Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE GENERAL COURT (Eighth Chamber)

29 March 2012 (*)

(Competition - Abuse of dominant position - Spanish broadband internet access markets - Decision finding an infringement of Article 82 EC - Price-fixing - Margin squeeze - Sincere cooperation - Ultra vires application of Article 82 EC - Legal certainty - Protection of legitimate expectations)

In Case T-398/07,

Kingdom of Spain, represented by N. Díaz Abad, abogado del Estado,

applicant,

v

European Commission, represented by F. Castillo de la Torre, É. Gippini Fournier and K. Mojzesowicz, acting as Agents,

defendant,

ACTION for annulment of Commission Decision C (2007) 3196 final of 4 July 2007 relating to a proceeding pursuant to Article 82 [EC] (Case COMP/38.784 - Wanadoo España / Telefónica),

THE GENERAL COURT (Eighth Chamber),

composed of L. Truchot, President, M. E. Martins Ribeiro, (Rapporteur) and H. Kanninen, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 8 June 2011,

gives the following

Judgment

Background to the dispute

1 Telefónica SA is the parent company of the Telefónica group, a former State monopoly in the telecommunications sector in Spain. In the period concerned by Commission Decision C (2007) 3196 final of 4 July 2007 relating to a proceeding pursuant to Article 82 [EC] (Case COMP/38.784 - Wanadoo España / Telefónica) ('the contested decision') that is, from September 2001 until December 2006, Telefónica supplied broadband services through its subsidiary Telefónica de España SAU ('TESAU') and through two other subsidiaries, Telefónica Data de España SAU and Terra Networks España SA, which merged with TESAU on 30 June and 7 July 2006 respectively (recitals 11, 13 and 19 to 21 of the contested decision). Telefónica and its subsidiaries (together 'Telefónica') constituted a single economic entity for the entire period concerned by the investigation (recital 12 of the contested decision).

2 Prior to full liberalisation of the telecommunications markets in 1998, Telefónica was owned by the Spanish State and had a legal monopoly in the retail provision of fixed-line telecommunications services. Currently, the fixed telephone network operated by Telefónica is the only nationwide network (recital 13 of the contested decision).

3 On 11 July 2003 Wanadoo España SL (now France Telecom España SA) submitted a complaint to the Commission of the European Communities, complaining that the margin between the wholesale prices which the subsidiaries of Telefónica charged their competitors for the wholesale supply of broadband access in Spain and the retail prices which they charged end users was not enough to allow competitors of Telefónica to compete with it (recital 26 of the contested decision).

4 On 18 November 2004 the Commission sent a request for information to the Comisión del Mercado de las Telecomunicaciones ('CMT', the Spanish Telecommunications Market Commission).

5 On 17 December 2004 the Commission sent an e-mail to CMT, in order to obtain information further to that requested on 18 November 2004. The Commission also sent to CMT a request for additional information on 17 January 2005.

6 On 20 December 2004, 26 January and 2 February 2005 CMT replied to the Commission's request for information of 18 November and 17 December 2004 and 17 January 2005.

7 On 20 February 2006 the Commission sent a statement of objections to Telefónica, which replied on 19 May 2006 (recital 27 of the contested decision).

8 On 15 May 2006 the Commission informed CMT that, if it wanted to participate at the hearing, it should ask the hearing officer for permission to do so. On 24 May 2006 the Commission sent to CMT a non-confidential version of the statement of objections and asked it to submit its comments in writing.

9 At Telefónica's request a hearing took place on 12 and 13 June 2006. Telefónica, the complainant and the interested third parties had the opportunity to be heard and to comment on the issues raised by the Commission in the statement of objections (recital 30 of the contested decision). CMT presented oral submissions. On 26 June 2006 CMT replied to several questions raised by the complainant at the hearing.

10 On 11 January 2007 the Commission sent to Telefónica a letter requesting that it submit its comments on the conclusions which the Commission proposed to draw based on new facts not referred to in the statement of objections. Telefónica replied to that letter on 12 February 2007 (recital 31 of the contested decision).

11 On 12 June 2007 the president of CMT sent a letter to the Commission, informing the Commission of the consequences of the contested decision in terms of regulation and deploring the lack of real cooperation between the Commission and CMT during the proceedings. The Commission replied by letter of 21 August 2007.

12 On 14 June 2007 a meeting of the Commission and CMT took place.

13 On 15 June 2007 CMT attended, in an expert capacity, a meeting of the advisory committee on restrictive practices and abuse of dominant positions, provided for in Article 14 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81[EC] and 82 [EC] (OJ 2003 L 1, p. 1).

Contested decision

14 On 4 July 2007 the Commission adopted the contested decision which is the subject-matter of this action.

15 In the first place, the Commission identified in the contested decision three markets of the products at issue, namely one retail broadband market and two wholesale broadband markets (recitals 145 to 208 of the contested decision).

16 The retail market at issue covers, according to the contested decision, all undifferentiated broadband products, whether supplied by ADSL (Asymetric Digital Subscriber Line) or by any other technology, marketed on the 'general public market' to residential and non-residential users. On the other hand, it does not cover customised broadband access services aimed principally at 'large client accounts' (recital 153 of the contested decision).

17 As regards the wholesale markets, the Commission stated that three main wholesale offers were available, namely a reference offer for local loop unbundling, marketed solely by Telefónica, a regional wholesale offer (GigADSL, 'the regional wholesale product'), also marketed solely by Telefónica, and several national wholesale offers marketed by Telefónica (ADSL-IP and ADSL-IP Total, 'the national wholesale product') and by other operators on the basis of local loop unbundling and/or the regional wholesale product (recital 75 of the contested decision).

18 In order to define the wholesale markets at issue in this case, the Commission analysed whether the wholesale access products described in the preceding paragraph belonged to the same product market or to separate product markets (recital 162 of the contested decision). In that regard, the Commission considered that the regional wholesale product and the local loop unbundling were not interchangeable (recitals 163 to 182 of the contested decision). The Commission also took the view that the interchangeability of the national and regional wholesale products was not sufficient (recitals 183 to 195 of the contested decision), adding that the precise boundaries between the national and regional wholesale markets were not crucial, in the light of Telefónica's dominant position in each of those markets (recital 195 of the contested decision). Lastly, the Commission considered that broadband access technologies other than ADSL, and in particular cable, could not be regarded as interchangeable with ADSL offers (recitals 196 to 207 of the contested decision). The Commission concluded that the wholesale markets at issue for the purposes of the contested decision covered the regional wholesale product and the national wholesale product, excluding wholesale services by cable and technologies other than ADSL (recitals 6 and 208 of the contested decision).

19 Geographically, the relevant wholesale and retail markets are, according to the contested decision, nationwide (Spain) (recital 209 of the contested decision).

20 In the second place, the Commission found that Telefónica had a dominant position in the two wholesale markets at issue (recitals 223 to 242 of the contested decision). In the period under consideration, Telefónica had an exclusive right to supply the regional wholesale product and more than 84% of the national wholesale product (recitals 223 and 235 of the contested decision). According to the contested decision (recitals 243 to 277), Telefónica also had a dominant position in the retail market.

