Telefónica, the Spanish telecoms operator, was fined €151 million (£102 million) by the European Commission yesterday for implementing anti-competitive practices against its domestic rivals between September 2001 and December 2006.

The fine is the highest –– after a €497 million penalty given to Microsoft –– to be imposed on a company for abusing its dominant position.

Neelie Kroes, the European Competition Commissioner, said that Telefónica’s behaviour had raised costs for competitors. “When consumers and businesses are harmed in such a major market, the entire economy suffers. I will not allow dominant companies to set prices that undermine telecoms liberalisation,” she said.

Telefónica was found guilty of operating a margin squeeze between the high wholesale rates that it charged rivals wishing to use its broadband access and the retail prices that it set for its own customers.

The telecoms group said that it would appeal against yesterday’s decision, which it described as “unjustified and disproportionate”. “Telefónica has legitimate reasons to believe it has strictly adhered to the regulations governing fair competition and has acted in good faith,” the company said.

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