Spain's antitrust watchdog fines Telefonica over DTS takeover terms

(Reuters) - Spain's antitrust watchdog on Friday imposed a 6-million-euro ($6.35 million) fine on Telefonica for commercial practices, such as permanence clauses on smart phone leases, that violated the terms of a 2015 takeover accord for cable TV operator DTS.

CNMC, as the regulator is known, said Telefonica's commercial offers, which included the lease of smart phones, with so-called permanence clauses preventing clients from switching providers, breached the commitments it made to get the merger approved.

Telefonica had agreed to refrain from hindering pay-TV customers switching to other providers for at least five years to ensure free competition, CNMC said. The period was extended for another three years in 2020, it added.

CNMC said clients who contracted the Movistar Fusion package from April 11, 2021 and took on a smartphone lease, were subject to permanence conditions and a penalty for early discharge over a three-year period. With these contracts, Telefonica restricted clients' ability to contract similar services with other competing operators.

The fine can be appealed before the national high court within two months. The regulator has said it opened proceedings in December 2022.

A spokesperson for Telefonica said the company will appeal as it does not consider that it has breached commitments on permanence conditions on pay-TV services.

Telefonica is the largest cable-TV operator in Spain in terms of number of customers. It acquired control of DTS from Spanish media company Prisa for 724.6 million euros ($769.6 million).

($1 = 0.9446 euros)

(Reporting by Joao Manuel Mauricio in Gdansk; Editing by Inti Landauro and Sharon Singleton)