21 In the third place, the Commission examined whether Telefónica had abused its dominant position in the markets at issue (recitals 278 to 694 of the contested decision). In that regard, the Commission considered that Telefónica had infringed Article 82 EC by imposing unfair prices on its competitors in the form of a margin squeeze between the prices for retail broadband access in the Spanish 'general public market' and the prices for wholesale broadband access at regional and national levels, in the period from September 2001 until December 2006 (recital 694 of the contested decision).

22 First, in order to demonstrate that there was a margin squeeze in the present case, the Commission noted the legislative context of Telefónica's supply of the national and regional wholesale products and, in particular, the obligation imposed on Telefónica by Spanish law to supply on fair terms wholesale access at regional and national levels. The Commission also noted the obligation imposed by CMT on Telefónica since March 1999 to supply the regional wholesale product and stated that Telefónica had begun offering its ADSL-IP Total product on its own initiative from September 1999 onwards, whereas CMT had imposed on Telefónica the obligation to supply access to ADSL-IP from April 2002 (recitals 288 and 289 of the contested decision).

23 Second, as regards the method of calculating the margin squeeze, the Commission considered (i) that the efficiency of Telefónica's competitors had to be measured against Telefónica's downstream costs (the 'as-efficient-competitor' method) (recitals 311 to 315 of the contested decision); (ii) that the appropriate method for the evaluation of costs was, in the present case, that of long-run average incremental costs ('LRAIC') (recitals 316 to 324 of the contested decision); (iii) that the assessment of profitability over time could be established by two methods, namely the so-called 'period to period' method and the discounted cash flow method (recitals 325 to 385 of the contested decision); (iv) that the margin squeeze had to be calculated on the basis of the range of services marketed by Telefónica in the relevant retail market (recitals 386 to 388 of the contested decision), and (v) as regards the choice of upstream inputs for the calculation of whether the downstream prices could be reproduced, that Telefónica's tariffs had to be capable of reproduction by an as-efficient competitor using at least one wholesale product of Telefónica in each of the relevant wholesale markets (recitals 389 to 396 of the contested decision).

24 Third, the Commission calculated whether the difference between Telefónica's upstream and downstream prices covered at least Telefónica's downstream LRAIC (recitals 397 to 511 of the contested decision). By applying the methodology described in the preceding paragraph, the Commission calculated that Telefónica's retail prices could not be reproduced on the basis of its national or regional wholesale products between September 2001 and December 2006 (recitals 512 to 542 of the contested decision).

25 Fourth, as regards the effects of the abuse, the Commission considered that Telefónica's conduct had probably restricted the capacity of ADSL operators to achieve sustainable growth in the retail market and had probably harmed the interests of end users. The Commission also took the view that Telefónica's conduct had had actual exclusionary effects and had harmed the interests of consumers (recitals 544 to 618 of the contested decision).

26 Fifth, the Commission stated that Telefónica's conduct was not objectively justified and had not brought about improved efficiency (recitals 619 to 664 of the contested decision).

27 Sixth and last, the Commission stated that Telefónica had leeway to prevent the margin squeeze. Telefónica could have increased its retail prices or lowered its wholesale charges. The Commission added that the CMT decisions sent to Telefónica on the margin squeeze were not capable of relieving Telefónica of responsibility (recitals 665 to 694 of the contested decision).

28 In the fourth place, the Commission found that in the present case trade between Member States was affected, since Telefónica's pricing policy related to the access services provided by a dominant operator extending to the whole of Spain, which constitutes a substantial part of the internal market (recitals 695 to 697 of the contested decision).

29 In order to calculate the fine, the Commission applied, in the contested decision, the methodology set out in the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) [SC] (OJ 1998 C 9, p. 3). The Commission had regard to the nature and impact of the abusive conduct and the size of the geographic market at issue and considered that the infringement had to be classified as 'very serious', even though the degree of seriousness had not necessarily been consistent throughout the period under consideration. According to the contested decision, the starting point for the fine of EUR 90 000 000 takes account of the fact that the gravity of the abuse became clear in the period under consideration and more particularly after the adoption of Commission Decision 2003/707/EC of 21 May 2003 relating to a proceeding under Article 82 EC (Case COMP/C 1/37.451, 37.578, 37.579 - Deutsche Telekom AG) (OJ 2003 L 263, p. 9) (recitals 738 to 757 of the contested decision).

30 A multiplication factor of 1.25 was applied to the starting amount of the fine to take account of Telefónica's significant economic capacity and to ensure that the fine had a sufficiently deterrent effect, with the result that the starting amount of the fine became EUR 112 500 000 (recital 758 of the contested decision).

31 Since the duration of the infringement was from September 2001 until December 2006, in other word five years and four months, the Commission increased the starting amount of the fine by 50%. That brought the basic amount of the fine to EUR 168 750 000 (recitals 759 to 761 of the contested decision).

32 On the basis of the evidence available, the Commission considered that it could be accepted in this case that there were some attenuating circumstances because, over part of the period under consideration, some prices charged by Telefónica were subject to sectoral regulation. Consequently, Telefónica was granted a 10% reduction in the amount of the fine, even though the leeway enjoyed by Telefónica in respect of setting its prices was, according to the Commission, much greater, which brought the amount of the fine to EUR 151 875 000 (recitals 765 and 766 of the contested decision).

33 The enacting terms of the contested decision provide as follows:

'Article 1

[Telefónica] and [TESAU] have infringed Article 82 EC by applying unfair price tariffs to the supply of wholesale and retail broadband access services between September 2001 and December 2006.

Article 2

For the infringement referred to in Article 1, a fine of EUR 151 875 000 is imposed jointly and severally on [Telefónica] and [TESAU].'

Procedure and forms of order sought by the parties

34 By application lodged at the Registry of the General Court on 31 October 2007, the Kingdom of Spain brought the present action.

35 The Kingdom of Spain claims that the Court should:

- annul the contested decision;

- order the Commission to pay the costs.

36 The Commission contends that the Court should:

- dismiss the action;

- order the Kingdom of Spain to pay the costs.

37 Upon hearing the report of the Judge-Rapporteur, the Court (Eighth Chamber) decided to open the oral procedure. The parties presented oral argument and answered oral questions put by the Court at the hearing on 8 June 2011.

Law

38 In support of its action, the Kingdom of Spain relies on five pleas in law. The first plea in law alleges an infringement of the duty of sincere cooperation laid down in Article 10 EC and Article 7(2) of Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive) (OJ 2002 L 108, p. 33). The second plea in law alleges an infringement of Article 82 EC because of the Commission's manifest errors of assessment. The third plea in law alleges an ultra vires application of Article 82 EC. The fourth plea in law alleges a breach of the principle of legal certainty. Lastly, the fifth plea in law alleges a breach of the principle of the protection of legitimate expectations.

