Gulating Court of Appeal agrees with the Norwegian Competition Authority that Telenor has abused its dominant position in the Norwegian mobile market and upholds fine of 788 million NOK.
The Court Appeal concludes in its judgment that Telenor created barriers for the development of a third mobile network in Norway, and thereby limited the possibilities for a competitor to enter the market. This is a serious violation of the Norwegian Competition Act. Telenor as a dominant company has a special responsibility not to allow its conduct to impair genuine undistorted competition on the market.
– We are satisfied that the Court of Appeal shares the Competition Authority’s view that this is a serious violation of the Norwegian Competition Act, a view that the Competition Tribunal also shared. The market for mobile communication services is a large and important market for Norwegian consumers. The size of the fine reflects the fact that Telenor has a significant turnover in this market, says Director General Lars Sørgard.
Norway has been one of very few countries in Europe with only two mobile operators with their own nationwide mobile network, with Telenor as the dominant player. Mobile operators without their own network have to rent access to either Telenor’s or Telia’s network. Due to the lack of effective competition, the Norwegian mobile market is still regulated. Therefore, the development of a third mobile network in Norway was key to achieving increased competition in this market.
Intention to limit the rollout of a third network
In 2007, Network Norway started the construction of a third mobile network together with Tele2. During the rollout of the network, Network Norway bought access to Telenors’ network in the areas where the third mobile network did not yet have coverage.
In 2010, Telenor changed the conditions in its network access agreement with Network Norway. It is in this regard that Telenor abused its dominant position. Through the new agreement, Telenor reduced the cost for the actual use of Telenor’s network, but at the same time introduced a fee that increased with the number of Network Norway’s end users. Network Norway had to continue to pay this fee even though it increased the use of its own network.
– Telenor’s amended rental terms reduced Network Norway’s incentives to continue the rollout of the third mobile network. Telenor consciously designed the conditions in the supplementary agreement in order to limit Network Norway’s further investment in the third network, and with the belief that the investments would be reduced. The Authority is pleased that this is made clear by the Court of Appeal and is emphasised in its ruling, says Senior Advisor in the Norwegian Competition Authority, Heidar Larsen.
The Court of Appeal also confirms that Telenor had a dominant position in the period from 2010 to 2014, when the abuse took place.
A fine of 788 million NOK is imposed on Telenor. This is the highest fine imposed on a company in Norway for abuse of a dominant position.
The judgment of Gulating Court of Appeal (in Norwegian only) >>
Background:
– The Competition Authority carried out unannounced inspections at the premises of Telenor Norge AS and Telenor ASA from 4 to 13 December 2012.
– The suspected infringements concerned possible abuses of a dominant position in the Norwegian mobile communications market.
– The Competition Authority analysed substantial amounts of documents and data obtained during the inspections at Telenor’s premises, gathered information from other market players and conducted several interviews in the course of its investigation.
– The Competition Authority issued a Statement of Objections to Telenor on 23 November 2016 for two possible abuses of a dominant position in breach of Section 11 of the Competition Act and Article 54 of the EEA Agreement.
– After having received Telenor’s reply to the Statement of Objections, the Competition Authority decided not proceeded with one of the suspected abuses, which concerned Telenors’ use of exclusivity clauses in certain of its agreements.
– On 21 June 2018, the Competition Authority found that Telenor’s amendments of the pricing structure in the supplementary access agreement concluded with Network Norway constituted an abuse of dominance in violation of Section § 11 the Norwegian Competition Act and Article 54 of the EEA Agreement and imposed a fine of 788 million NOK on Telenor.
– Telenor appealed the decision of the Competition Authority before the Competition Tribunal on 20 December 2018.
– On 19 June 2019, the Competition Tribunal upheld the decision of the Competition Authority as well as the fine of 788 million NOK.
– On 18 September 2020, Telenor appealed the decision of the Competition Tribunal before Gulating Court of Appeal.
– On 24 June 2021, Gulating Court of Appeal handed down its judgment in the case.
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Sven Heidar Larsen, Senior Advisor, Norwegian Competition Authority.
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