Competition Commission fines Swisscom 220 million francs
The Competition Commission (ComCo) fines Swisscom CHF 220 million for abusive pricing of broadband services. Swisscom rejects the accusations and intends to contest the ruling.
The Competition Commission is of the opinion that Swisscom holds a dominant position in the broadband market and charged excessively high prices for DSL wholesale services (Broadband Connectivity Service, BBCS for short) until the end of 2007. It accuses the company that the margin between Swisscom's BBCS wholesale service and the retail prices for DSL broadband offers was too small and that competitors were therefore unable to operate their DSL business profitably. Accordingly, Swisscom had impeded its competitors in a manner contrary to antitrust law. On the basis of these allegations, the Competition Commission is imposing a fine of around CHF 220 million on Swisscom, thereby largely following the proposal submitted by its Secretariat on November 12, 2008.
Swisscom files an appeal with the Federal Administrative Court
Swisscom rejects the accusations and considers the sanction imposed to be unjustified, as it wrote in a press release on Thursday. In Switzerland, there is intense infrastructure competition with the various cable networks, the latest mobile networks and future fiber optic networks. According to the OECD, this leads to the fourth-highest market penetration worldwide. The Federal Office of Communications (OFCOM) has also noted that broadband prices for average usage requirements fell by more than a third between 2001 and 2008. The unbundling introduced in April 2007 has also stimulated competition. Swisscom has also proven that it can operate the DSL end-customer business profitably. There can therefore be no question of the margin being too small. The press release also states that the company disputed the Competition Commission's authority to impose fines in the proceedings on mobile termination prices. This legal issue is pending before the Federal Administrative Court as the highest instance of the Competition Commission. Swisscom had therefore requested the Competition Commission to suspend the DSL proceedings. "Swisscom is therefore very surprised that the Competition Commission has not waited for the forthcoming landmark decision of the court and has imposed a further sanction against Swisscom despite the unclear legal situation."
Given this starting position, Swisscom feels compelled to file an appeal with the Federal Administrative Court in these proceedings as well. "The company considers its chances in the appeal proceedings to be intact and is therefore not making any provisions according to current estimates."
Sunrise and the Foundation for Consumer Protection take a stand
Competitor Sunrise also criticized the fact that the first antitrust investigation began over seven years ago. The ADSL market had developed to maturity in the meantime. A large number of providers (such as Tiscali, Cybernet, Easynet, Econophone) had already disappeared. According to Sunrise, this confirms that there are inadequate competitive conditions in Switzerland. A revision of the Telecommunications Act is unavoidable. In particular, discrimination in the future fiber optic network must be prevented from the outset, Sunrise demanded.
The Stiftung für Konsumentenschutz (Foundation for Consumer Protection) has taken the same line: the proceedings show that the Federal Communications Commission (ComCom) urgently needs to be strengthened. The authority should be able to intervene on its own initiative and order a price reduction. A motion for the corresponding partial revision of the Telecommunications Act had only been adopted by the Council of States. This means that there is still a risk that consumers will have to pay too much for years to come. Accordingly, the CHF 220 million that Swisscom has to pay as a fine also belongs to consumers. However, the sum will trickle away into the federal coffers.
Swisscom files an appeal with the Federal Administrative Court
Swisscom rejects the accusations and considers the sanction imposed to be unjustified, as it wrote in a press release on Thursday. In Switzerland, there is intense infrastructure competition with the various cable networks, the latest mobile networks and future fiber optic networks. According to the OECD, this leads to the fourth-highest market penetration worldwide. The Federal Office of Communications (OFCOM) has also noted that broadband prices for average usage requirements fell by more than a third between 2001 and 2008. The unbundling introduced in April 2007 has also stimulated competition. Swisscom has also proven that it can operate the DSL end-customer business profitably. There can therefore be no question of the margin being too small. The press release also states that the company disputed the Competition Commission's authority to impose fines in the proceedings on mobile termination prices. This legal issue is pending before the Federal Administrative Court as the highest instance of the Competition Commission. Swisscom had therefore requested the Competition Commission to suspend the DSL proceedings. "Swisscom is therefore very surprised that the Competition Commission has not waited for the forthcoming landmark decision of the court and has imposed a further sanction against Swisscom despite the unclear legal situation."
Given this starting position, Swisscom feels compelled to file an appeal with the Federal Administrative Court in these proceedings as well. "The company considers its chances in the appeal proceedings to be intact and is therefore not making any provisions according to current estimates."
Sunrise and the Foundation for Consumer Protection take a stand
Competitor Sunrise also criticized the fact that the first antitrust investigation began over seven years ago. The ADSL market had developed to maturity in the meantime. A large number of providers (such as Tiscali, Cybernet, Easynet, Econophone) had already disappeared. According to Sunrise, this confirms that there are inadequate competitive conditions in Switzerland. A revision of the Telecommunications Act is unavoidable. In particular, discrimination in the future fiber optic network must be prevented from the outset, Sunrise demanded.
The Stiftung für Konsumentenschutz (Foundation for Consumer Protection) has taken the same line: the proceedings show that the Federal Communications Commission (ComCom) urgently needs to be strengthened. The authority should be able to intervene on its own initiative and order a price reduction. A motion for the corresponding partial revision of the Telecommunications Act had only been adopted by the Council of States. This means that there is still a risk that consumers will have to pay too much for years to come. Accordingly, the CHF 220 million that Swisscom has to pay as a fine also belongs to consumers. However, the sum will trickle away into the federal coffers.