The first plea in law: breach of the obligation of sincere cooperation laid down in Article 10 EC and Article 7(2) of the Framework Directive

39 By its first plea in law, the Kingdom of Spain claims that the Commission was in breach of its duty of sincere cooperation, laid down in Article 10 EC and Article 7(2) of the Framework Directive, with CMT during the administrative proceedings at issue.

40 It must be borne in mind that the obligation of sincere cooperation laid down in Article 10 EC is incumbent both on all authorities of the Member States acting within the scope of their powers and on the institutions of the European Union, which have a reciprocal obligation to afford such sincere cooperation to the Member States (order of July 1990 in Case C-2/88 Imm Zwartveld and Others [1990] ECR I-3365, paragraph 17; see Case C-94/00 Roquette Frères [2002] ECR I-9011, paragraph 31 and case-law cited). Where, as in the present case, European Union and national authorities are called upon to assist in the attainment of the objectives of the Treaty by the coordinated exercise of their respective powers, such cooperation is particularly crucial (Roquette Frères, paragraph 32).

41 As regards the admissibility of the part of this plea relating to the infringement of Article 7(2) of the Framework Directive, which is disputed by the Commission, the Court must join the Commission in observing that the Kingdom of Spain, within this plea, has merely asserted that the scope of the obligation of cooperation cannot be restricted to a mechanism for the notification of draft measures on the part of the national regulatory authorities ('the NRA') and subsequent comments on the part of the Commission, and has not presented any arguments to demonstrate that that provision has been infringed.

42 In response to questions at the hearing on the relevance, in this case, of that provision, the Kingdom of Spain declared that Article 7(2) was an application, within the regulatory framework relating to electronic communications, of the duty of sincere cooperation laid down in Article 10 EC.

43 It is clear from Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure of the General Court that every application initiating proceedings must state the subject-matter of the proceedings and contain a summary of the pleas in law on which it is based. That statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the action, if necessary, without any further information. In order to guarantee legal certainty and the sound administration of justice it is necessary, in order for an action to be admissible, that the basic legal and factual particulars relied on be indicated, at least in summary form, coherently and intelligibly in the application itself (see Case T-201/04 Microsoft v Commission [2007] ECR II-3601, paragraph 94 and case-law cited).

44 Further, a mere abstract statement of the grounds in the application does not alone satisfy the requirements of the Rules of Procedure and the application must specify the nature of the grounds on which the application is based (Joined Cases 19/60, 21/60, 2/61 and 3/61 Fives Lille Cail and Others v High Authority [1961] ECR 281, at 295, and judgment of 18 December 2008 in Case T-455/05 Componenta v Commission, not published in the ECR, paragraph 45).

45 It is clear that the Kingdom of Spain has not presented any sufficiently clear argument in support of the part of the plea relating to the infringement of Article 7(2) of the Framework Directive in the context of the administrative proceedings which led to the adoption of the contested decision. That part of the plea must therefore be declared to be inadmissible since it does not meet the requirements of the case-law cited in paragraphs 43 and 44 above.

46 As regards the substance of this plea in so far as it relates to an infringement of Article 10 EC, in the first place, the Kingdom of Spain's assertion that the Commission was in breach of its duty of sincere cooperation by not sufficiently involving CMT in the administrative proceedings must be rejected.

47 It should be emphasised, so far as concerns relationships formed in the context of proceedings conducted by the Commission pursuant to Articles 81 EC and 82 EC, that the rules for the operation of the duty of sincere cooperation which stems from Article 10 EC and which binds the Commission in its relationships with the Member States have been stated in, inter alia, Articles 11 to 16 of Regulation No 1/2003, in Chapter IV headed 'Cooperation'. Those provisions do not impose an obligation on the Commission to consult the NRA, nor do they provide for the Commission being able, as claimed by the Kingdom of Spain, to undertake 'joint action' with them in proceedings conducted by the Commission pursuant to Articles 81 EC and 82 EC.

48 Next, it is clear that CMT was in fact involved in the administrative proceedings in this case. First, as is clear from paragraphs 4 to 6 above, the Commission sent to CMT three requests for information, to which CMT replied. Second, the Commission sent to CMT, on 24 May 2006, a non-confidential version of the statement of objections. The Commission also informed CMT that it was open to it, if it chose, to send to the Commission written comments on the statement of objections or again to present observations or questions orally at the hearing. No written observations were presented by CMT. Third, the Kingdom of Spain does not dispute that several representatives of CMT were present at the hearing of 12 and 13 June 2006 and that CMT also intervened orally at that hearing. Fourth, on 26 June 2006 CMT also replied in writing to a number of questions put by the complainant during the hearing. Fifth, the Kingdom of Spain does not dispute the Commission's assertion that the members of the team responsible for the file met CMT on several occasions in order to discuss the investigation. Sixth, the Kingdom of Spain does not dispute the Commission's assertions that on 14 June 2007 several representatives of CMT met the Commission and presented observations on the wording of some recitals of the contested decision, which were taken into consideration for the second meeting of the advisory committee referred to in Article 14 of Regulation No 1/2003. CMT did not submit any additional comments in that regard. Moreover, a CMT expert took part in a meeting of that advisory committee, which took place on 15 June 2007. It must be held that the Kingdom of Spain fails to explain, in its action, why the participation of CMT, as described above, was insufficient in the present case.

49 In that regard, the arguments relied on by the Kingdom of Spain to demonstrate the significance of the failure by the Commission to comply with its duty of sincere cooperation can also not be accepted.

50 First, the fact that the contested decision related to products and services regulated by CMT in accordance with the applicable European directives is of no relevance. As correctly stated by the Commission, in the absence of express derogation to that effect, competition law is applicable to regulated sectors (see, to that effect, Joined Cases 40/73 to 48/73, 50/73, 54/73 to 56/73, 111/73, 113/73 and 114/73 Suiker Unie and Others v Commission [1975] ECR 1663, paragraphs 65 to 72, and Case 66/86 Saeed Flugreisen and Silver Line Reisebüro [1989] ECR 803). Further, the applicability of the competition rules is not ruled out where the sectoral provisions concerned do not preclude undertakings from engaging in autonomous conduct which prevents, restricts or distorts competition (see Joined Cases C-359/95 P and C-379/95 P Commission and France v Ladbroke Racing [1997] ECR I-6265, paragraphs 33 and 34 and case-law cited). As the Commission found in recitals 665 to 694 of the contested decision, which are not disputed by the Kingdom of Spain, Telefónica had in the present case leeway in which to prevent the margin squeeze (see also paragraph 27 above). The conduct of Telefónica penalised in the contested decision is therefore within the scope of Article 82 EC (see also, to that effect, Opinion of Advocate General Mazák in Case C-280/08 P Deutsche Telekom v Commission [2010] ECR I-0000, points 15 and 19).

