The French competition regulator, Conseil de la Concurrence, has fined the country’s three mobile telephone companies (Orange France, FranC’aise du Radiot, and Bouygues Telecom SA) a total of $631 million for illegally restricting competition.
Investigators found that between 1997 and 2003, the operators regularly exchanged information about new and canceled contracts and used this information to maintain their market shares and match commercial strategies.
While the Conseil did not find specific evidence of price fixing, it did consider that the exchange of information restricted competition by allowing the three operators to react to one another’s marketing strategies.
Commentary: One interesting element of this case is that regulators did not find specific proof of price-fixing, but simply inferred it from the other information that was exchanged – that information, in regulators’ minds, would have been enough to coordinate strategies on product services, offerings, billing practices (and thereby resultant pricing).
On the positive side, we can commend the French school system for its history curriculum – one of the handwritten documents unearthed in discovery referred to the practices as a “market-share Yalta” among the competitors which would “pacify the market” (a reference to the historic 1945 agreement between Russia, the U.K. and the U.S. to partition post-war Europe influence).
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July 25th, 2007 at 10:52 pm
It brings up an interesting point about the importance of appearances and the dangers of industry benchmarking which is often done by companies surveying their nearest competitors. Not only ’signalling’ behavior as a soft form of collusion can be done under the guise of information exchange, but also some bona-fide benchmarking may not appear so innocent to regulators. It underscores the importance of training staff on do’s and dont’s of industry benchmarking or, better still, outsourcing the benchmarking to an independent third party.