The Conseil d'Etat approves ARCEP's penalties policy.

Paris, 6 July 2012

Since 2008, AFORST, (a French association of alternative telecommunications network operators and service providers) has requested ARCEP to impose financial penalties on France Telecom - on the ground that the incumbent carrier's wholesale prices from 2006 to 2008 would not comply with its regulatory obligations.

The Director-General of ARCEP had refused to satisfy these requests, having ascertained that an investigation into the matter did not confirm France Telecom's failure to meet its pricing obligations, which could have resulted in the incumbent carrier being issued with a notice to comply.

In its 4 July 2012 judgement, the Conseil d'Etat (France's highest administrative court) confirmed the legality of this refusal to impose a penalty.

The Conseil d'Etat ruled that ARCEP accurately applied the national and European legal framework governing its power to impose penalties. In accordance with this legal framework, where the Authority finds that an undertaking does not comply with its regulatory obligations, it must first issue a notice to comply with regulation, and can impose a penalty only if that operator has failed to comply with this notice.

On this basis, the Conseil d'Etat concludes that, "in a situation where, in the course of the investigation of a procedure launched by the Authority, the operator's or provider's failure to meet its obligations ceases, whether before or after receiving a notice to comply with said obligations, the Authority can only bring the penalty procedure to a close".

The Conseil d'Etat also confirms that the applicable national legal provisions clearly comply with European directives, which do not require that the penalty procedure has to be used to offer financial compensations for alleged wrongdoings from competing operators.

This court decision therefore provides definitive reinforcement of the Authority's decision-making practice in that matter. In accordance with the responsibilities assigned to it by law, ARCEP is devoted to the sound regulation of the electronic communications sector by ensuring that operators comply with existing obligations, and does not seek to rule on the existence of past commercial wrongdoing in lieu of the competent judicial authorities.