European Commission warns Spanish regulator over Telefónica price caps

The European Commission has formally asked Spanish regulator CNMC to withdraw or amend its proposal to cap the prices which  dominant operator Telefónica can charge rivals that want to sell broadband services on it network.

The Commission said that it warned the regulator in June that its plan “may not be compatible with EU telecoms rules, could be detrimental to competition and would not incentivise investment in high speed broadband”.

The Commission added that it is particularly concerned that the Spanish regulator´s proposed price setting model would lead to regulated prices up to 50 per cent above cost-efficient levels. Furthermore, the wholesale broadband access product is the only regulated offer on Telefónica’s fibre network and the Spanish regulator does not plan to impose other competition safeguards such as stricter non-discrimination rules, the EC added.

The Commission explained that it carried out a three month investigation, and concluded that CNMC´s measure still lacks transparency and contains an element of arbitrariness, as CNMC failed to justify in detail the price levels set. BEREC, the body of European Telecoms Regulators, has also expressed support for majority of the Commission’s concerns, it added.

“The Commission now requires the Spanish regulator to withdraw or amend its proposal in order to bring it in line with EU telecoms rules,” the Commission said in a statement. “Should CNMC fail to follow the Commission’s recommendation, the Commission will consider any appropriate legal steps.”