EU regulators: Telefonica, Portugal Telecom deal illegal

 

An agreement between Spain's Telefonica and Portugal Telecom not to compete against each other in the Iberian market is illegal, European Union regulators said on Tuesday, after sending a charge sheet to the telecoms operators.

"The (European) Commission is of the preliminary view that this agreement hinders competition in breach of EU antitrust rules that prohibit restrictive business practices," the EU executive said in a statement.

"Non-compete clauses are one of the most serious violations of fair and healthy competition," it added.

The Commission, which opened an investigation into the issue in January, said it had sent the telecoms firms a "statement of objections", where it sets out its concerns on the agreement, even though the operators scrapped the contract in February.

The companies drew up the agreement as part of Telefonica's acquisition of sole control of Brazilian mobile operator Vivo in 2010, which was then jointly owned by the operators.

The companies have two months to reply to the statement of objections. Telefonica's shares were down 1.8% at 15 euros by 1547 GMT and Portugal Telecom's were 2.7% lower at 5.14 euros. The Stoxx 600 telecoms index was 1.2% off.