The President of UOKiK ruled that Telekomunikacja Polska restricted the competition by introducing the increase of the prices of international calls with the numbers beginning with 0-708-1 and imposed a fine exceeding PLN 12 million on this largest Polish operator

The proceedings, conducted pursuant to the Polish law and the Community regulations, were initiated at the request of Netia. The company accused Telekomunikacja Polska of abusing its dominant position by raising fees for inter-zone and international calls beginning with the number 0-708-1as of 1 October 2005.

This number is used for long distance and international calls. In practice the consumer who uses the fixed line telephone, e.g. in TP SA network, dials the number beginning with 0-708-1 and then, after the signal, the appropriate number of the subscriber (e.g. in Germany or the United States). The TP SA subscriber pays the fees according to its tariff and Telekomunikacja Polska makes settlements pursuant to separate agreements with alternative operators (e.g. Netia, Telefonia Dialog) which own the 0-708-1 numbers.TP SA does not have such numbers. It should be emphasized that there are no constraints of legal nature concerning the possibility of making international calls with the use of the numbers beginning with 0-708-1.

Prior to the rise, the price of the call was very attractive and amounted to gross PLN 0.35 per minute which is much less that the cheapest fee per minute of international call offered by TP SA (gross PLN 0.73). The number of such calls constantly increased (e.g. by almost 6 million minutes between August 2004 and August 2005) and along with the increased interest in the 0-708-1 services, the share of TP SA in the international calls has fallen.

On 1 October 2005 Telekomunikacja Polska raised prices for 0-708-1 calls to gross PLN 0.71, and at the same time - almost simultaneously - decreased fees for certain international calls and introduced attractive packages of free minutes for international calls.

As there was a danger that the questioned practice of TP SA would lead to elimination of independent operators from the market, the President of the Office obliged the company to withhold the price increase. It was possible on the gorunds of the provision of the Antimonopoly Act pursuant to which a provisional decision was possible still before the termination of proceedings, ordering to abandon the practice which may result in serious and difficult to eliminate threat to competition. On 10 October 2005 a provisional decision was made ordering the operator to immediately reintroduce the prices in effect before the rise. Telekomunikacja Polska complied with the decision.

In the decision terminating the proceedings the President of UOKiK recognised that TP SA abused its market position and negative effect was felt both by alternative operators and the consumers. When Telekomunikacja Polska raised prices, it in fact resulted in the decrease of interest in services provided by alternative operators (for example in August 2005 movement generated via 0-708-1 numbers amounted to about 6.5 m. minutes, whereas in October it decreased to 4.8 m. minutes). Thus - from the Office’s point of view - the company limited competition of the telephone calls market. UOKiK believes that as long as alternative entrepreneurs offered only “party line”, horoscope or news bulletins type of services - TP SA did not feel at risk. But when the offer of alternative operators was extended to include services competitive to Telekomunikacja Polska, the company raised prices of those services and at the same time decreased the costs of international calls provided.

From UOKiK’s point of view a 100% rise by TP SA is not justified. All decisions made by the company aimed only at limiting competition on the telecommunication connections market and eliminating alternative entrepreneurs from the market. At the same time the company took advantage of the fact the it forms prices at which services are available to over 90% of Polish subscribers. The Office found it puzzling that the rise took place only when the consumers discouraged by the high prices of international calls suddenly became interested in services performed via 0-708-1 numbers.

A fine imposed on Telekomunikacja Polska, amounting to PLN 12 million 187 thousand is of coercive and preventive nature. In particular, the Office recognised that it constituted yet another infringement of the antimonopoly law by the operator. The amount of sanctions takes into account the fact that withdrawing from the rise took place only after the Office’s provisional decision ordering suspension.

The decision of the Office is the first decision to which the provisions of the Treaty establishing the European Community were applied, as - from the point of view of UOKiK President - the questioned practice of TP SA in the territory of Poland, was also present on the considerable part of the Common Market. In conformity with the procedure, decisions made pursuant to Community legislation must be consulted with the European Commission, which was done also in case of this decision.

The decision is not binding and may be appealed against to the Court of Competition and Consumer Protection.

Additional information:
Elżbieta Anders, UOKiK Press spokesman
Department of International Relations and Communication
The Office of Competition and Consumer Protection
Pl. Powstancow Warszawy 1, 00-950 Warszawa
Ph.: 22 827 28 92, 55 60 106, 55 60 314
faks 22 826 11 86

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