UPDATE 1-Telefonica to appeal EU collusion fine

Wed Jan 23, 2013 12:07pm EST

* Telefonica, Portugal Telecom fined total 79 mln eur

* Telefonica says to appeal

* P. Telecom says considering fighting fine in court (Recasts with reaction from Telefonica and PT)

BRUSSELS, Jan 23 (Reuters) - Spain's Telefonica said it would appeal after regulators fined it and Portugal Telecom a total of 79 million euros ($105 million) for breaching EU rules by agreeing not to compete with each other in the Iberian market.

The European Commission said the deal between Telefonica , Europe's biggest telecoms company by revenues, and Portugal Telecom lasted from September 2010 to the end of 2011.

The EU competition authority fined Telefonica 66.89 million euros and Portugal Telecom 12.29 million euros following a 10-month investigation that began in January 2011.

Telefonica said it "strongly disagreed" with the fine and would appeal the decision with the Luxembourg-based EU Court of Justice, while Portugal Telecom threatened to follow suit.

The non-compete deal was linked to Telefonica's 2010 buyout of the stake held by Portugal Telecom in their Brazilian joint venture, Vivo.

The Commission said the two companies' agreement hindered the creation of a single EU telecoms market and could have led to higher consumer prices.

"We will not tolerate anti-competitive practices by incumbents to protect their home markets, as they harm consumers and delay market integration," EU Competition Commissioner Joaquin Almunia said in a statement. ($1 = 0.7530 euros) (Reporting by Foo Yun Chee; Additional reporting by Tracy Rucinski in Madrid; Editing by Rex Merrifield and Helen Massy-Beresford)

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