Spanish watchdog the National Commission on Markets and Competition (CNMC) has fined telecoms giant Telefonica €5 million for again failing to comply with the commitments it accepted for its acquisition of prominent pay-television operator Distribuidora de Television Digital (DTS) in 2015.
The CNMC said the telco voluntarily presented a series of commitments to be able to acquire DTS and preserve competition in the market.
However, the watchdog found that Telefonica violated this with its sublicensing deal with subscription streaming service DAZN for rights to motor racing’s Formula 1 (F1).
In May, the CNMC launched a disciplinary investigation into the agreement that was struck ahead of the 2021 F1 season giving DAZN exclusive rights to show all races in Spain from 2021 to 2023.
The agreement included DAZN’s own channels being made available to Telefonica on a non-exclusive basis, with the telecoms giant creating streaming packages to sell to third parties. DAZN also launched a dedicated linear channel on Movistar Plus, the pay-television operator owned by Telefonica.
The CNMC’s investigation concluded that Telefonica violated multiple commitments, which included the exclusion of Formula 1 premium content from its wholesale offer and having marketed it exclusively in favor of DAZN.
The regulator also found that the company has imposed clauses that have allowed the existence of de facto exclusives, while it included in the agreement a provision whereby any Telefonica subscriber who receives DAZN content will also count as a DAZN subscriber.
Telefonica also violated a commitment that prohibits it from acquiring and selling exclusive rights to broadcast TV channels edited by third parties.
The CNMC describes the breaches as a “very serious infringement” which has led to such a hefty fine. Telefonica has been given two months to appeal the decision to the National Court.
The telco purchased DTS, formerly Sogecable, from Spanish media company Prisa for $769.6 million.
To get the DTS acquisition approved, Telefonica pledged, as part of a series of conditions, to make premium services available to competitors as a wholesale offer, as well as have the costs determined by a regulated formula, for five years.
The telco also pledged to not acquire or sell exclusive broadcasting rights in Spain of television channels produced by third parties. Those conditions were then extended in 2020 for another three years.
The new investigation comes on the back of the CNMC finding initial evidence of non-compliance in the agreement between Telefonica and DAZN in July 2021. A month later, the regulator requested that Telefonica adjust its agreement with DAZN to comply with its commitments.
The CNMC also launched other proceedings against Telefonica in relation to breaching its commitments.
In September 2022, it fined Telefonica €5 million for failing to provide “timely, correct, and complete” information following its acquisition of DTS, which breached another condition set as part of its approval.
Last December, the regulator launched disciplinary action against the telecoms giant for breaching its obligation when announcing its Fusion+Smartphone product offer, which incorporates pay-television services.
The CNMC said the offer made it possible for Telefonica customers to lease smartphones in exchange for a monthly fee of €3 and a 36-month contract term.
As a result, the offer was found to have breached Telefonica's commitment by locking subscribers into a contract.
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