It is one of those historic battles against the regulator that, despite everything, remains more alive than ever. Telecommunications operators are fighting in court with the National Markets and Competition Commission (CNMC) over the so-called ‘operator rate’. Telefónica won several battles in the National Court in the middle of the last decade for this same concept. Now it achieves the precautionary suspension in the same courtroom of the litigation of another subsequent liquidation while awaiting a final ruling. Previously, other operators such as the old BT (Evolutio) or Másmóvil did the same.
The so-called ‘operator rate’ has been regulated for years in the telecommunications law in Spain. Every company in the sector must pay an annual amount, which may not exceed two per thousand of its gross income and which is intended to cover the management, control and execution expenses of the regulator. The settlement is carried out directly by the CNMC. And these disbursements have been, in many cases, denounced by the companies when they understood that the calculations were not well executed.
Now, the battle has escalated again. And the proof is in the precautionary suspensions that the Court is granting to the operators while new ‘assaults’ of this struggle are being carried out. The Contentious Chamber does so with the settlement of 2.8 million euros corresponding to the 2014 fiscal year of Telefónica. In the order, consulted by La Información, the magistrates insist that the suspension was already granted administratively. On this occasion, the economic-financial situation of the Spanish telecom company is not discussed in detail, since the lack of opposition from the State paves the way for the decision to stop the execution.
In the middle of the last decade there were already rulings from the Supreme Court and the National Court in favor of the operators who complained. This is the case of Telefónica itself, which only in 2014 obtained several of these endorsements from the High Court and the Court that totaled more than 25 million euros. They all corresponded to settlements from the years 2010 and 2011. Now, the settlement corresponds only to a few years later.
Other operators also obtained victories: Vodafone achieved the return of 4.6 million euros from 2010 and two years ago achieved the precautionary suspension – the ruling has not yet been made public – of the payment of the 2.5 million euros from 2013. In this background there is also the opposite conclusion, as in the case by Orange in the Supreme Court just seven years ago, in November 2016. The High Court did not agree with it in its attempt to have the CNMC itself revoke the liquidations of the controversial rate (corresponding to the years between 2008 and 2012) and declares their nullity. The magistrates supported the position of the Court.
The Court of Justice of the EU ruled on a Supreme Court petition in July 2011 and confirmed that the setting of a fee like this by a Member State was legal. But the Supreme Court went into the substance of the matter and reversed several settlements imposed by the former Telecommunications Market Commission (CMT) – today CNMC -, for example, to Telefónica for the years 2003 or 2005 – and the National Court ional of other calculations in that jurisprudence. He understood that there was a “lack of equivalence” between regulatory expenses and revenue from the fee and that there was no specific calculation to check whether “the fee adjusted to strict costs.”
Telefónica is not the only one that maintains live fights in the courts for the settlement of this fee. The National Court has also provisionally suspended in several orders the payments of companies such as Evolution Cloud Enabler (former British Telecom in Spain) in March 2023 and Másmóvil in March 2022. Both refer to more recent years. All are cases that are awaiting a final decision from the judges of the Chamber.
Like the rest of the operators, Telefónica has many fronts open in the courts due to different tax figures. Telecoms is a sector with especially harsh taxation. The owner of Movistar has recently lost the appeal for the first rate of the 5G radio spectrum in the 3.5 ‘gigahertz’ band, as La Información advanced. It also has many pending rulings on contested settlements of the Economic Activities Tax (IAE), the last major battle in the courts.
The IAE, the great battle
In the latter, Vodafone has benefited the most to date. It was the one that received the first favorable ruling from the Supreme Court on this tax – which has been eliminated for being contrary to European law precisely by concluding that it distorts competition due to its configuration and high import – Vodafone has already won several final rulings that have represented a bal on oxygen with million-dollar returns. The last one was for 27 million euros and was known last November.
The judges also have other resources on the table that have been accumulating in recent years that have to do with other tax figures in the sector. The so-called ‘RTVE rate’ has been confirmed – although with division of opinion in some cases – by both the Supreme Court and the Constitutional Court, although Vodafone has managed to get the Supreme Court to study whether the bill can be reduced in the calculation. To this we must add other key decisions such as repealing the collection of the Property Transmission Tax (ITP) on the spectrum or confirming the municipal rate for landline and internet companies for their use of the public domain.
