CADE’s General Superintendence asks for condemnation of Telemar for abuse of dominant position

The General Superintendence of the Brazilian Administrative Council for Economic Defense (CADE) recommended, in a report published on the Federal Official Journal of 14 January, the condemnation of Telemar Norte Leste S/A company for abuse of dominant position in the telecommunications’ market.

The violation (Administrative Proceeding nº 08012.003918/2005-04) would have occurred by the beginning of the year 2000, when Telemar detained more than 90% of the fixed telephony market in Region I of the General Plan of Concessions, which corresponds to the states of Rio de Janeiro, Minas Gerais, Espírito Santo, Bahia, Sergipe, Alagoas, Pernambuco, Paraíba, Rio Grande do Norte, Ceará, Piauí, Maranhão, Pará, Amapá, Amazonas, and Roraima.

The company would have monitored their clients’ phone calls to the call center of its competitor Vésper, which had recently entered the market, after the development of the new regulatory mark in the telecommunications’ sector, and the restructuring of the Telebrás system. CADE’s General Superintendence’s evaluated that, from this monitoring, Telemar offered specific plans to avoid the migration of its clients to the competitor.

In 2005, the National Telecommunications Agency (Anatel) emitted a protective order determining the termination of the practice, after perceiving that irreparable or difficult economic compensation damages could occur.

According to the General Superintendence, Telemar used sensitive information of its clients improperly, to which had access due to the interconnection of telecommunications networks’ legal obligation, to difficult the establishment of competitors.  The General Superintendence also stated that in the context of telecommunications’ market opening, such practice would present high anticompetitive potential, since Telemar had conditions to systematically hamper the entrance of any new competitor, frustrating the objectives of the new sector’s legislation of introducing a competitive environment 

The case now is to be trialed by CADE’s Tribunal.