Spain’s Comisión Nacional de los Mercados y la Competencia (CNMC) has opened formal disciplinary proceedings against Telefónica de España S.A.U., accusing the telecom giant of failing to meet certain commitments made during its 2015 acquisition of pay-TV provider DTS (formerly known as Sogecable).
The case, referenced as SNC/DC/004/25, stems from allegations that Telefónica did not adhere to the terms stipulated by the CNMC when it cleared the €725 million merger nearly a decade ago. The focus of the investigation is on the operator’s compliance with commitments aimed at preserving competition in Spain’s pay-TV and telecoms markets.
Background: Conditional Approval of the DTS Acquisition
In April 2015, Telefónica’s acquisition of DTS was approved by the CNMC, but with several key conditions attached to ensure the merger would not harm competition in the audiovisual and telecom sectors. One of the main stipulations was that Telefónica would not impose minimum-term contracts on customers for pay-TV services, whether offered independently or as part of bundled telecom services.
These commitments were designed to maintain customer flexibility and prevent Telefónica from gaining undue market power. In 2020, these obligations were extended for an additional three years, reflecting the regulator’s ongoing concerns about competition in the market.
Previous Violations and €6 Million Fine
This is not the first time Telefónica has been under scrutiny for potential breaches of these commitments. In July 2021, the CNMC flagged the operator’s “Fusión+Smartphone” offering, which bundled smartphone leases with 36-month lock-in periods, as a clear violation of the merger terms. Telefónica was ordered to revise the offer and inform both its customers and the CNMC of the changes.
In March 2023, the company was fined €6 million for failing to comply with the restrictions on lock-in periods for pay-TV services, marking the first penalty related to the breach of these commitments.
New Investigation: Fusión and miMovistar Offers
The CNMC’s latest investigation focuses on Telefónica’s Fusión and miMovistar offers, which ran from August 30, 2021, to April 30, 2023—the final day of the regulatory commitments. The CNMC claims that these deals continued to restrict customer mobility, contrary to the agreement reached in the 2015 merger.
The issue revolves around “indirect permanence clauses” that the CNMC argues were included in these offers, restricting customers’ ability to switch providers without incurring penalties. Despite previous warnings from the regulator, Telefónica allegedly failed to make the necessary adjustments to comply with the merger’s terms.
On January 30, 2024, the CNMC formally declared that Telefónica had violated its merger commitments once again, specifically related to sections 1.1 and 1.1.2 of the original 2015 resolution and the subsequent compliance ruling in 2021.
Next Steps: Three-Month Investigation
The initiation of this disciplinary process does not indicate a final decision on the case, the CNMC clarified. Telefónica will now face a formal three-month investigation, during which time the regulator will review the evidence and assess whether further sanctions are warranted.
If the operator is found guilty of breaching the terms of the merger, it could face additional fines or other penalties. The growing scrutiny of Telefónica’s compliance with its post-merger obligations highlights the ongoing importance of robust competition oversight in Spain’s telecom and pay-TV markets.
