Introduction

Orange Polska (formerly Telekomunikacja Polska (TP)) has failed to persuade the General Court to overturn a decision of the European Commission to impose a €127m fine for abusing its dominant position in Poland's wholesale broadband market.

Members of Shepherd and Wedderburn’s specialist Telecoms team, led by Gordon Moir, teamed up with the Commercial Disputes team to successfully intervene on behalf of the European Competitive Telecommunications Association (ECTA). ECTA had been granted leave to intervene in support of the Commission. The team acted for ECTA throughout the oral procedure, with Solicitor Advocate John MacKenzie appearing for ECTA.

Today’s Judgement is significant in finding that non-price abuses are actionable and can attract significant fines. As anti-competitive behaviours become more sophisticated in the telecoms context, for example through abusive terms of trade or degradation of service, this could prove to be a landmark decision.

Background

The Commission found that TP had hindered the ability of alternative operators (AOs) to compete on downstream broadband markets. It concluded that from August 2005 until at least October 2009 TP engaged in practices which prevented, or at least delayed, competition on the broadband markets by developing a strategy to prevent AOs obtaining access to TP's wholesale broadband products. This was achieved by refusing to allow effective access to its network infrastructure and wholesale broadband services through a variety of non-price abusive behaviours.

TP appealed this decision to the General Court in Luxembourg and the oral procedure took place June 2015.

In today’s Judgement of the General Court TP’s appeal was dismissed in its entirety and the fine imposed by the Commission was not adjusted. This note summarises some of the key points to note from the Judgement.

The judgement of the General Court

Competency of the Commission to impose a fine
The first argument advanced by TP was that the Commission was not an ‘independent and impartial tribunal established by law’. Following the parties’ written submissions and particularly in light of the decisions of the Court in Chalkor v Commission [2010] 5 C.M.L.R. 24 and Schindler v Commission [2013] 5 C.M.L.R. 39, this argument was withdrawn at the oral hearing.

TP’s right of defence
TP argued that the Commission’s decision had infringed its right to be heard and rights of defence (Articles 41 and 48 of the Charter of Fundamental Rights). This was because it had not indicated in the statement of objections and letter of facts the elements it was going to consider by way of mitigating circumstances when calculating the fine.

The Court addressed a number of the specific points identified by TP and held that the Commission was not required to:

  • State the total amount of the fine in the statement of objections;
  • Take into account the agreement entered into between TP and the national regulator. This was because it was apparent that discussion about this only took place after the statement of objections had been sent.

Finally, the Court confirmed that the Commission had taken those arguments into account in the Contested Decision in any event.

Error in calculation of the fine imposed
TP alleged that there had been an error of law and of assessment when calculating the basic amount of the fine. TP did not dispute the existence of the infringement but instead asked the Court to review the level of the fine imposed. This plea was split into two parts.

  1. Failure to take account of the fact the infringement involved practices with different durations and intensities (paras 117 to 157) The Court held that in this case the Commission had taken account of the duration and variable intensity of the anti-competitive conduct. The Commission had also acknowledged the initiatives implemented to improve the way that information was communicated to Alternative Operators.
  2. Incorrect assessment of the impact on the relevant market (paras 158 to 175) TP asserted that the assessment of the nature and gravity of the infringement was based on a conclusion that TP’s conduct had an actual impact on the relevant markets. If that was the case, the Commission was required to provide specific evidence for assessing the actual influence on the relevant market. Secondly, TP argued that the Commission’s findings on the likely effect were exaggerated.

The Court accepted the Commission’s position that it had not taken either the actual or the likely effect of the infringement into account. Accordingly it was not required to show the existence of those effects. The Court held that the Contested Decision made clear that the factors taken into account by the Commission were: the nature of the infringement, its geographical scope, the market share of TP and the implementation of the infringement by TP.

Failure to take mitigating circumstances into consideration
Linked to the second plea, the fourth plea alleged that the Commission failed to take mitigating circumstances into consideration. The three specific examples given by TP were the investment undertaken following TP’s agreement with the national regulator, the voluntary cessation of infringement and the commitments that TP offered to make.

The Court held that the Commission had taken account of TP’s agreement with the regulator. It had chosen the date of signature of the agreement as the date of the end of the infringement. This stopped the multiplier rate applied according to the duration of the infringement. Secondly, it noted that TP’s unlawful conduct did not cease immediately after the Commission’s intervention, whilst there was gradual compliance, the Alternative Operators continued to experience difficulties with access for some time after signature of the agreement. Finally, the Court observed that TP’s offer to make commitments during the administrative process did not go beyond the obligation to co-operate with the Commission.

Taking these factors together, the fourth plea in law was also dismissed. The Court concluded that the Commission had taken the mitigating circumstances into account.

Conclusion

Having rejected each of TP’s pleas in law, the Court confirmed that the Commission had appropriately taken the variations in duration and intensity into account and its conduct had been appropriate. As such, the Court rejected TP’s request that the Court exercise its discretion to vary the fine imposed by the Commission.

The decision is significant because of the level of the fine imposed and the fact that it related to non-price abuses. However it also addresses a number of the technical challenges that are often brought against a decision of the Commission. Whilst every decision will to a large extent turn on its own facts the detailed analysis of the Court is a very useful reminder of the relevant tests that the Court will apply when reviewing a decision of the Commission.

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