Competition Council Imposes Highest Ever Fine on Mobile Operator Proximus

The investigation was closed in 2008. The Competition Prosecutor indicated in its report to the Competition Council that Proximus had a dominant position on the Belgian market for mobile telephone services and had abused this position in several ways.

The Competition Council also found that from 2002 to 2005, Proximus had a dominant position on the Belgian market for mobile telephone services, with a particularly significant market position in the market segment for professional clients with specific requirements, including large corporations and public authorities. This assessment was mainly based on the historical (and still important) market position of Proximus compared to its two competitors during the relevant period. Until 1995, Proximus (at that time called Belgacom Mobile) was Belgium's sole provider of mobile telephone services. It was not until 1995 and 1998 respectively that the second (Mobistar) and third (Base) operators were authorized to enter the market. Proximus's position was further reinforced by certain additional factors, such as the fact that it belongs to the incumbent telecommunications provider Belgacom, which allowed it to avail of Belgacom's highly developed sales network.

Regarding the alleged abuses of dominant position, only one was withheld by the Competition Council - the so-called 'margin squeeze' in 2004 and 2005.

In its complaint brought in 2005, Base (subsequently followed by Mobistar) claimed that it could not enter the professional client market because it could not compete with Proximus's tariffs for such clients. On investigation, the council found that because of the margin squeeze exerted by Proximus, Base and Mobistar could not undercut or even match its tariffs. It found that in 2004 and 2005, the prices for on-network calls (ie, calls between Proximus customers) that Proximus charged its professional customers were lower than the mobile termination rates charged to Base and Mobistar (ie, the rates that Proximus charged its competitors for terminating calls made by their customers on the Proximus network).

Consequently, Proximus was held responsible for a serious breach of Belgian and EU competition rules, and was hit with the highest fine ever imposed by the Competition Council - €66.3 million. The fine amounted to 15% of the sales made by Proximus in that market sector in 2005 (€340 million), increased by 30% because the behaviour was proven to have continued over two years.

Proximus has lodged an appeal against the fine. Base and Mobistar have already lodged damages claims for more than €1 billion before the Brussels Court of Commerce.

For further information on this topic please contact Carmen Verdonck or Geoffroy Regout at Altius by telephone (+32 2 426 1414) or by fax (+32 2 426 2030) or by email (carmen.verdonck@altius.com or geoffroy.regout@altius.com).