TELECOM Digest OnLine - Sorted: French Mobile Phone Cartel Faces Big Fine

French Mobile Phone Cartel Faces Big Fine

Laurence Frost (
Thu, 1 Dec 2005 13:27:03 -0600

By LAURENCE FROST, AP Business Writer

French antitrust authorities slapped record fines on the country's
mobile operators Thursday after a four-year investigation found that
Orange, SFR and Bouygues illegally shared sales data and conspired to
undermine competition.

The networks were ordered to pay a combined 534 million euros ($628
million) -- the largest penalty ever imposed by France's Competition
Council and Europe's second-largest antitrust fine. All three vowed to

In a 90-page report, the watchdog said the operators had shared
"precise and confidential" commercial information every month for six
years and had even agreed to freeze their market shares in 2000-2002,
easing competitive pressure on prices.

"The existence of this collusion has been established through the
recovery of serious, precise and consistent evidence, including
handwritten documents explicitly mentioning an 'agreement' between the
three operators," the regulator said.

France's main consumer organization, UFC-Que Choisir, said it now
plans to sue for damages estimated at 50 euros to 80 euros ($59 to
$94) per mobile subscriber. UFC filed a complaint against all three
networks in 2002, a year after the antitrust authority launched its
own probe.

The decision is potentially embarrassing for Finance Minister Thierry
Breton, who took over as chairman and chief executive of Orange parent
France Telecom SA in 2002, a year before the illegal information
exchanges stopped.

Prime Minister Dominique de Villepin came to Breton's defense Thursday
when asked whether the minister's former France Telecom role --
relinquished earlier this year -- could undermine his position.

"That has absolutely nothing to do with it," Villepin said. "Thierry
Breton is doing a great job as finance minister and he will continue
doing his job."

Orange vowed to appeal its 256 million euros ($301 million) fine, the
largest of the three, describing the penalty as "unfounded and
excessive." Vivendi Universal SA's SFR and Bouygues SA's telecoms
division also said they plan to challenge their respective penalties
of 220 million euros ($259 million) and 58 million euros ($68 million)
in the appeal courts.

During the investigation, the three mobile networks admitted sharing
confidential sales data, arguing unsuccessfully that it had not
distorted competition and that they had not sought to freeze market

But investigators found an incriminating paper trail, including a
handwritten note seized from the office of SFR General Manager Pierre
Bardon that mentions Michel Bon, Breton's France Telecom predecessor,
and Orange France CEO Didier Quillot.

"Michel Bon via D. Quillot is OK to renew the 2000 market-share
agreement in 2001," reads the note, as transcribed in the Competition
Council report.

Documents recovered from France Telecom, including notebooks kept by
Quillot, also referred to the deal as a "market-share Yalta" - an
apparent reference to the 1945 conference that paved the way for
Europe's postwar carve-up between East and West.

Quillot, who still heads Orange France, declined to comment through a

The market-share deal was concluded at a time when sales were slowing
on the maturing French mobile market, the regulator said, leading to
"increased prices" for consumers as operators sought to squeeze profit
growth from existing clients instead of new subscribers.

The three operators began exchanging sales data three years earlier,
in 1997, and stopped the practice only in late 2003, in response to
the antitrust probe.

The total fines announced Thursday are the second-largest in European
antitrust history. In 2001, the European Commission fined eight drug
companies a combined 855 million euros (then worth $755 million) for

U.S. shares of France Telecom, each worth one ordinary share, rose 39
cents to $25.38 in afternoon trading on the New York Stock
Exchange. U.S. shares of Vivendi Universal rose 73 cents o $29.68 on

Associated Press Writers Matt Moore in Frankfurt, Aoife White in Brussels,
Toby Sterling in Amsterdam and David Ariel in Rome contributed to this

Copyright 2005 The Associated Press.

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