51 Second, the Kingdom of Spain's assertion that the Commission, in the contested decision, carried out an 'in depth' analysis of CMT's regulatory activity is also of no relevance. While it is certainly true that in the contested decision the Commission made reference to the regulatory context in which Telefónica supplied the regional and national wholesale products, that is because it is necessary, in order to determine whether pricing practices are abusive, to consider all the circumstances and to investigate whether the practice tends to remove or restrict the buyer's freedom to choose his sources of supply, to bar competitors from access to the market, to apply dissimilar conditions to equivalent transactions with other trading parties, or to strengthen the dominant position by distorting competition (judgment in Case C-280/08 P Deutsche Telekom v Commission, paragraph 175; see Case C-52/09 TeliaSonera [2011] ECR I-0000, paragraph 28 and case-law cited). In the contested decision, the Commission moreover expressly stated that the national regulations which imposed on Telefónica an obligation to supply the regional and national wholesale products was compatible with the European Union regulatory framework adopted in 2002 (recital 294 of the contested decision) and that the finding of an infringement of Article 82 EC in the form of a margin squeeze was not a contradiction of CMT's policy (recital 684 of the contested decision). The Commission also emphasised that the methodology used in the contested decision was not incompatible with the methodology used by CMT in 2001 (recital 733 of the contested decision). Lastly, the Commission stated that it was the adoption, by CMT, of interim measures leading to a substantial reduction in the prices of the regional and national wholesale products which brought the margin squeeze to an end (recital 759 of the contested decision).

52 Third, it cannot be maintained that the Commission penalised Telefónica for an anti-competitive practice which had previously been analysed by CMT. The Kingdom of Spain has not disputed, either in its written pleadings or, when questioned on this point, at the hearing, the facts that CMT did not ever analyse the existence of a margin squeeze during the period of infringement between Telefónica's national wholesale product and its retail products and that the analysis of a margin squeeze between Telefónica's regional wholesale product and its retail products was not carried out on the basis of Telefónica's historical real costs but rather on the basis of ex ante estimates (recitals 726 and 727 of the contested decision).

53 In the second place, contrary to what is claimed by the Kingdom of Spain, it cannot be held that the contested decision impedes the regulatory work of CMT, has consequences in respect of its future activity, or affects its regulatory policy.

54 First, the Kingdom of Spain's argument that the Commission's action did not take into account the regulation of the sector must be rejected.

55 There is no need to rule on the relevance of the judgment of the Supreme Court of the United States of 13 January 2004 (Verizon Communications Inc. v Law Offices of Curtis V. Trinko, LLP 540 US 398 (2004)), relied on by the Kingdom of Spain, to the analysis in the present case of the conditions under which the Commission can take action on the basis of Article 82 EC in the regulated market at issue, since the view must be taken that the Commission, in recitals 287 to 309 of the contested decision, did in fact examine the regulatory context in which Telefónica supplied wholesale access at the regional level and at the national level, and took into account that context, precisely because of the need, stated in paragraph 51 above, to assess all the circumstances, including the obligation imposed on Telefónica by the Spanish regulatory framework to supply wholesale access at regional level from 1999 and wholesale access at national level from April 2002 (recital 287 of the contested decision). Moreover, the Commission made reference for that purpose on many occasions, in the contested decision, to CMT's activity in the Spanish market. In any event, even if the sectoral regulation referred to by the Kingdom of Spain derives from European Union secondary legislation, it must be stated that, in view of the principles governing the hierarchical relationship of legal rules, such secondary legislation could not, in the absence of any enabling provision in the Treaty, derogate from a provision of the Treaty, in this case Article 82 EC (see, to that effect, Case T-51/89 Tetra Pak v Commission [1990] ECR II-309, paragraph 25).

56 The Kingdom of Spain's argument that the Commission's adoption of the contested decision has consequences in respect of future activity of CMT and affects its regulatory policy must also be rejected. Leaving aside the fact that the Kingdom of Spain does not explain in its written pleadings what those consequences are, nor why CMT's regulatory policy would be affected, it is clear that ex ante regulation by a NRA and ex post review by the Commission have distinct purposes and objectives, the competition rules laid down by the EC Treaty supplementing, by ex post review, the legislative framework adopted by the European Union legislature for ex ante regulation of the telecommunications markets (judgment in Case C-286/08 P Deutsche Telekom v Commission, paragraph 92).

57 Second, the Kingdom of Spain's argument based on the Commission decision of 30 April 2003 relating to proceedings under Article 81 [EC] and Article 53 of the EEA Agreement (Case COMP/38.370 - O2 UK Limited/T-Mobile UK Limited) (OJ 2003 L 200, p. 59), and on several Commission press releases, from which it is said to be clear that, in other cases within the telecommunications sector, the Commission has taken the view that competition was sufficiently maintained because of the action taken by the NRA, must also be rejected. The assessments made by the Commission are based on the specific facts of each case and decisions in other cases can be indicative only, since the facts of cases are not identical (see, to that effect, Case C-167/04 P JCB Service v Commission [2006] ECR I-8935, paragraphs 201 and 205, Case C-76/06 P Britannia Alloys & Chemicals v Commission [2007] ECR I-4405, paragraph 60). Consequently, assessments made by the Commission based on the facts of previous cases, the facts of which moreover are essentially established for the purposes of this case by reference to Commission press releases, cannot be transposed to the present case (see, to that effect, Case T-282/06 Sun Chemical Group and Others v Commission [2007] ECR II-2149, paragraph 88).

58 It follows from all the foregoing that this plea must be rejected.

The second plea in law: infringement of Article 82 EC because of manifest errors of assessment by the Commission

59 By this plea the Kingdom of Spain claims that the Commission committed several manifest errors of assessment in respect of the application of Article 82 EC. In that regard, the Kingdom of Spain claims that the wholesale products concerned were not indispensable for the operators who took up their offers, that the calculation of the specific retail costs of competitors regarded hypothetically as being as efficient as Telefónica is incorrect and that the analysis of the effects of Telefónica's anti-competitive conduct on the Spanish market is misconceived.

60 As a preliminary, it must be borne in mind that, in accordance with settled case-law, although as a general rule the courts of the European Union undertake a comprehensive review of the question whether the conditions for applying the competition provisions of the EC Treaty are met, their review of complex economic appraisals made by the Commission is necessarily limited to verifying whether the relevant rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or misuse of powers (Case 42/84 Remia and Others v Commission [1985] ECR 2545, paragraph 34; Joined Cases 142/84 and 156/84 British American Tobacco and Reynolds Industries v Commission [1987] ECR 4487, paragraph 62; Joined Cases C-204/00 P, C-205/00 P, C-211/00 P, C-213/00 P, C-217/00 P and C-219/00 P Aalborg Portland and Others v Commission [2004] ECR I-123, paragraph 279; and Case T-271/03 Deutsche Telekom v Commission [2008] ECR II-477, paragraph 185).

61 Likewise, in so far as the Commission's decision is the result of complex technical appraisals, those appraisals are in principle subject to only limited judicial review, which means that the courts of the European Union cannot substitute their own assessment of matters of fact for the Commission's (see Microsoft v Commission, paragraph 88, and Case T-301/04 Clearstream v Commission [2009] ECR II-3155, paragraph 94).

