The European Commission has opened a formal investigation into whether Telefonica and Portugal Telecom have breached EU rules by agreeing not to compete with each other in their home markets. The Commission says it is concerned about an agreement signed by the two last year, when Telefonica agreed a deal to take over Vivo, its Brazilian joint venture with PT, which is valid until the end of 2011. However, the Commission is also to investigate the “scope and effects of the co-operation between the parties in Spain and Portugal prior to the 2010 Vivo transaction.”

In mobile terms, there is certainly no significant overlap between the two companies in their home markets – PT owns TMN in its home country but nothing in Spain, while Telefonica has businesses across Europe, but nothing in Portugal. While Telefonica has a small shareholding in PT, it reduced the size of this stake in 2010, as part of the (somewhat bumpy) path to acquiring Vivo ownership. The Commission says there is no legal deadline for it to complete inquiries into anticompetitive conduct.