The giant Spanish telecoms firm Telefonica faces being fined a record amount if a decision by Spain's Supreme Court is upheld. The ruling follows a complaint by Vodafone that the former state monopoly abused its dominant market position by preventing Airtel -- which Vodafone acquired in 2000, from expanding its business in Spain through unfair competition practices between 1995 and 1999.
Vodafone specifically accuses Telefonica of bullying cell phone retailers into signing exclusivity contracts that prevented Airtel from acquiring new subscribers via a channel that, in the late 1990s, accounted for more than 50 per cent of handset sales.
Vodafone's claims are based on a 2006 Supreme Court ruling that found Telefonica guilty of violating competition rules. However, while some analysts believe there will be an out of court settlement, what seems more likely is that Telefonica will lodge an appeal with a higher court. If this is successful then Vodafone will need to wait two to three years for a decision.
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