62 However, while the courts of the European Union recognise that the Commission has a margin of appreciation in economic or technical matters, that does not mean that they must decline to review the Commission's interpretation of economic or technical data. The courts of the European Union must not only establish whether the evidence put forward is factually accurate, reliable and consistent but must also determine whether that evidence contains all the relevant data that must be taken into consideration in appraising a complex situation and whether it is capable of substantiating the conclusions drawn from it (Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987, paragraph 39; Microsoft v Commission, paragraph 89, and Clearstream v Commission, paragraph 95).

63 In the light of the principles stated above, the Court must examine whether the Commission has committed the manifest errors of assessment claimed by the Kingdom of Spain.

64 First, the Kingdom of Spain claims that it is a requirement of the case-law that, before there can be a margin squeeze between a wholesale product and a retail product contrary to Article 82 EC, as found by the contested decision, that the wholesale product should be indispensable for the provision of the retail service, which is not true in the present case.

65 In response to questions at the hearing on the meaning and scope of its argument, particularly in the light of the judgment in TeliaSonera, the Kingdom of Spain reiterated that its position was that where, as in the present case, there existed a regulatory obligation to supply a wholesale product, it was the duty of the Commission, in order to establish the existence of a margin squeeze contrary to Article 82 EC, to demonstrate that that product was indispensable to the provision of the retail product. The Kingdom of Spain also stated that the reasoning of TeliaSonera applied only where the wholesale products at issue had been voluntarily placed on the market, in the absence of any regulatory obligation.

66 In accordance with the case-law cited in paragraph 51 above, in order to determine whether the dominant undertaking has abused its position by the pricing practices it applies, it is necessary to consider all the circumstances and to investigate whether the practice tends to remove or restrict the buyer's freedom to choose his sources of supply, to bar competitors from access to the market, to apply dissimilar conditions to equivalent transactions with other trading parties, or to strengthen the dominant position by distorting competition.

67 In particular, a pricing practice adopted by a vertically integrated dominant undertaking which is unfair because it effectively squeezes the margins of its competitors on the retail market, because of the spread between the prices of its wholesale products and the prices of its retail products, may constitute an abuse of a dominant position contrary to Article 82 EC (see, to that effect, TeliaSonera, paragraph 30).

68 A margin squeeze, in view of the exclusionary effect which it may create for competitors who are at least as efficient as the dominant undertaking, in the absence of any objective justification, is in itself capable of constituting an abuse within the meaning of Article 82 EC (TeliaSonera, paragraph 31).

69 In that regard, the Kingdom of Spain's argument, presented at the hearing, that the reasoning of TeliaSonera applies only where the wholesale products at issue have been voluntarily placed on the market, in the absence of any regulatory obligation, must also be rejected.

70 In TeliaSonera the Court of Justice held in effect that Article 82 EC applies only to anti-competitive conduct engaged in by undertakings on their own initiative. If anti-competitive conduct is required of undertakings by national legislation or if the latter creates a legal framework which itself eliminates any possibility of competitive activity on their part, Article 82 EC does not apply. In such a situation, the restriction of competition is not attributable, as that provision implicitly requires, to the autonomous conduct of the undertakings (see TeliaSonera, paragraph 49 and case-law cited).

71 On the other hand, Article 82 EC may apply if it is found, as in the present case (recitals 665 to 685 of the contested decision) (see also paragraph 27 above), that the national legislation preserves the possibility that undertakings may engage in autonomous conduct which prevents, restricts or distorts competition (see, to that effect, TeliaSonera, paragraph 50 and case-law cited).

72 The Court has stated that, notwithstanding such legislation, if a dominant vertically integrated undertaking has scope to adjust even its retail prices alone, the margin squeeze may on that ground alone be attributable to it (see, to that effect, the judgment in Case C-280/08 P Deutsche Telekom v Commission, paragraph 85, and TeliaSonera, paragraph 51).

73 Moreover, while the Kingdom of Spain claims that, if the margin between the national and regional wholesale products, on the one hand, and the retail product, on the other, was so close that it amounted to being negative, with the result that no other operator could use those wholesale products, the conduct under examination ought then to be analysed as a refusal of access which should then be regarded as abusive only by reference to the criteria stated in Case C-7/97 Bronner [1998] ECR I-7791, such an argument must also fail.

74 The Court of Justice has made it clear that it cannot be inferred from Bronner that the conditions to be met in order to establish that a refusal to supply is abusive must necessarily also apply when assessing the abusive nature of conduct which consists in supplying services or selling goods on conditions which are disadvantageous or on which there might be no purchaser. Such conduct may, in itself, constitute an independent form of abuse distinct from that of refusal to supply (TeliaSonera, paragraphs 55 and 56).

75 If Bronner were to be interpreted otherwise, that would amount to a requirement that before any conduct of a dominant undertaking in relation to its terms of trade could be regarded as abusive the conditions to be met to establish that there was a refusal to supply would in every case have to be satisfied, and that would unduly reduce the effectiveness of Article 82 EC (see, to that effect, TeliaSonera, paragraph 58).

76 It follows that the Kingdom of Spain cannot claim that the Commission was obliged, in the contested decision, in order to establish the very existence of a margin squeeze, to demonstrate that the wholesale products concerned were indispensable for the operators who had concluded contracts for them. The Kingdom of Spain's arguments designed to demonstrate that, in the contested decision, the Commission considered that the regional and national wholesale products were necessary on the basis of a misconceived interpretation of the theory of scale of investments, must therefore also fail.

77 Lastly, it is clear from the Court's case-law cited in paragraph 51 above, that, in order to demonstrate whether the dominant undertaking has abused that dominance by the application of its pricing practices, it is necessary to consider all the circumstances and to investigate whether the practice tends to remove or restrict the buyer's freedom to choose his sources of supply, to bar competitors from access to the market, to apply dissimilar conditions to equivalent transactions with other trading parties, or to strengthen the dominant position by distorting competition.

78 As the Commission explained in recitals 287 to 309 of the contested decision, the marketing by Telefónica of its wholesale products and the obligation on it, imposed by the Spanish regulatory framework, to give access to its infrastructures constitute a pre-existing reality of the Spanish market. As regards the national wholesale product, it is clear from recitals 110 and 287 to 289 of the contested decision that Telefónica began supplying the ADSL-IP Total service on its own initiative from September 1999 onwards and was subject to an obligation to supply ADSL-IP imposed by CMT from April 2002. The unsubstantiated assertion by the Kingdom of Spain, at the hearing, that use of the ADSL-IP Total service was marginal must in that regard also be rejected, since that service was at the least the wholesale product which was most used until the last quarter of 2002 (recital 98 of the contested decision). Next, as regards the regional wholesale product, Telefónica was subject to an obligation to supply from March 1999. The Commission therefore did not infringe Article 82 EC, nor commit any manifest error of assessment, by examining against that background Telefónica's pricing practices over the period concerned.

79 It follows from the foregoing that the first part of the Kingdom of Spain's second plea in law, as set out in paragraph 64 above, must be rejected.

