The European Union has fined Spanish and Portuguese telecommunications companies Telefonica and Portugal Telecom 79 million euros (105 million dollars) for agreeing not to compete with one another, the bloc's executive announced Wednesday.
"Non-compete agreements are one of the most serious violations of EU competition rules, as they potentially result in higher prices and less choice for consumers," the European Commission said in a statement.
The non-competition deal was set up in 2010, when Telefonica bought out its Portuguese rival's stake in Brazilian mobile phone operator Vivo, a joint venture they had set up together.
The commission launched an investigation into the two Iberian operators in early 2011, and they dropped their arrangement weeks later, meaning it was in place for just 4 months.
"The commission is committed to ensuring the creation of a genuine single market in the telecoms sector," said EU Competition Commissioner Joaquin Almunia.
"We will not tolerate anti-competitive practices by incumbents to protect their home markets, as they harm consumers and delay market integration," he added.
The bulk of the fine - almost 67 million euros - must be paid by Telefonica, with Portugal Telecom bearing just over 12 million euros of the penalty, reflecting a difference in the volume of sales.