On 29 Jan 2004, the Rotterdam Administrative Court issued a ruling in an important case opposing the regulatory authority OPTA and the incumbent operator KPN.

The Court confirmed that OPTA is entitled to impose penalties on a daily basis (i.e. the amount increases day-by-day) in case of persistent failure by operators to comply with OPTA decisions.

The history of the case can be summarised as follows:

On 3 Dec 2003, OPTA imposed significant daily penalties on KPN for non-compliance with the obligation of cost-orientation for interconnection, special access and local loop unbundling.

OPTA had earlier ordered KPN to apply cost-oriented tariffs for specific wholesale services from 1 Jan 2004, and to retroactively apply these tariffs from 1 Sep 2003 to 31 Dec 2003 for interconnection and from 1 July 2003 to 31 Dec 2003 for special access services where these cost-oriented tariffs had not been applied by KPN.

KPN appealed OPTA’s decision, contesting OPTA’s authority to specify/impose tariffs and contesting OPTA's authority to apply daily penalties.

The key points of the Rotterdam Administrative Court ruling are as follows:

The Provisioning Judge ruled that OPTA has the authority to determine whether tariffs are cost-oriented or not. In addition, when it is clear that the tariffs applied are not cost-oriented, the Judge ruled that OPTA has the authority to impose daily penalties on KPN. The Court declared itself incompetent to rule about the correct level of the interconnection and special access tariffs and stated that it has no reason to assume that OPTA has not made a correct analysis of the situation.

The Provisioning Judge also ruled that the penalties imposed by OPTA, albeit significant, cannot be considered to be disproportionate, because the sums to be gained by KPN by not complying with the applicable rules are also considerable. He ruled that the motivation put forward by OPTA (i.e. that the penalties imposed on KPN should represent a strong enough impetus for KPN to adhere to the regulations) is “not unacceptable".

The full text of the Rotterdam Administrative Court ruling can be accessed by clicking here.