80 Second, the Kingdom of Spain claims that the analysis of costs carried out by the Commission contains significant errors, since it overestimates the wholesale prices applicable to alternative operators and Telefónica's specific costs. In support of that argument, the Kingdom of Spain confines itself to claiming that, first, the alternative operators use an optimal combination of the wholesale products existing on the market, which enables them to minimise their costs, and, second, that the specific costs used in the contested decision differ from those used by CMT and do not reflect the reality of the Spanish market. The Kingdom of Spain claims, moreover, that the Commission does not explain why the 'values' of the specific costs used by CMT ought not to be regarded as correct.

81 In the first place, the Kingdom of Spain's argument that the Commission does not explain why the 'values' of the specific costs used by CMT, which are said to differ from those used in the contested decision, ought not to be regarded as correct, must be rejected, since the Commission devoted to that point recitals 492 to 511 of the contested decision. In that regard, as the Commission stated in those recitals, the findings whereof are not disputed by the Kingdom of Spain, the costs used by CMT did not allow an assessment of the compatibility with Article 82 EC of Telefónica's broadband access prices, since CMT's model was not based on recent information concerning the costs actually incurred by Telefónica. Further, according to the Commission, the model of costs of external consultants under-estimated, to a significant degree, Telefónica's marginal network costs and did not take into account Telefónica's promotion costs. Conversely, the Commission's model is based on the most recent historical data as provided by the company and on Telefónica's business plan (recital 511 of the contested decision).

82 In the second place, the Kingdom of Spain's argument on the use by an as-efficient competitor of an optimal combination of wholesale products in order to minimise its costs must be rejected. It must be observed at the outset that the use by the alternative operators, during the period of infringement, on each telephone exchange, of an optimal combination of wholesale products, which would include unbundling of the local loop, has not been established. Thus, it is clear from recitals 102 and 103 of the contested decision, the information provided therein not being disputed by the Kingdom of Spain, that until 2002 France Telecom almost exclusively purchased Telefónica's national wholesale product, that being replaced, in late 2002, by an alternative national wholesale offer based on Telefónica's regional wholesale product. Only after February 2005 did the number of France Telecom's unbundled local loops significantly increase, whereas there was a reduction in the number of alternative national wholesale lines based on Telefónica's regional wholesale product. Further, until the last quarter of 2004 Ya.com exclusively purchased Telefónica's national wholesale product and began gradually to use the unbundling of the local loop only from July 2005 onwards, with its acquisition of Albura.

83 Next, as observed by the Commission, such an optimal combination could be used only by competitors of Telefónica having possession of a network allowing them unbundling of the local loop, to the exclusion of Telefónica's potential competitors.

84 Further, the Kingdom of Spain's argument that a possible optimal combination of wholesale products would prevent the establishment of a margin squeeze is in contradiction to the regulatory obligations imposed by CMT on Telefónica, the aim of which is, in particular, to ensure that all Telefónica's retail offers can be reproduced on the basis of its regional wholesale product (recital 114 of the contested decision). In that regard, the Kingdom of Spain has moreover not challenged, in its reply or at the hearing, the references made by the Commission, as examples, to CMT decisions of 8, 22 and 28 July, 21 October, 11 November and 20 December 2004, whereby CMT prohibited new market offerings by Telefónica which did not leave an adequate margin between its retail prices and the prices of the regional wholesale product (see also recital 115 of the contested decision).

85 In the third place, as correctly stated by the Commission, the Kingdom of Spain fails to rebut the Commission's conclusions as to the calculation of costs in the contested decision and as to the level of retail prices in Spain. The Kingdom of Spain does no more than maintain that evidence of the existence of errors in calculation in the contested decision can be inferred from the fact that the costs of access to the ADSL-IP Total service (between 2001 and 2004) and the ADSL-IP service (between 2002 and 2004) were lower than the costs of GigADSL, which was however the offer most taken up by the alternative operators from the second half of 2002 onwards (recital 99 of the contested decision), a fact said to be 'apparently irrational'. However, the Kingdom of Spain does not indicate in what way such an assertion can serve to demonstrate the unlawfulness of the Commission's calculations or the absence of a margin squeeze.

86 In the fourth place, while the Kingdom of Spain relies on a comparison of wholesale prices and retail prices in France, it does not explain to what extent that comparison can demonstrate the unlawfulness of the Commission calculation of costs in the context of establishing a margin squeeze on the Spanish market. Such an argument must accordingly be rejected.

87 In the light of the foregoing, the second part of the Kingdom of Spain's second plea in law, as set out in paragraph 80 above, must also be rejected.

88 Third, the Kingdom of Spain claims that the analysis of the effect of Telefónica's anti-competitive conduct is misconceived.

89 In that regard, it must be borne in mind that, in accordance with the case-law, in prohibiting the abuse of a dominant position, in so far as trade between Member States is capable of being affected, Article 82 EC refers to the conduct of a dominant undertaking which, on a market where the degree of competition is already weakened precisely because of the presence of the undertaking concerned, through recourse to methods different from those governing normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition (see judgment in Case C-280/08 P Deutsche Telekom v Commission, paragraph 174 and case-law cited).

90 The effect referred to in the case-law cited in the preceding paragraph does not necessarily relate to the actual effect of the abusive conduct complained of. For the purposes of establishing an infringement of Article 82 EC, it is sufficient to show that the abusive conduct of the undertaking in a dominant position tends to restrict competition or, in other words, that the conduct is capable of having, or likely to have, that effect (Case T-203/01 Michelin v Commission [2003] ECR II-4071, paragraph 239; Case T-219/99 British Airways v Commission [2003] ECR II-5917, paragraph 293, and Microsoft v Commission, paragraph 867). The pricing practice concerned must have an anti-competitive effect on the market, but the effect does not necessarily have to be concrete, and it is sufficient to demonstrate that there is an anti-competitive effect which may potentially exclude competitors who are at least as efficient as the dominant undertaking (TeliaSonera, paragraph 64)

91 It is apparent from the case-law of the Court of Justice, cited in paragraph 51 above that, in order to determine whether the undertaking in a dominant position has abused such a position by its pricing practices, it is necessary to consider all the circumstances and to investigate whether the practice tends to remove or restrict the buyer's freedom to choose his sources of supply, to bar competitors from access to the market, to apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, or to strengthen the dominant position by distorting competition.

92 Since Article 82 EC thus refers not only to practices which may cause damage to consumers directly, but also to those which are detrimental to them through their impact on competition, a dominant undertaking has a special responsibility not to allow its conduct to impair genuine undistorted competition on the common market (see judgment in Case C-280/08 P Deutsche Telekom v Commission, paragraph 176 and case-law cited).

93 It follows from this that Article 82 EC prohibits a dominant undertaking from, inter alia, adopting pricing practices which have an exclusionary effect on its equally efficient actual or potential competitors, that is to say practices which are capable of making market entry very difficult or impossible for such competitors, and of making it more difficult or impossible for its co-contractors to choose between various sources of supply or commercial partners, thereby strengthening its dominant position by using methods other than those which come within the scope of competition on the merits. From that point of view, therefore, not all competition by means of price can be regarded as legitimate (see judgment in Case C-280/08 P Deutsche Telekom v Commission, paragraph 177 and case-law cited).

