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29 Contingent liabilities and contingent assets

Regulatory and competition-law proceedings

­In accordance with the revised Telecommunications Act, Swisscom provides interconnection services and other access services to other telecommunication service providers in Switzerland. In previous years, several telecommunication service providers demanded from the Federal Communications Commission (ComCom) a reduction in the prices charged to them by Swisscom. The determination of the prices for access services during 2013 to 2016 is still pending. In addition, the Federal Competition Commission (Weko) is conducting various proceedings against Swisscom. In accordance with the Federal Anti-Trust Law, Weko may impose penalties against Swisscom in the event that the competition law is found to have been violated. The amount of the penalty is dependent on the duration and severity as well as the nature of the violation. It may be as much as 10% of the revenues which have been generated by the company in question in the last three business years on the relevant markets in Switzerland. In the event of a legally enforceable finding as to market abuse, claims under civil law may be asserted against Swisscom.

In April 2013, Weko initiated an investigation against Swisscom pursuant to the Anti-Trust Law in the area of broadcasting live-sport events on pay TV. In May 2016, Weko decreed a penalty of CHF 72 million on Swisscom as part of these proceedings. Swisscom rejects the accusations and is of the opinion that it has conducted itself in a lawful manner in the marketing of sports contents. In addition, claims under civil law against Swisscom were asserted which might prevail in the event that a legally enforceable finding as to market abuse is reached. Swisscom has challenged the penalty imposed in the Federal Administrative Court and from a current perspective, considers the levying of sanctions in the court of last appeal as not probable. For this reason, it has established no provision in the consolidated financial statements as of and for the year ended 31 December 2016, as in the prior year.

In November 2015, in its investigation as to the invitation to tender for the corporate network of the Swiss Post in 2008, Weko reached the conclusion that Swisscom has a market-dominant position on the market for broadband access for large corporate clients. In this tender, Swisscom is accused of having set the wholesale prices charged to competitors at such a high level that the latter could not compete with the end-customer offer made by Swisscom. As a result of this unlawful conduct, Weko ruled a direct penalty of CHF 8 million. Swisscom has challenged the ruling in the Federal Administrative Court. From a current perspective, Swisscom considers the levying of sanctions in the court of last appeal as not probable and thus has established no provision in the consolidated financial statements as of and for the year ended 31 December 2016.

Contingent assets from litigation

In 2015, the Italian competition authorities (AGCM) found Telecom Italia guilty of unlawful conduct as a market-dominant company and imposed a penalty of EUR 104 million. Related to the same matter, Fastweb has claimed damages from Telecom Italia and initiated legal action in connection therewith. In the fourth quarter of 2015, Fastweb and Telecom Italia reached an out-of-court settlement which encompassed the contested receivables of both parties due from each other. In the second quarter of 2016, Telecom Italia made a payment of EUR 55 million (CHF 60 million). As at 31 December 2016, there continued to exist for Fastweb, as a result of the settlement, an uncertain receivable to which conditions are attached. Disclosure of the amount of the receivable is waived for contractual and procedural reasons.