State aid: Commission opens in-depth investigation into allocation of mobile radio frequencies by Poland to telecoms operator Sferia

The European Commission has opened an in-depth investigation to assess whether the allocation by the Polish authorities of a frequency block for the provision of 4G services to Sferia S.A (“Sferia”) is in line with EU State aid rules.

Sferia is a Polish telecommunications operator, controlled by the Cyfrowy Polsat capital group, which is active in the telecommunications and broadcasting markets in Poland.

The Commission received complaints from a number of competing telecoms operators, alleging that, in 2013, the Polish authorities allocated a frequency block from the 800MHz “digital dividend band” to Sferia without a selection procedure, at no additional cost, and without coverage obligations. By contrast, other operators were assigned the remaining blocks of the 800 MHz “digital dividend band” only in 2016, through a competitive process, against a payment (on average) of approximately €390 million (PLN 1,7 billion) and with coverage obligations. According to the complainants, the allocation of mobile radio frequencies to Sferia in 2013 was not in line with EU State aid rules.

Under the EU regulatory framework for electronic communications, Member States may allocate frequencies from their national spectrum to operators without maximising their revenues. Such allocation does not in principle constitute State aid within the meaning of EU rules, provided that the operators concerned are treated equally, in line with the principle of non-discrimination. If, instead, operators are treated differently, the allocation may constitute State aid that, if not objectively justified, may be incompatible with the Internal Market.

At this stage and based on the information available, the Commission’s preliminary view is that Sferia may have been awarded by the Polish authorities 800 MHz frequencies on more favourable terms than other operators and that, hence, the allocation may have amounted to State aid. 

The Commission will also investigate if a possible difference in treatment between Sferia and other operators, should it be confirmed, was justified and whether the allocation in question may have given Sferia an undue economic advantage vis-à-vis its competitors, in breach of EU State aid rules.

Furthermore, given the structural, functional, personal and capital links between Sferia and Cyfrowy Polsat capital group, the Commission will investigate if the potential State aid benefitted not only Sferia, but also the Cyfrowy Polsat group as a whole.

The Commission will now investigate further to determine whether its initial concerns are confirmed. The opening of an in-depth investigation gives Poland and interested third parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.

The non-confidential version of the decisions will be made available under the case number SA.37489 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.