94 In that regard, while it is true that, in TeliaSonera (paragraph 69), the Court stated that the question whether the wholesale product is indispensable may be relevant when assessing the effects of the margin squeeze, it is clear, as correctly stated by the Commission, and as the Kingdom of Spain expressly confirmed at the hearing, first, that the Kingdom of Spain referred to the circumstance of the wholesale products being indispensable only to rebut the very existence of a margin squeeze contrary to Article 82 EC (see paragraph 65 above) and, second, that the Kingdom of Spain has not challenged the lawfulness of recitals 543 to 563 of the contested decision, in which the Commission held that Telefónica's conduct was likely to restrict competition on the relevant markets.

95 Since, according to settled case-law, in so far as certain grounds of a decision in themselves provide a sufficient legal basis for that decision, any errors in other grounds of the decision have no effect in any event on its operative part (Case T-87/05 EDP v Commission [2005] ECR II-3745, paragraph 144; see also, to that effect, Joined Cases C-302/99 P and C-308/99 P Commission and France v TF1 [2001] ECR I-5603, paragraphs 26 to 29), the Kingdom of Spain's claims that there is no evidence that Telefónica's conduct had actual effects on the market must be rejected as ineffective in relation to the establishment of the infringement at issue within this action.

96 It follows that the third part of the Kingdom of Spain's second plea in law, as set out in paragraph 88 above, must be rejected, and therefore the plea must be rejected in its entirety.

The third plea in law: ultra vires application of Article 82 EC

97 The Kingdom of Spain claims that the Commission's application of Article 82 EC was ultra vires.

98 In its defence the Commission contends that the reference to the ultra vires exercise of its powers does not adequately explain whether the Kingdom of Spain's plea relates to a lack of competence or to a misuse of power. This plea in law might therefore be declared to be inadmissible on the grounds of the application's lack of clarity. That lack of clarity is prejudicial to the rights of the defence, since the assessment of lack of competence and that of misuse of power are subject to different criteria.

99 In that regard the Kingdom of Spain, in its written pleadings, relies on five arguments in support of its plea claiming an ultra vires application of Article 82 EC. First, the Kingdom of Spain claims that the Spanish regulations are consistent with the objective of the European directives. Accordingly, the Commission ought not to have adopted a decision on the basis of Article 82 EC, but should have adopted a decision on the basis of Article 226 EC or had recourse to one of the mechanisms provided for by Article 7 of the Framework Directive. Second, the Kingdom of Spain claims that the Commission substituted a new regulatory model for the regulatory framework existing in Spain. Third, the contested decision produces a situation which is incompatible with the objectives of the regulatory policy which the NRA must pursue and the results of the contested decision are incompatible with 'international regulatory experience'. Fourth, the Commission de facto prevents the Spanish NRA from achieving the objectives established by the regulatory framework on electronic communications and the contested decision 'suggests that the regulatory activity did not comply with Article 82 EC'. Fifth and last, there has been a breach of the principle of lex specialis, since the legislation concerning electronic communications prevails over the legislation relating to competition.

100 It is clear that the arguments relied on within this plea appear to be linked, in essence, to either a lack of competence or a misuse of power, or even, in the case of some of them, to an infringement of Article 82 EC.

101 In that regard, the Kingdom of Spain expressly stated in its reply and confirmed at the hearing that it was not claiming, within the present plea, either that the Commission lacked competence or that it misused its power, but rather that Article 82 EC had been applied in a way 'which goes beyond its wording'. At the hearing, the Kingdom of Spain again stated, in essence, that the basis of its plea was that the Commission had acted ultra vires by intervening, late, in a market that was adequately regulated.

102 The Kingdom of Spain has however provided nothing in the way of explanation of why the Commission has, in the present case, 'applied Article 82 EC in a way which goes beyond its wording'. Nor has the Kingdom of Spain indicated in what way the arguments relied on within this plea can be distinguished from those relied on within the other pleas of this action.

103 Under the first subparagraph of Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure, every application initiating proceedings must state the subject-matter of the proceedings and contain a summary of the pleas in law on which it is based. In order to guarantee legal certainty and the sound administration of justice it is necessary, in order for an action to be admissible, that the basic legal and factual particulars relied on be indicated, at least in summary form, coherently and intelligibly in the application itself (see Case T-369/08 EWRIA and Others v Commission [2010] ECR II-0000, paragraph 48 and case-law cited).

104 It is also apparent from the case-law that the summary of an applicant's pleas in law must be sufficiently clear and precise to enable the defendant to prepare its defence and to enable the Court to give judgment in the action without the need to seek further information. Similar requirements apply where a submission is made in support of a plea in law (see Case T-209/01 Honeywell v Commission [2005] ECR II-5527, paragraph 55 and case-law cited).

105 In the light of the foregoing, and since the Kingdom of Spain has expressly stated that it was not claiming that the Commission either lacked competence or misused its power, it must be held that this plea in law does not set out coherent legal arguments specifically contesting the findings of the contested decision. The plea is therefore too vague to be answered, and must accordingly be declared to be inadmissible (see, to that effect, Case C-194/99 P Thyssen Stahl v Commission [2003] ECR I-10821, paragraphs 105 and 106).

The fourth plea in law: breach of the principle of legal certainty

106 The Kingdom of Spain claims, in essence, that, by adopting the contested decision, the Commission infringed the principle of legal certainty, since that decision involves an ex post alteration of the design of the ex ante regulatory framework. The contested decision trespasses on the regulatory framework under which operators in the electronic communications sector had planned substantial long term investment, and that creates great uncertainty for the economic actors. By means of the contested decision the Commission has become a body with the power to review the administrative activity of the NRA, and the consequence of that is that the regulation of prices has been duplicated. There existed in Spain, in the period under consideration, an abundance of ex ante regulation and it was the duty of the Commission, under Article 7 of the Framework Directive, to monitor the regulatory measures adopted by CMT. The Commission did not, by annual implementation reports or infringement proceedings against the Kingdom of Spain, take any issue with the regulatory instruments designed by CMT or with its activity on the market. The damage to legal certainty also has 'future consequences', taking into account the differences expressed in the contested decision on the subject of the definition of the markets or the methodology of analysis which the NRA are permitted to use in connection with ex ante regulation.

107 It must be recalled that the principle of legal certainty requires that legal rules be clear and precise, and aims to ensure that situations and legal relationships governed by European Union law remain foreseeable (see, to that effect, Case C-158/07 Förster [2008] ECR I-8507, paragraph 67; Case T-308/05 Italy v Commission [2007] ECR II-5089, paragraph 158, and judgment of 13 November 2008 in Case T-128/05 SPM v Council and Commission, not published in the ECR, paragraph 147).

108 That principle has not been infringed in the present case. As stated by the Commission, the Kingdom of Spain's plea is based on the mistaken premiss that the Commission altered ex post the regulatory framework, which has not been demonstrated.

