Following the completion of the oral hearing process, and after taking into consideration the concerned parties’ written submissions, the Commission for the Protection of Competition (hereinafter ‘the CPC’) evaluated all the evidence before it and unanimously decided at its meeting convened on 10 December 2012, that CYTA had infringed section 6 (1) (a) of the Protection of Competition Law (hereinafter ‘the Law’).
The subject of the case was the complaint against CYTA (no. 11.17.36/2005) filed by PrimeTel Co Ltd to the CPC on 3 June 2005, for the alleged infringement of section 6 of the Protection of Competition Laws of 1989 until (no. 2) 2000, which was replaced by the Protection of Competition Law of 2008 (L. 13(I)/2008), as a result of reductions in the retail prices of i-choice (broadband access) and miVision (pay TV) services which came into effect on 1/6/2005, as well as promotional offers made by CYTA, in relation to the above products.
The CPC, as a result of the Supreme Court’s decisions no. 3902 (CYTA and Commission for the Protection of Competition) on the 29 January 2008 and no. 1544/09, 1545/09, 1546/09 and 1601/09 (ExxonMobil Cyprus Ltd etc. and the Commission for the Protection of Competition), on the 19 January 2012, revoked its previous decisions since it was decided by the Supreme Court that they were held to have been taken by a non-legally composed administrative body and decided the ab initio examination of the complaint.
The CPC, through its decision dated 10/12/2012, decided that CYTA held a dominant position in the relevant retail market for broadband access. The CPC after having thoroughly examined the evidence submitted, and especially after taking into account CYTA’s dominant position at the wholesale level in the provision of broadband access, concluded that the intention of CYTA was the exploitation of its dominant position against its competitors in the market for the provision of retail broadband access and also the reinforcement of its position in the market for retail pay TV. Therefore, the CPC unanimously concluded that CYTA infringed section 6 (1) (a) of the Law as a result of:
(a) The imposition of unfair retail prices for the provision of i-choice service, as evidenced from the fact that the retail prices for the sale of i-choice service for the years 2004, 2005 and 2006 exceeded the average variable cost but remained under the total cost. The intention to eliminate competition was evident from the various internal documents prepared by either the General Manager or the relevant Departments of CYTA.
(b) The imposition of unfair retail prices for miVision service, as evidenced from the retail prices for the sale of miVision service for years 2004, 2005 and 2006 which were below the average variable cost. For the years 2007 and 2008, although the retail prices exceeded the average variable cost and were below the total cost, an intention to eliminate competition was established as evidenced in various internal documents which were prepared by either the General Manager or the relevant Departments of CYTA.
(c) The imposition of unfair retail prices in the bundling of miVision and i-choice services, as evidenced from the fact that the retail sale prices for miVision and i-choice services for years 2004, 2005 and 2006 were below the average variable cost. For the years 2006, 2007 and 2008, although the retail price of the bundled services exceeded the average variable cost and were below the total cost, an intention to eliminate competition was established, as evidenced in the various internal documents which were prepared by the General Manager or the relevant Departments of CYTA.
The CPC held in its decision that the infringements were serious, because CYTA’s actions aimed at inhibiting other businesses from operating within the electronic communications sector and therefore intended to foreclose the market by implementing a plan, known as the “aggressive promotion” plan. According to CYTA’s plan this would be effected through the reduction of retail prices for both services, the provision of free installation, and the offering of free subscription. Specifically, through the provision of free subscriptions, CYTA aimed at tying the clients of i-choice (broadband access) for a period of eight (8) months and to “bundle” these services with the service of miVision (pay TV).