The CNMC urges Telefónica to modify or clarify its ‘Merger’ offer with phone rental



The National Commission of Markets and Competition (CNMC) has published a resolution in which it urges Telefónica “to clarify or modify” certain terms of the conditions of its commercial offer ‘Merger’ launched last April, in which it allows its customers to rent mobile phones in exchange for
a monthly fee of three euros in general
, and a stay, in practice, of 36 months. Likewise, the CNMC urges the company to modify certain aspects of its agreement with Dazn to adapt it to the commitments acquired after the Telefónica / DTS concentration operation in April 2015.

For their part, Telefónica sources told Servimedia that they will file a contentious appeal before the National High Court against the resolutions announced this Tuesday by Competition. Sources from the ‘teleco’ indicated that the company will go to the National Court and request the precautionary suspension of both resolutions of the regulator, while it is analyzing how to adapt to the requirements set by the CNMC.

On April 11, Telefónica modified its ‘Fusion’ package offer and added the lease of a ‘smartphone’ terminal to other pay TV, fixed telephony, fixed broadband and mobile line services, with an increase in the monthly fee of three euros in general. According to said offer, in the event that the client hires this new product, certain conditions of permanence and penalty for early withdrawal will be applied for a period of 36 months.

The CNMC considers that the literal nature of these new conditions could limit the change of customers to other companies, since their ability to subscribe to similar services with pay television offered by Telefónica’s competitors is restricted.

Consequently, Competition considers that Telefónica must “either introduce adjustments or clarify the general terms of the commercial conditions of these products to adapt them to the commitments”. The body that Cani Fernández directs also urges Telefónica to communicate said clarifications or modifications to customers who had previously contracted any of these products, as well as to the CNMC itself, to whom it will also have to communicate other modifications related to these packages before its commercial effectiveness.

Agreement with Dazn

On the other hand, the CNMC has analyzed the compatibility of the agreement that Telefónica and Dazn signed on January 7 with the commitments assumed in the Telefónica / DTS concentration operation. Competition considers that certain aspects of the contract “could not be compatible with the concentration commitments” and imply a reduction in the wholesale offer that Telefónica makes available to other operators, as well as a restriction to the agreements that Dazn could reach with other operators to distribute its contents.

Competition specifies that this resolution is part of its surveillance work to verify that Telefónica complies with the commitments offered for the approval of the takeover of DTS (the former Sogecable) by Telefónica by acquiring 56% of DTS owned by the Prisa group in 2015.

Thus, the CNMC asks Telefónica to make adjustments to the contract so that Formula 1 content continues to be included in its wholesale offer and ensures that Dazn accesses such content in a non-discriminatory manner.

Second, Competition demands that Dazn’s pay TV customer count be modified to comply with the commitments related to the guaranteed minimum cost. At the same time, the CNMC considers that the clause limiting the possibility of Dazn reaching agreements with third-party operators to freely distribute its content should be deleted.

This resolution is part of the surveillance work carried out by the CNMC to verify that Telefónica complies with the commitments offered for the approval of the takeover of DTS (the former Sogecable) by Telefónica by acquiring the 56% of DTS that the group owned Rush.

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