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Telefonica-Yoigo sharing deal now facing competition probe

Rivals claim networking sharing deal could have breached Spanish competition laws.
Written by Steve Evans, Contributor

The National Commission for Markets and Competition (CNMC), Spain's competition watchdog, has confirmed it will look into the network sharing deal struck by Telefonica and Yoigo.

The agreement, announced in July this year, enabled Telefonica to use Yoigo's 4G network, while in return Yoigo was given access to Telefonica's broadband infrastructure, allowing it to offer mobile, fixed line and broadband bundles to its customers.

It is the second element of the deal that has drawn the ire of Telefonica and Yoigo's rivals. Orange and Vodafone both filed complaints with the regulator, arguing that the deal was a restriction of competition, claiming Yoigo's triple-play packages bore names and pricing that were very similar to Telefonica's Fusion offerings.

According to Vodafone's complaint, this showed the agreement "involves coordination of market behaviour, information exchange, resignation to compete and, as a result, competition restriction".

In a statement sent to ZDNet, the watchdog confirmed it has formally opened an investigation into the deal after evidence was revealed that suggested the deal breached rules set out in the Spanish Competition Act and the Treaty on the Functioning of the European Union (TFEU).

"An analysis of the information gathered shows that the agreements entered into by Telefonica and Yoigo for the shared use or rollout of mobile telephone networks and for the commercial distribution by Yoigo of a product that overlaps with its mobile services and the landline services of Telefonica may amount to an unlawful restriction on competition," the statement said.

The CNMC now has up to 18 months to investigate the deal. It also confirmed to ZDNet that no "precautionary measures" have been taken against either operator, so both can continue selling the services at issue. Vodafone's complaint had requested that the deal be suspended while an investigation takes place.

Yoigo said in a statement: "From the beginning, the agreement between Telstra (Yoigo) and Telefonica has been characterised by full transparency in the marketing of offerings by Telstra and the use of Telstra's 4G network by Telefonica.

"We believe the agreement functions as a boost to competition in both the fixed market, in which Telstra was not present, and in the mobile market, making it possible for Telefonica to offer 4G services. We are open to reaching agreements with other operators to use our 4G network, if desired."

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