OPTA imposes a penalty of €450,000.00 on KPN

The Commission of OPTA, the Independent Post and Telecommunications Authority, has imposed a penalty of €450,000.00 on KPN, because the latter had failed to request OPTA’s prior consent to offer additional discounts to business callers. This involved an unlawful additional discount as part of the Belzakelijk series, a series of discounts on KPN’s basic tariffs targeting the business market. Discounts have to be approved by OPTA in advance. Until last summer this also happened in the case of all Belzakelijk variants as of the introduction of such discounts in 2003. However, last summer KPN offered a temporary additional Belzakelijk discount without prior approval by OPTA. This is a major contravention of the rules which apply to KPN under the terms of the Telecommunications Act.

In July 2004, KPN offered a limited group of new business customers initial discounts amounting to €5,000.00 each, if they took out a new Belzakelijk subscription. Any new customers had this amount paid into their bank account. With a view to respecting the confidential nature of such business, OPTA will not make any announcement concerning the additional turnover which KPN generated through this promotion.

As a party holding significant market power in the fixed telephony market, KPN is only allowed to give discounts if OPTA approves them beforehand. This follows from the Telecommunications Act, which seeks to promote competition in the fixed telephony market. OPTA assesses discounts based on their implications for competition in the market. By failing to present this specific Belzakelijk promotion to OPTA in advance, KPN has committed a serious offence under the Telecommunications Act, which has significantly undermined competition. It is for this reason that OPTA has imposed such a high penalty.

The imposition of this penalty on KPN is entirely separate from OPTA’s current investigation into its provision of unlawful discounts, which OPTA announced on 19 October 2004. This investigation has still not been completed.