Norwegian telecoms giant Telenor Norge and its parent company Telenor ASA are under investigation by the European Free Trade Association’s (EFTA) Surveillance Authority, the ESA, over allegations the partially state-owned company breached European competition rules. It’s the second investigation launched against Telenor this month, after white collar crime unit Økokrim raided its offices over its links to controversial mobile phone company VimpelCom Ltd.
“The Authority will examine whether Telenor has charged prices resulting in an illegal margin squeeze on its competitors in respect of the provision of retail mobile data services and of bundles of retail mobile telecommunications services,” said the ESA in a press release on Wednesday.
“The Authority also intends to investigate whether clauses in Telenor’s retail agreements concluded with customers for the supply of mobile telecommunications services give rise to market foreclosure concerns,” the release stated.
The ESA said it gathered a significant amount of data during an unannounced inspection of Telenor Norge and Telenor ASA’s offices in December 2012. The head of the ESA’s Competition and State Aid Directorate, Per Andreas Bjørgan, said the opening of the investigation did not mean the ESA had found any infringements, only that an in-depth investigation was needed.
If any “illegal margin squeeze” had occured, the ESA said it could hinder market entry and expansion. That in turn would impact consumers by limiting choice, affecting retail prices and product development.
“They asked for a lot of information, but we don’t have detailed knowledge of exactly what they are after,” Torlild Uribarri, Telenor Norge’s communications director told newspaper DagensNæringsliv (DN). “They’re looking for one thing or another.”
“We believe we have not done anything wrong in relation to competition legislation in the Norwegian market, and we believe that still,” said Uribarri. She emphasised the ESA’s comments that opening a formal investigation did not mean the watchdog had reached any conclusions.
Telenor introduced a new pricing model in the autumn of 2011, reported DN. Data allowances were the central to the new packages, which included text messages and calling minutes. The new phone plans were a huge success for Telenor, and increased their market share throughout 2012. Mobile phone data services and bundles are both specifically mentioned in the ESA’s release.
Norwegian competitors Netcom found it odd that Telenor would push down prices in such a way, while Tele2 claimed Telenor’s prices were lower than what the company had offered them for resale in the wholesale market, reported DN.
Uribarri would not speculate on whether the ESA investigation is related to Telenor’s mobile packages. Telenor was also found by both the Norwegian Post and Telecommunications Authority (Post-og Teletilsynet) and the Ministry of Transport and Communications (Samferdselsdepartementet) to have overcharged Danish competitor TDC, but Uribarri couldn’t say if that case is part of the new investigation.
Earlier this month, Telenor was raided by Økokrim over its substantial stake in VimpelCom Ltd, which is the target of an international corruption investigation.
The ESA was set up to monitor Norway, Iceland and Liechtenstein’s compliance with European Economic Area (EEA) rules, so the countries can participate in the internal European market.