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On 21 June 2018, the Norwegian Competition Authority (NCA) decided to impose an administrative fine of NOK 788 million NOK against Telenor. The basis for the fine is an alleged abuse of Telenor's dominant position in the Norwegian wholesale market for mobile communication services in the period of 2010 to 2014 in violation of Section 11 of the Norwegian Competition Act (similar to EEA Agreement Article 54 and TFEU Article 102).
Telenor appealed the decision in December 2018 to the Norwegian Competition Tribunal (NCT). The case is the third substantive case since NCT was established in 2018 (the two others concern the lawfulness of an imposed order to file a minority acquisition in Sector Alarm AS/Sector Group case (2018/363) and a joint bidding case brought against several electrician companies organized in El-Proffen AS (2018/112 and 113)). The fine against Telenor is the highest fine ever imposed under the Norwegian Competition Act from 2004. However, please note that the NCA has recently sent a statement of objections to Sector Alarm AS and Verisure AS informing them of an indicated fine of NOK 784 and 424, 8 million respectively with a deadline to respond 2 September 2019.
The investigation against Telenor was initiated in a joint EFTA Surveillance Authority (ESA) and NCA dawn raid in December 2012. The NCA sent a statement of objections on 7 April 2017 alleging that Telenor had abused its dominant position in two ways, and indicating a fine of NOK 906 million:
In its decision, the NCA decided to drop the second allegation, and continue only with the first allegation, thereby also reducing the fine to NOK 788 million.
At facts, Network Norway started the construction of a third mobile network together with Tele2 in 2007. During the rollout of the network, Network Norway bought access to Telenor’s network in the areas where the third mobile network did not yet have coverage. In 2010, Telenor changed the conditions in its network access agreement with Network Norway. The change included a reduction of the cost for the actual use of Telenor’s network. However, at the same time Telenor introduced a fee that increased with the number of Network Norway’s end users. This fee was a cost that Network Norway could not avoid by increasing the use of its own network.
The NCA and Telenor disagree on inter alia the actual effect of the pricing structure in the roaming agreement, the existence of a delay in the roll out of the third network, the causality between the roaming agreement and the actual roll out of the third network, the impact on competition of Telenor's agreement and the assessment of Telenor's strategy. The case has involved complex assessments at facts, law and economics.
The NCT stresses the unique characteristics of the Norwegian mobile telecom wholesale market. Norway is one of very few countries in Europe with only two mobile operators with their own nationwide mobile networks. Of the two operators, Telenor has been the dominant player. Mobile operators without their own network have to rent access to either Telenor’s or Telia’s network. In order to ensure effective competition in this market, the development of a third mobile network has been regarded as a key measure. The NCT further upholds the NCA's assessments of the roaming agreement's reduction of Network Norway's incentives to continue the roll out of the third mobile network.
In its decision, the NCT finds that Telenor through the pricing model in its wholesale agreement disincentivized Network Norway from further investments in the construction of a third mobile network. With regard to the responsibility dominant undertakings have not to act in a manner that restricts competition, the NCT concluded that the pricing model represented an abuse of Telenor’s dominant position. The NCA concluded that Telenor’s abuse of its dominant position took place in the period 2010-2014.
Arntzen de Besche's competition law team has significant experience in abuse of dominance and other contentious competition investigations. For the sake of completeness, please note that our partner Svein Terje Tveit was part of the team at Thommessen that assisted Telenor from 2012-2018.