The European Commission has drawn the preliminary conclusion following its investigation that the agreement between Telefónica and Portugal Telecom hinders competition in breach of European antitrust rules.

The European Commission has sent a statement of objections to Telefónica and Portugal Telecom, respectively the Spanish and Portuguese incumbent telecoms operators, regarding their agreement not to compete on the Iberian telecommunications markets. This statement of objections is motivated because the Commission is of the preliminary view that this agreement hinders competition in breach of EU antitrust rules that prohibit restrictive business practices. The sending of a statement of objections does not prejudge the final outcome of the investigation, but serves to inform the parties concerned in writing of the objections raised against them.

The investigation was launched by the Commission in January 2011 after it became aware of the agreement between Telefónica S.A. and Portugal Telecom SGPS S.A. The Commission has a copy of the agreement concluded on the occasion of the Vivo transaction and of the non-compete clause, which originally was due to run from September 2010 to the end of 2011. The Brazilian deal itself is not affected by the investigation.

Although Telefónica and Portugal Telecom repealed the non-compete agreement in February 2011, after the Commission opened antitrust proceedings, this does not erase the fact that the agreement existed in first place. Non-compete clauses are one of the most serious violations of fair and healthy competition. Article 101 of the Treaty on the Functioning of the EU lists amongst the agreements that are prohibited those that "directly or indirectly fix purchase or selling prices" and "share markets or sources of supply".