OPTA fines KPN EUR 2.88 million for contravening the Telecommunications Act

The Commission of the Dutch Independent Post and Telecommunications Authority (OPTA) has imposed fines totalling EUR 2.88 million on Koninklijke KPN N.V. The reason for this is that KPN has failed to report agreements with two customers active in the wholesale market to OPTA. This was revealed when OPTA launched an investigation following a complaint filed by a market party. This investigation found that the services offered in these agreements were unacceptable, because they were discriminatory and were not transparent. Since KPN wrongly failed to report the relevant services to OPTA, the regulatory authority was unable to perform its duties properly. Due to the position of power it holds, KPN is bound by specific pricing regulations, amongst other things, in order to give its competitors a chance to compete on the fixed telephony market. By means of these agreements, KPN granted the two companies in question selective tariff discounts and was able to retain them as customers. As a result, KPN restricted competition. The turnover generated by the two types of services amounted to approximately EUR 4.5 million during the period from the beginning of 2006 until mid-June 2007, when OPTA caused the agreements to be terminated by means of conditional penalty. Since the agreements were not reported, OPTA was prevented from performing its duty to regulate the market. Chris Fonteijn, OPTA’s Chairman, has this to say about the matter: “KPN has previously been fined for similar contraventions and could therefore have known better. This has led to the fines being raised. In order to prevent these types of contraventions from occurring in the future, we are consulting closely with KPN about compliance programmes, which should guarantee proper compliance with the law.” KPN’s duties OPTA’s fixed telephony retail decision, which came into effect on 1 January 2006, makes it mandatory for KPN in its capacity as a party holding ‘significant market power’ to report all new services and any related tariffs to OPTA and to disclose them to the market. KPN itself assesses whether the services which it offers comply with its duties in relation to retail tariff regulation and non-discrimination. OPTA’s regulatory role is directed towards monitoring and enforcement. In this case the two agreements do not comply with KPN’s duty to ensure transparency and non-discrimination.