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ACM forces KPN to lower tariffs for copper connection lines

At the insistence of the Netherlands Authority for Consumers and Markets (ACM), Dutch telecom company KPN lowered its tariffs for the use of copper connection lines. KPN had previously actually raised these tariffs retroactively for the period of October 2012 through July 2015. KPN had raised these tariffs in response to a court ruling. However, this raise was at odds with other tariff rules that KPN needed to comply with.

By imposing an order subject to periodic penalty payments on KPN, ACM forced the company to change its practices. The penalty payment is EUR 500,000 per day with a maximum of EUR 5 million. KPN had to lower retroactively the tariffs for copper connections before August 19, 2016, and it had to publish this change on its website. ACM has established that KPN has met these requirements. Therefore, no penalty payments need to be paid.

All telecom providers must be able to make competitive offers to their customers

KPN owns a copper network. In order to give competitors the opportunity to offer telecom services, KPN must also give other telecom companies access to its network. The tariffs that KPN charges other telecom companies for the use of the copper connection lines must be no higher than those that KPN charges itself. This is the only way to ensure that other telecom providers are able to offer a competitive suite of services.

KPN’s behavior is at odds with the rules on non-discrimination that ACM imposed on KPN in the 2011 market analysis decision on unbundled access. Because of the magnitude of the tariff increase, other telecom providers were left with margins that were too small to compete with.

Solving market problems

ACM has different instruments at its disposal for solving market problems. When choosing a strategy, ACM selects the instrument that is best able to solve the identified market problem. In this specific case, ACM chose to impose an order subject to periodic penalty payments. In that way, KPN is forced to end the effects of the violation as quickly as possible