Berne, 06 October 2015
The Federal Administrative Court has in principle confirmed COMCO’s allegation of misconduct, according to which Swisscom is deemed to have charged improper prices vis-à-vis its competitors for its Broadband Connectivity Service (BBCS) up to 31 December 2007. However, it considers that the resulting fine imposed by COMCO of CHF 219 million is too high and has therefore reduced this to CHF 186.
Swisscom regrets the decision made by the Federal Administrative Court and maintains that the penalty is unjustified in view of the fact that
In light of the situation and due to the nature of the decision, Swisscom will lodge an appeal with the Federal Supreme Court.
Up until now, Swisscom has not set aside any provisions for the sanction proceedings. However, based on the decision by the Federal Administrative Court, Swisscom will now recognise a provision amounting to CHF 186 million as an expense in the third quarter of 2015. Operating income (EBITDA) will be adversely affected by this amount. For the financial year 2015 Swisscom expects an operating income (EBITDA) of over CHF 4.0 billion.
In October 2005, COMCO launched an investigation against Swisscom for alleged improper BBCS pricing. Four years later, in its sanction ruling of 19 October 2009, COMCO concluded that Swisscom held a market-dominant position in the broadband market and that it had abused this position using a so-called margin squeeze (i.e. an insufficient margin between the input price and end-customer price) up to the end of 2007. This margin squeeze was deemed to have made the profitable operation of the broadband Internet business impossible for Swisscom’s competitors. As a result, COMCO imposed a fine of CHF 219 million against Swisscom. The company then lodged an appeal against this sanction with the Federal Administrative Court.
Irrespective of the outcome of these proceedings, Swisscom will constantly strive as ever to improve its broadband offering in terms of scope of service and price, and continue to invest heavily in upgrading the infrastructure for fast broadband provision in Switzerland. In 2015 alone, Swisscom will invest approximately CHF 1.75 billion in the Swiss infrastructure.