mobile recharges among other transactions through prepay accounts or bank accounts; security services, which includes Latch applications that allows consumers to remotely switch their digital services on and off; cloud computing services, which include the instant Servers services; advertising, which includes advertising products based on SMS and IT technologies, such as SMS campaigns or bulk SMS sales to corporations, mobile portals and any other advertising related activities; big data, which includes the product Smart Steps, which helps retailers, municipalities and public security bodies to understand the influx of people; and future communications, which includes TU Go, Movistar’s application that allows clients have the same number on all their devices and communicate among such devices through Wi-Fi.
The Company competes with Vodafone and America Movil.
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