KPN fined EUR 30 mln over state telephony contract

Nieuws Breedband Nederland 24 JAN 2014
KPN fined EUR 30 mln over state telephony contract
KPN has been fined almost EUR 30 million by the Dutch regulator over the state telephony tender known as OT2010. KPN was found to violate non-discrimination and transparency requirements, allowing it to offer lower prices in the tender in 2010. KPN said it plans to appeal the decision in court.

The fine was first imposed in December 2011, and the amount of EUR 29.68 million was set by the Rotterdam appeals court in October 2013 and has only now been made public. The original fine imposed by Opta, ACM's predecessor, was higher, but this amount was not disclosed. The ACM based the fine on the expected revenue from the contract, over a period of at least 3.5 years, and considered the impact of the offence very serious, mainly due to KPN's obligations for non-discrimination towards competitors using its wholesale services. The fine was also increased due to the failure in KPN's compliance programme agreed with the regulator. 

The ACM considered doubling the fine due to recidivism, but in the end did not, as EUR 30 million is already high for an administrative fine and was considered suitable for the nature of the violation. The long-running dispute over the award of OT2010 was already the reason for Opta to put KPN under increased surveillance.
KPN appealed the original fine, and Opta upheld the decision in July 2012. Following the ruling by the Rotterdam court in October 2013, KPN filed another appeal with the corporate appeals court, CBb. The CBb rejected on 23 January KPN's request for a preliminary order suspending the decision. The same evening the ACM published its decision on the fine and the appeal proceedings.

The ACM found that at an important moment in the tender process KPN withheld tariff information that it was required to share with competitions. KPN's own retail company knew about a planned discount scheme before Tele2, putting the competitor at a disadvantage as it could not incorporate the prices in its own offer in the tender. After multiple court cases, Tele2 succeeded in overturning the award of the contract to KPN and took the deal itself. 

KPN said that neither the ACM nor the Rotterdam court took into account the already extremely negative impact the OT2010 case had on the company. While the CBb has already determined that KPN violated the non-discrimination requirement, KPN said that this does not justify such a high fine, as the norm on which the violation was based was not clear from the start. KPN also contests that it violated the transparency requirement. 

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