Commission approves Telekom-Telenor deal planned to destroy UM & SBB in Serbia

Source: N1

The Commission for Protection of Competition gave on Thursday the green light to Telekom Serbia and Telenor to execute their contracts which Telekom's CEO described as aiming to destroy United Media and its SBB internet provider.

The contracts are approved for an unspecified limited period, and the approval contains the conditional exemption.

„Due to the public interest, incomplete and inaccurate information presented during the procedure, the Commission will publish complete decision with explanations that do not contain protected data as soon as the procedural conditions are met, i.e, after the decision on Telecom’s and Telenor’s data protection requests,“ the Commission said in a statement.

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The conditional exemption means that they are approved for a limited time and that companies that have concluded a contract are obliged to report to the Commission on their business moves following the Law on Protection of Competition.

The Law stipulated that the restrictive agreements can be exempted from the prohibition „if they contribute to the improvement of production and trade, i.e. encourage technical or economic progress, and provide consumers with a fair share of benefits provided they do not impose restrictions on market participants.“

At the request of the participants in the restrictive agreement, the Commission may exempt an individual restrictive agreement from the prohibition (the individual exemption is defined in Article 12 of the same Law).

„The period to which an individual exemption applies may not exceed eight years,“ Commission said.

At the end of January, the Commission announced that Telekom Serbia and Telenor Serbia had addressed it with a request for an individual exemption from the ban on agreements on limited and defined business cooperation in a specific business segment.

In early April, United Media (UM) and SBB, which operate within the United Group, filed criminal charges against Telekom Srbija a.d. Belgrade and Telenor d.o.o. Belgrade and their responsible managers for suspicion they committed the criminal offence of concluding a restrictive agreement under Article 229 paragraph 1 of the Criminal Code.

„There is a suspicion that the applicants concluded a restrictive agreement at the end of 2020 and the beginning of 2021. It divides the market to push a third participant, SBB, out of it in terms of infrastructure and United Media in terms of media content,“ a statement from the Tomanovic Law Firm representing UM and SBB said

In January, an internal document signed by the current Telekom CEO, then the coordinator for the Internet and Multimedia, Vladimir Lucic leaked.

In several different documents, Lucic told the Executive and Supervisory boards that the goal was to destroy TV stations within United Media and that cooperation with Telenor was just a mean to do that.

„This enables SBB to be pushed out of this market, for Telekom Srbija to be stable number one in the retail of fixed internet, but also to generate significant revenue in wholesale in the future,“ the leaked document said.
It added that „as for our TV channels, the use of our infrastructure implies the use of our content, which will enable our complete domination over United Media channels. Therefore, the contract for the mentioned service puts an end to the business of United Media as well as SBB in Serbia .“

Following the Commission ruling, Telecom said, „the communications market is being liberalised.“

„Telekom Serbia confirmed it received a notification from the Commission for Protection of Competition that the proposed cooperation with Telenor has been approved and that it is by all positive legal regulations. That created conditions for the contract proposed by the companies to enter into force,“ Telekom said.

The company added the cooperation with Telenor was done „by the best European standards and included the lease of Telekom’s optical infrastructure to Telenor and the distribution of content, on commercial and completely non-exclusive terms.“

Telekom Srbija understands it can now lease its infrastructure to other market participants, and Telenor can buy content whenever it wants because the contract is not restrictive at any point.

In its statement, Telenor said the Commission for Protection of Competition conditionally approved its contract with Telekom Serbia on renting optical infrastructure, which enabled Telenor to enter the market of media content distribution and fixed broadband internet.

According to Telenor’s interpretation, that means further development of competitiveness in that market segment.

„We are glad that the Commission for Protection of Competition made a positive decision, and now we will focus on creating an innovative and attractive offer that we will launch by the end of the year. We want to stand out in this segment with quality, as we are in mobile services. The Serbian market is ready for a new cable operator,“ Telenor Serbia General Manager Mike Michel said.

Telenor said it would enter the media content distribution market independently, respecting the rules of fair market competition with other content providers, including SBB and Telekom.