UPDATE 1-Swiss competition body opens probe into Swisscom

Fri Jul 19, 2013 8:09am EDT

* WEKO investigating Swisscom for abuse of market position

* Swisscom rejects the allegations

* Rival Sunrise filed complaint in 2009 (Adds competitor statement, detail)

ZURICH, July 19 (Reuters) - Switzerland's competition authority has opened an investigation into telecoms provider Swisscom after suggestions from a rival it abused its market position in broadband internet for business clients.

Competition is fierce among European telecoms groups, which are struggling with declining revenue and profit as customers shift from using from traditional text messages and voice calls to apps like Skype, What's App and Viber that let users route calls and messages through data plans.

Swiss competition body WEKO said on Friday it had evidence to suggest Swisscom, which has a 55 percent broadband market share, had prevented competitors from making bids for a contract five years ago.

In a tender to provide post offices across Switzerland with broadband, Swisscom is alleged to have fixed the prices for its internet cables so high that rival telecom companies, which needed to use them, were unable to compete, WEKO said.

Private telecoms company Sunrise, as well as one other firm, competed with Swisscom in the tender. Sunrise filed the complaint to WEKO in 2009.

Swisscom, majority owned by the state, said it was astounded by the investigation and that competitors were able to win orders for large-scale projects.

"We reject the allegations that Swisscom has unlawfully hindered competition. Swisscom is confident that the competition commission will come to the same conclusion in the course of their investigation," the company said in a statement.

Swisscom said Sunrise could have made a competitive offer to Swiss Post.

Sunrise, which has around 3 million customers using its mobile, landline and internet services, said it welcomed the decision by WEKO to formally investigate Swisscom, calling it a signal for fair competition in the Swiss telecoms market.

Violating Swiss cartel laws can incur a penalty of up to 10 percent of a firm's turnover earned in Switzerland in the preceding three financial years, dependent of the duration and severity of the unlawful behaviour.

Italy's Antitrust Authority fined Telecom Italia 103.8 million euros ($135.9 million) in May for abusing its dominant market position as owner and manager of the country's fixed-line telephone network.

Swisscom's share price was down nearly 1 percent by 1200 GMT.

($1 = 0.7639 euros) (Reporting by Caroline Copley, Peter Maushagen and Alice Baghdjian; Editing by David Cowell and Mark Potter)

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