Swiss Competition Authority Launches Swisscom Investigation

   By John Revill 

ZURICH--Switzerland's competition authority WEKO Friday said it was launching an investigation into allegations of anti competitive behaviour by telecommunications company Swisscom AG (SCMN.VX).

WEKO began its inquiry following complaints, denied by Swisscom, that the company had abused its dominant market position when bidding for broadband internet contracts with business customers in Switzerland.

The case is the latest in a series of anti competitive cases brought against Swisscom, the formerly state-owned company which had a monopoly on telecoms before the Swiss market was liberalized in 1998.

In its latest investigation, WEKO said Friday there were indications that Swisscom, which has 54% of internet subscriptions in Switzerland, used its dominant position to prevent competitors bidding for contracts with the Swiss post office.

Swisscom and two other telecoms companies, including Sunrise Communications AG - owned by CVC Capital Partners - had bid for the contract in 2009 to connect all the 1,757 post office branches in Switzerland with broad band internet.

The other telecoms companies had to use Swisscom's internet network, because of the company's dominant position.

WEKO said there was evidence that Swisscom set the wholesale price to access its network too high for rivals to make competitive offers, resulting in Swisscom winning the contract.

If Swisscom is found to be anti competitive, the company could face a fine of up 10% of its revenue over the past three years. A spokesman for WEKO said the investigation is likely to last 18 months.

A spokesman for Sunrise, which made the complaint to WEKO, said Swisscom had quoted a price of 25 million Swiss francs ($26.5 million) to use its broadband infrastructure.

Swisscom won the contract with the Swiss post office after making an offer of CHF20.5 million to carry out the project.

"We believe this was anti competitive behavior which we cannot accept," said Sunrise spokesman Tobias Kistner. "This shows that the market is not as free as it should be."

Swisscom said it was amazed at the investigation, and rejected allegations that it had unlawfully impeded competition.

"Swisscom is confident that the competition commission will come in the course of the investigation to the same conclusion," the company said in a statement.

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