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Wednesday, July 17, 2024

Telenor hit with enormous fine

Norway’s top state competition regulator slapped leading telecoms firm Telenor, which remains majority-owned by the Norwegian state, with a fine of NOK 788 million (USD 97 million) on Thursday. The authorities claim Telenor abused its market power by preventing competitors from establishing a third mobile phone network in Norway. Telenor disagrees and is expected to appeal.

Norway’s top competition regulator Lars Sørgard is convinced that Telenor violated competition law and abused its dominant position in the Norwegian market. PHOTO: Konkurransetilsynet/Marit Hommedal

“We have determined that Telenor misused its dominant position in the Norwegian mobile market,” declared Lars Sørgard, director of Norway’s competition authority (Konkurransetilsynet) Thursday morning. “The company has consciously set out hindrances in the way of building out a third mobile network in Norway.”

He claimed the country has had a goal of building a third network to strengthen competition in Norway. “When dominant players hinder competitors  from establishing themselves in this manner, it’s a serious violation of competition law,” Sørgard said.

Norway is one of few countries in the world that only has two nationwide mobile phone networks, one owned by Telenor and the other owned by its chief rival Telia. State authorities claim the lack of other network options limits competition and adversely affects customers.

Six-year investigation
The case against Telenor extends back to 2012, when both regulators from both the Norwegian competition authority and the EU’s European Free Trade Association (EFTA, of which Norway is a member) raided the offices of both Telenor Norge and parent company Telenor ASA. Telenor evolved from Norway’s former state telephone untility company in the 1990s and has since expanded internationally. The Norwegian government still holds 54 percent of Telenor’s shares while the rest was sold off to private investors.

In November 2016, Norwegian regulators warned that they planned to fine Telenor as much as NOK 906 million for what they viewed as abuse of market power from 2010 to 2014. Norwegian Broadcasting (NRK) reported that fine has now been reduced to NOK 788 million because the Norwegian regulators no longer think Telenor violated competition law in four major deals as a supplier of telecommunications services. That portion of the complaint has thus been dropped.

Berit Svendsen, CEO of Telenor’s Norwegian operations, said Telenor disagrees with the regulators’ conclusions. The company will likely appeal. PHOTO: Telenor

Telenor still faces one of the biggest fines in Norwegian history. It stems from plans dating back to 2007 when another player in the telecoms business, Network Norway, planned to build a third mobile phone network along with Tele2. Telenor was obligated to provide Network Norway and Tele2 access to Telenor’s network in areas where their third network was not completed.

In 2010 Telenor changed the terms of its agreement with Network Norway, and that’s where the alleged violation of competition law lies. The changes made the entire project less profitable for Network Norway when Telenor lowered the price for use of its network but simultaneously imposed a fee that would rise in line with the number of customers using it. That removed incentives to complete establishment of the third network.

‘We disagree’
Telenor officials are predictably upset by the authorities’ conclusions and seemed poised to fight it Thursday morning. “We have cooperated well with Konkurransetilsynet and accommodated their work all along,” Berit Svendsen, chief executive of Telenor Norge, stated in a press release after the fine was announced. “We disagree that we have violated competition law.”

Telenor can file a complaint of its own with the commission overseeing the regulators, and can ultimately appeal to the courts as well. Telenor must file its appeal within six months.

“Now we’ll use that time to go through all sides of this issue,” Svendsen stated. “We expect that we will appeal this measure.”

Telenor ranked as one of the most actively traded shares on the Oslo Stock Exchange Thursday morning, with its share price down 0.59 percent on news of the fine. Berglund



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