Banged to rights: EU court throws out Orange Polska’s appeal against abuse fine

• Years of impeding access to broadband resulted in fine for Orange Polska
• Its appeal against the size of the fine rejected in a victory for competitive players
• From now on, investment not a mitigating factor in market abuse cases

A judgement just delivered by the Court of Justice of the European Union (CJEU) is being seen as overdue push-back against the seemingly endless calls for regulatory and competitive relief demanded by Europe’s incumbent telecoms industry as the price of network investment.

Back in 2011 Orange Polska had challenged a Commission decision of June that year which found that its predecessor company, the Polish historical telecommunications incumbent, Telekomunikacja Polska, had abused its dominance in the market for wholesale broadband Internet access in Poland. The Commission’s view was that this was a classic incumbent strategy to systematically impede access to its network in order to limit competition. It subsequently imposed a fine of €127.6 million on Telekomunikacja Polska. The fine was unsuccessfully appealed but, still feeling aggrieved, Orange Polska returned to the court in 2016 to lodge another appeal which challenged the actual reasoning of the court judgement, rather than disputing the facts of the case. The court has just thrown the appeal out.

This is where it gets interesting.

An important part of the Orange Polska argument was that the court should have considered the impact and importance of its investments and, as a result, should have reduced the fine - in effect that the investment should have been seen as a mitigating circumstance.

This was clearly not an argument that could be accepted as valid by Europe’s competitive operators. Their representative lobbying body, the European Competitive Telecommunications Association (Ecta) weighed in to oppose the latest appeal, seemingly to telling effect.

“The decision to reject the appeal closes the door to the idea that normal investment activity would merit abusive behaviour being fined any less heavily. Such an outcome would have been a profound disincentive for competition and competitive investment: Why take the risk to invest if the big guy can not only abuse its power, but then go on to claim that the abuse mattered less because everybody benefitted from its investment?"  says ecta Director General, Luc Hindryckx.

In its way the Orange Polska argument illustrates the underlying attitudes that have developed over the past few years within telecoms - that might (and money) is right and that leading players should reasonably be able to claim relief from irksome competition and public interest regulation if they can show that it might (just might) make them less inclined to invest in infrastructure. We hear it all the time.

According to Gordon Moir, lead partner at Shepherd and Wedderburn, the lawyers that advised and represented ecta in the court proceedings,  the “case was of significant importance to telecommunications competitors and to the development of European competition law enforcement more generally.”

He said, “Ecta’s intervention, which centred on the analysis of competitive conditions and the market impact of abusive behaviours in Poland’s wholesale broadband markets, helped the court see the broader commercial context.”

For further information see case reference: C-123/16 P Orange Polska v Commission, judgment of 25.7.2018, ECLI:EU:C:2018:590