ESA: ‘Telenor broke competition rules’

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Norway’s large multinational telecoms firm Telenor, already caught up in a corruption investigation, now faces huge fines for allegedly hindering competition in the Norwegian mobile telephone market. It’s the latest in a series of problems for Telenor’s new chief executive, Sigve Brekke.

Dagens Næringsliv (DN) reported Monday that the regulatory agency for the European Free Trade Association (ESA) confirmed it is worried that Telenor has misused its dominant position in Norway. It has sent Telenor a lengthy complaint, outlining its concerns and demanding a reponse.

Raided three years ago
The case dates back to a raid on Telenor offices in December 2012, when various regulatory agencies seized records based on suspicions that Telenor had violated ESA’s competition laws. The chief executive at the time was Jon Fredrik Baksaas, who was replaced last year by Brekke, former chief of Telenor’s operations in Asia.

Already then came reports that Telenor was liable to face huge fines for hindering competition. DN cited the boss of ESA at the time as saying that the biggest fine could amount to 10 percent of the company’s total revenues, which were NOK 98.5 billion in 2011. That would put a fine at nearly NOK 10 billion (more than USD 1 billion) if ESA were to conclude that Telenor has broken competition rules, but former ESA director Per Andreas Bjørgan said most fines are lower than the maximum allowed.

Now the ESA has reached a preliminary conclusion that Telenor hindered competition in two markets for mobile phone services for Norwegian customers. Current ESA director Gjermund Mathisen said it was too early to estimate what the fine might be: “It’s much too early in the process,” he told DN on Monday.

Three years of investigation, two months to respond
That process now gives Telenor until April to respond to ESA’s concerns, which were sent to the company on Monday. That means that while ESA took more than three years to probe its competition concerns and file charges, Telenor is given just over two months to respond. Mathisen denied the investigation had taken too long and promised to hear Telenor’s defense.

“We will now give Telenor an opportunity to offer its views,” Mathisen said. “It’s important for us to listen to what Telenor has to say.”

Telenor CEO Brekke told DN that his company must now examine and evaluate ESA’s specific concerns, which he couldn’t yet comment on in detail. “We have received 112 pages (of text from ESA), which we have to go through first,” Brekke told DN. Telenor shares fell on the news from ESA, with the price down 0.85 percent to NOK 139.60 by late afternoon.

newsinenglish.no/Nina Berglund