AdC imposes fine of 84 million euros to MEO for cartel with NOWO

Press release 20/2020
 
AdC imposes fine of 84 million euros to MEO for cartel with NOWO
 
The AdC - Portuguese Competition Authority imposed a fine of 84 million euros on the telecommunication operator MEO for market sharing and price fixing of mobile and fixed telecommunications services with NOWO – Communications.
 
The cartel established by MEO and NOWO resulted in higher prices and less quality of service, as well in as geographical restrictions that harmed consumers throughout the Portuguese territory.
 
Following the conclusion of an MVNO contract between these companies, MEO and NOWO entered into an anti-competitive agreement whereby NOWO has agreed not to launch mobile services outside the geographic areas where it provided fixed services, thus not competing with MEO in Lisbon and Porto areas.
 
In the scope of this cartel, NOWO has agreed with MEO not to make mobile offers for EUR 5 or less (or with prices lower than the reference price of similar offers in the market). NOWO also agreed to implement price increases and reduce the quality of bundled offers of fixed and mobile services.
 
On the other hand, MEO undertook to improve the contractual conditions of the MVNO contract with NOWO, especially with regard to the prices charged, and to solve operational problems within the scope of the execution of that contract.
 
The cartel was in force at least between early January and the end of November 2018, when the AdC carried out unannounced inspections at both companies' premises.
The AdC had issued a Statement of Objections to MEO and NOWO on December 20, 2019, following which the companies had the opportunity to defend themselves regarding the Statement of Objections.
 
In addition to imposing a fine of 84 million euros to MEO, the AdC also applied to this company the ancillary sanction of publishing an extract of the final decision issued by the AdC in Diário da República (the official journal) and in a national newspaper.
 
The case was opened by the AdC following a complaint submitted by NOWO under the Leniency Program. NOWO was exempted, through this program, from the payment of a fine.
 
The Leniency Program is a special regime under Portuguese Competition Law that allows the exemption or reduction of fines in cartels investigated by the AdC.  The first undertaking to report the participation in a cartel may benefit from total exemption of the fine. The following undertakings may benefit from a progressively lower reduction of the fine.
 
Competition Law forbids agreements between undertakings that restrict competition, in all or part of the market, reducing welfare of consumers and undertakings.
Combatting cartels, namely in sectors with significant weight in the Portuguese economy, such as telecommunications, is a priority for the AdC. Cartels may cause significant losses to consumers, forcing them to pay higher prices for less quality and diversity of goods or services.
 
Infringement of competition rules not only reduces welfare of the consumers, it may also harm the competitiveness of businesses, and therefore causing losses to the economy as a whole.
 
An MVNO is a virtual network operator, which has not invested in telecommunications infrastructures (towers, antennas, radio frequency spectrum) and “leases” the right to use part of the infrastructure of a telecommunications operator. An MVNO is only responsible for the commercialization and billing of the service, in addition to serving customers, which allows it to offer lower prices on the services it provides.
 
December 3, 2020