EU fine on leading Polish telco could open door to compensation claims

Telecommunications specialists predict that the European Commission anti-trust fine levied last week against Telekomunikacja Polska S.A. (TPSA) could open the door to compensation claims from competitors, writes Andrew Kureth.

Brussels hit TPSA, Poland's dominant telecom operator, with a €127.5 million penalty, saying it had illegally stymied competitors' access to its network.

In a statement addressing the ruling, the Commission (EC) said that between August 2005 and October 2009, the firm, which is 49% owned by France Telecom, blocked or delayed its competitors from entering the Polish broadband market.

“This case shows our determination to ensure that dominant telecom operators do not systematically hinder competitors who can make a real difference in the market to the benefit of consumers and businesses,” said EU competition Commissioner Joaquin Almunia.

As the decision reverberates throughout Poland's telecoms market, analysts said that the door has now been opened for the company's competitors to gain compensation through the courts.

Piotr Janik, a telecoms analyst at KBC Securities in Warsaw, said he saw the possibility that Netia, TPSA's biggest competitor in Poland’s landline market, could see the ruling as the basis for a claim.

“I would not be surprised if Netia filed some claim for remuneration. It could be an opportunity for them since the EC has opened the door for compensation claims,” he said.

“It's widely known that either the regulator or the EC found some facts that could suggest that TPSA was abusing its dominant market position and made the life of alternative operators a bit more difficult,” he added.

When asked if he thought the decision was justified, despite the ruling concerning actions taken as many as six years ago, Janik said Brussels had acted correctly.

“If the EC is trying to keep market competitiveness as high as possible…then it is the right decision,” he said.

In its response to the ruling, TPSA said: “The EC’s decision is surprising, as the contemplated irregularities were voluntarily removed by TP [TPSA] promptly upon discovery, ie, no later than in 2009.”

The company had been fined several times by local Polish anti-trust regulators for the same violations. In 2006 alone it received Polish Zloty 500 million ($179 million) in fines for non-compliance.

Nevertheless, Janik said that the penalty was par for the course for the EC, which had handed down penalties to companies in other countries that had also been fined by their local regulators in the past.

“Look at the level of the fine – it could have been up to 10 per cent [of 2010 revenues] and it was only 3 per cent. So they got off easy,” he added.

Whatever compensation claims are made, they will likely take a long time to work their way through the courts, as TPSA has already pledged to fight the ruling – it could take Brussels to the European Court of Justice for an appeal.

“The decision of the EC is not final. Therefore, TP will cooperate with its lawyers to take any and all possible and reasonable steps regarding the EC’s decision,” the company said in its official statement.

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