The director of Norway’s national communications authority (Nkom) says he’s not surprised that fellow regulators at the state competition authority want to hit Telenor with a record fine. Nkom also slapped Telenor with tougher measures last summer, to keep it from abusing its powerful market position.
Telenor itself claimed it was indeed surprised over a warning issued by the competition authority (Konkurransetilsynet) on Wednesday that it wants to issue a fine amounting to NOK 906 million (USD 105 million). After a lengthy investigation that followed raids on Telenor offices four years ago, the competition authority has concluded that Telenor tried to block the establishment of a third mobile phone network in Norway.
Norwegian Broadcasting (NRK) reported that the alleged blocking came at the cost of a Telenor competitor, according to the authorities. Norway is one of few countries in Europe with just two nationwide mobile networks, belonging to Telenor and Telia. ICE is now working to roll out a third network.
‘Biggest fine ever’
The authorities maintain that Telenor was obligated to help Network Norway and Tele2 when they tried to establish a third mobile network in 2007. Instead, Telenor allegedly set up hindrances and has also allegedly entered into exclusive agreements with mobile operators to limit opportunities for customers using a third network.
“This pertains to a large and important market for many consumers,” Lars Sørgaard, director of Konkurransetilsynet, told NRK. “It’s serious.”
That’s why the fine is so high, more than triple that accepted by another large company, Yara, in a major corruption case. “This is the biggest fine ever imposed upon a Norwegian company,” Sørgaard said. “Abuse of market dominance is an important area in the competition law, and breaking the rules must have serious consequences for the companies involved.”
Torstein Olsen of Nkom also stated in a press release Wednesday afternoon that there are “serious competition problems” in the mobile phone market. “I’m really not surprised by this (the fine proposed against Telenor),” Olsen told NRK. “We have followed the mobile markets for many years, analyzed them, and come to the conclusion that there are competition problems.”
Olsen said that Nkom has subjected Telenor to stricter regulation, striking down, for example, the use of exclusive agreements with various players. “Telenor has dominated the Norwegian mobile market for many years,” Olsen said. “We have determined it was necessary to regulate Telenor as the dominant player.”
Telenor likely to object
Telenor officials claim they were surprised not only by the fine but especially its size. Telenor also disagrees with the competition authority’s evaluation. Berit Svendsen, chief executive of Telenor Norge, noted that a local court in Asker og Bærum concluded in 2012 that the same type of agreement to which the authorities now object was legal under competition rules.
Telenor’s communications director Torild Lid Uribarri said Telenor’s lawyers will now thoroughly examine the authority’s objections and respond within the deadline. “In general terms we believe that we do not have agreements that limit competition, and we will defend that,” Uribarri said.
Telenor has until March 1 to respond to the proposed fine. The state still owns 54 percent of Telenor, which evolved from the former state telephone utility. Trade Minister Monica Mæland, who’s in charge of the state’s investments in Norwegian companies, did not want to comment on the fine.
“The competition authority has an independent position and monitors the competition law independently of the ministry,” Mæland wrote in an email to NRK. “Questions must be directed to the authority or Telenor.”