Brussels Brief - March 9, 2011 - European developments impacting dominant, vertically integrated operators – the TeliaSonera judgment

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Introduction

On 17 February 2011, the European Court of Justice (ECJ) – on a reference for a preliminary ruling by the Stockholm District Court (SDC) – clarified, and indeed expanded upon, the scope of the law in relation to pricing practices of vertically integrated companies. The ruling impacts dominant, vertically integrated companies active both within and outside of regulated markets, such as telecoms. Companies on both sides of the Atlantic are therefore called upon to once again pay heed to the EU dominance rules (Article 102 TFEU).

Background

The Swedish Competition Authority (SCA) deemed that TeliaSonera (the dominant telephone company and mobile network operator in Sweden) had abused its dominant position by applying a pricing policy pursuant to which the spread between the sale prices of ADSL products intended for wholesale users, and the sale prices of services offered to end users, was insufficient to cover the costs which TeliaSonera itself had to incur to distribute those services to end users.

The SCA therefore brought an action before the SDC requesting that the latter order TeliaSonera to pay an administrative fine for having breached domestic and EU abuse of dominance rules.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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