EC probes Telefonica, PT competition agreement

The European Commission has opened a wide-reaching probe into anti-competition agreements between Telefonica and Portugal Telecom, following the pair’s agreement over Brazilian carrier Vivo.
The Commission is investigating whether the incumbents have breached European competition rules by agreeing not to compete against each other in their home markets, which was a condition of the agreement for Portugal Telecom to sell its shares in Vivo parent Brasilcel to Telefonica.
That agreement covers the period from September 2010 until end-2011, however the Commission will also look into a prior co-operation arrangement dating back to 1997, despite the pair already notifying the Commission of the deal at the time.
The investigation is latest twist in the long-running saga over Telefonica’s attempts to gain full control of Brasilcel, a joint venture with Portugal Telecom that held a controlling stake in Brazilian carrier Vivo.
Both firms regarded Vivo as a key asset in their fight to stave off falling revenues in their domestic markets, resulting in a protracted battle for control that saw Telefonica threaten to dissolve the joint venture after Portugal’s government blocked the transaction.
The Spanish incumbent eventually sealed the acquisition for €7.5 billion in July.