The Competition Council fines Netcity Telecom for abuse of a dominant position

The Competition Council sanctioned Netcity Telecom SRL (formerly Netcity Telecom SA) with a fine of 2,183,552 lei (approximately 460,000 euros) for abuse of dominant position.

Netcity Telecom SRL is the concessionaire of the Netcity network, having as responsibilities the design, building and operating the underground telecommunications infrastructure of the Bucharest Municipality, with the main purpose of hosting the electronic communications networks previously installed, mainly, on the elecricity poles in the capital city. Netcity Telecom SRL holds a monopoly position, having, by means of a concession contract, the exclusive and unrestricted right to implement and manage the Netcity network, for a period of 49 years. “Netcity” is a support for communications networks and must be made available to all telecom operators who want to provide services in Bucharest, in an equal, transparent and non-discriminatory manner. The competition authority found that, during the period 2010-2019, the Netcity network concessionaire abused its dominant position by imposing inequitable conditions regarding:

• pricing methods depending on the degree of occupancy of a functional loop (the operators paid inversely in proportion to the length of the contracted duct);
• obliging customers to contract minimum lengths of infrastructure;
• imposing FTTB connections (fiber optics pre-equipped ducts), as long as they are normally optional for customers;
• limiting the option of the operators to install, under clear and transparent conditions, various underground transmission lines (they could not install cables other than fiber optics);
• contractual terms longer than the final customers wanted (5 years even if they wanted 1-2 years) and payment of the rent related to the 5-year contract.

“As we have said on other occasions, we do not dispute the usefulness of the project, which aims both to increase the quality of data transmission services and to improve the visual aspect of the city, but it must comply with the competition rules so that the costs incurred by operators (and transferred to consumers) should not be unfair. A large company, which holds a monopoly position, must have a fair behavior towards its partners and create clear, transparent and reasonable procedures for access conditions ”, said Bogdan Chiriţoiu, President of the Competition Council.

Netcity Telecom SRL admitted the offense and received a 15% reduction in the fine.

In the same investigation, the Competition Council found that, between Nov 26, 2013 – Oct 20, 2016, the administration of the Municipality of Bucharest, through the General Mayor and the General Council of the Municipality of Bucharest, did not take the necessary steps in the process of regulating the conditions to access the Netcity infrastructure. In this way (by not acting), the Bucharest City Hall violated the competition regulations (art.8 of the Competition Law), favoring the continuation of the abuse of Netcity Telecom’s dominant position until 2016, when the provisions regarding the physical infrastructure regime of electronic communications networks, as well as those regarding the establishment of measures to reduce the cost of installing electronic communications networks (Law no. 159/2016), entered into force.

“Given that at present, in several cities of the country there are similar projects for the development of similar networks, the conclusions in this case represent a warning for all involved actors, companies and mayors”, added the President of the Council competition. We recall the investigation into a possible abuse of Netcity’s dominant position was initiated in 2016, at the Ines Group SRL complaint, and was connected with the investigation initiated in April 2019, at the Interlan Internet Exchange SRL complaint. Currently, Netcity Telecom is part of a group of five companies active in the field of energy infrastructure and telecommunications. At the end of the first semester of 2019, Netcity’s infrastructure included 1,520 kilometers of underground fiber optic network, to which 20,300 buildings are connected. Of the total, 560 kilometers of network were built by Netcity Telecom from the beginning of 2018 until the end of June 2019, infrastructure with 7,500 buildings connected. At present, the works continue, mainly on the secondary streets.