Telefónica gets €1.5m fine for subjecting rivals to excessive football costs

Spanish markets regulator the CNMC has fined Telefónica €1.5 million over infractions of the conditions set at the time of its acquisition of pay TV operator DTS.

The regulator ruled that the telco had failed to correctly allocate fixed costs that had a role in determining the price to paid by rival operators for its Movistar El Partizado premium football channel.

The watchdog found that this error gave Telefónica a competitive advantage by subjecting rivals interested in signing deals to carry the premium football service to major unforeseen costs.

The CNMC authorised Telefónica’s acquisition of a 56% majority stake in DTS – then known as Sogecable – in 2015 from publishing giant Prisa.

The CNMC ruled that Telefónica would have to fulfil a series of obligations, including making a majority of its premium offer avail; able to rivals.

The watchdog found that Telefónica had incorrectly calculated the number of its own subscribers when setting minimum guaranteed costs, leading to rivals incurring greater costs than they should have, while Telefónica benefited.

Specifically, it found that Telefónica wrongly calculated the fixed costs of the Movistar Partizado channel for the 2016-17 season, understating the number of subscribers on its own network that took the channel, which led to higher costs being allocated to other operators.

Telefónica was obliged to make its pay TV offering available to competitors, including providing its football and motorsports channels for a guaranteed minimum cost. Fixed costs were allocated on a proportional basis, with the distribution to be based on criteria that included the fees paid by subscribers as well as the potential subscriber base of different operators.

Telefónica told the Reuters news agency that it would appeal the penalty, which it considers excessive. The telco said it had compensated rival players for the error as soon as this was perceived.

The CNMC initiated proceedings against Telefónica in July.