Spain’s antitrust watchdog fines Telefonica over DTS takeover terms

(Reuters) – Spain’s antitrust watchdog on Friday imposed a 6-million-euro ($6.35 million) fine on Telefonica for commercial practices, such as permanence clauses on smart phone leases, that violated the terms of a 2015 takeover accord for cable TV operator DTS.

CNMC, or the regulator as it is commonly known, claimed Telefonica’s offer to lease smart phones and so-called permanence clauses that prevented clients from switching providers, violated its commitments.

CNMC stated that Telefonica had committed to ensuring free competition by not preventing pay-TV customers from switching to other providers for at most five years. It also stated that the period was extended by three more years for 2020.

CNMC stated that clients who signed the Movistar Fusion package beginning April 11, 2021, and took out a smartphone lease, were subjected to permanent conditions and a penalty for early discharging over a three year period. Telefonica made it impossible for clients to contract similar services from other operators by limiting their ability to do so with these contracts.

Within two months, the fine can be appealed to the national high court. According to the regulator it started proceedings in December 2022.

Telefonica spokesmen said that Telefonica will appeal, as it does not believe it has broken its obligations regarding permanence conditions on pay TV services.

Telefonica is Spain’s largest cable-TV operator by number of subscribers. It bought DTS from Prisa, a Spanish media company, for 724.6 million euros ($769.6 millions).

($1=0.9446 euros)

(Reporting by Joao manuel Mauricio at Gdansk; Editing done by Inti landauro and Sharon Singleton).