109 First, it is clear that the sectoral legislation to which the Kingdom of Spain refers has no effect on the competence which the Commission derives directly from Article 3(1) of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles [81 EC] and [82 EC] (OJ 1962 13, p. 204), and, since 1 May 2004, Article 7(1) of Regulation No 1/2003, to find infringements of Articles 81 EC and 82 EC (see, to that effect, Case T-271/03 Deutsche Telekom v Commission, paragraph 263).

110 As stated above in paragraph 56, the competition rules laid down by the EC Treaty supplement, by ex post review, the legislative framework adopted by the European Union legislature for ex ante regulation of the telecommunications markets (judgment in Case C-208/08 P Deutsche Telekom v Commission, paragraph 92).

111 Since Telefónica had leeway in which to prevent the margin squeeze (see also paragraphs 27 and 50 above), the conduct of Telefónica penalised in the contested decision was within the scope of Article 82 EC (see also, to that effect, the opinion of Advocate General Mazák in Case C-280/08 P Deutsche Telekom v Commission, points 15 and 19).

112 Further, that legislative framework cannot call into question, for the purposes of the application of Article 82 EC, the division of competences established at the level of primary law by Articles 83 EC and 85 EC (see, again, the opinion of Advocate General Mazák in Case C-280/08 P Deutsche Telekom v Commission, point 19).

113 Second, the Kingdom of Spain cannot claim that it was the duty of the Commission, under Article 7 of the Framework Directive, to monitor the regulatory measures adopted by CMT. As stated by the Commission in its written pleadings, only the measures adopted in June 2006, following the introduction by CMT of the new regulatory framework for electronic communications networks and services, were notified to the Commission by means of the procedure laid down in that article.

114 Third, the Court cannot hold that damage to legal certainty also has 'future consequences', taking into account the differences expressed in the contested decision on the subject of the definition of the markets or the methodology of analysis which the NRA are permitted to use in connection with ex ante regulation. As is clear in particular from Article 15 of the Framework Directive, the identification of product and service markets within the electronic communications sector, the characteristics of which may be such as to justify the imposition of regulatory obligations set out in the Specific Directives is without prejudice to markets that may be defined in specific cases under competition law. Likewise, paragraph 28 of the Commission guidelines on market analysis and the assessment of significant market power under the Community regulatory framework for electronic communications networks and services (OJ 2002 C 165, p. 6) states that market definitions under the new regulatory framework for electronic communications networks and services may, in some cases, even in similar areas, be different from the markets as defined by the competition authorities.

115 Fourth and last, while the Kingdom of Spain claims that the Commission ought to have brought infringement proceedings against it, under Article 226 EC, if the Commission had come to the conclusion that the decisions of CMT, as an organ of the Member State, did not ensure the absence of a margin squeeze and, therefore, did not comply with that regulatory framework, it must be observed that, in the contested decision, the Commission did not make any such finding. Further, in any event, even if CMT had infringed a rule of European Union law and the Commission could on that basis have brought infringement proceedings against the Kingdom of Spain, such possibilities can have no effect on the lawfulness of the contested decision. In that decision the Commission did no more than find that Telefónica had infringed Article 82 EC, a provision which concerns not the Member States, but only economic operators (see, to that effect, Case T-271/03 Deutsche Telekom v Commission, paragraph 271). Further, according to the Court's case-law, under the system laid down by Article 226 EC, the Commission has a discretion to bring an action for failure to fulfil obligations, and it is not for the courts of the European Union to assess whether it was appropriate to do so (judgment in Case C-280/08 P Deutsche Telekom v Commission, paragraph 47).

116 It follows that this plea must be rejected.

The fifth plea in law; breach of the principle of the protection of legitimate expectations

117 The Kingdom of Spain claims that, by breaking the regulatory framework by means of a decision adopted in an area which had already been regulated by CMT, the Commission infringed the principle of the protection of legitimate expectations as regards not only the operator penalised, but also other operators in that market, who believed that they acted under the protection of the sectoral framework of wholesale access established by CMT. The infringement of the principle of the protection of legitimate expectations is particularly clear in so far as CMT had taken ad hoc actions relating to Telefónica's market offers. Consequently, the contested decision infringed the principle of the protection of legitimate expectations by stating that the fact that an operator acts in conformity with the framework established by a NRA does not justify a presumption that that conduct is lawful.

118 It must be recalled that any trader on the part of whom an institution has inspired reasonable expectations may rely on the principle of the protection of legitimate expectations. Further, there is nothing to prevent a Member State from claiming in an action for annulment that an act of the institutions frustrates the legitimate expectations of particular traders (see, to that effect, Case C-284/94 Spain v Council [1998] ECR I-7309, paragraph 42, and Case C-342/03 Spain v Council [2005] ECR I-1975, paragraph 47 and case-law cited).

119 However, if those traders can foresee the adoption of the European Union measure which affects their interests, the benefit of the principle of the protection of legitimate expectations cannot be invoked (see Case C-342/03 Spain v Council, paragraph 48 and case-law cited).

120 In the present case, it has already been stated in paragraphs 109 to 111 above that the sectoral legislation to which the Kingdom of Spain referred had no effect on the competence of the Commission to find infringements of Articles 81 EC and 82 EC and that the conduct of Telefónica penalised in the contested decision was within the scope of Article 82 EC. The Commission's action on the basis of Article 82 EC cannot therefore be regarded as unforeseeable.

121 Further, while it is true that, as stated by the Kingdom of Spain, CMT did indeed take ad hoc actions in relation to Telefónica's market offers, with the objective, inter alia, of preventing a squeeze, it must be recalled that CMT is not a competition authority, but a regulatory authority, that it has never taken action to ensure compliance with Article 82 EC and that it has not adopted decisions relating to the practices penalised by the contested decision (recitals 678 and 683 of the contested decision). Further, as stated in paragraph 52 above, the Kingdom of Spain has not disputed the fact that CMT never analysed the existence of a margin squeeze in the period of infringement between Telefónica's national wholesale product and its retail products and that the analysis of a margin squeeze between Telefónica's regional wholesale product and its retail products was never based on Telefónica's real historic costs, but on ex ante estimates (recitals 726 and 727 of the contested decision).

122 In those circumstances, neither the CMT decisions nor the regulatory framework established by CMT could be the basis of a legitimate expectation, on the part of either Telefónica or other operators, that any conduct which complied with those decisions or that regulatory framework was compatible with Article 82 EC.

123 Therefore, this plea must be rejected and the action in its entirety must be dismissed.

Costs

124 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings.

125 Since the Kingdom of Spain has been unsuccessful, it must be ordered to pay the costs, as applied for by the Commission.

On those grounds,

THE GENERAL COURT (Eighth Chamber)

hereby:

1. Dismisses the action;

2. Orders the Kingdom of Spain to pay the costs.

Delivered in open court in Luxembourg on 29 March 2012.

[Signatures]

* Language of the case: Spanish.

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