The European Commission has imposed fines of EUR 66,894,000 on Telefónica, S.A. and of EUR 12,290,000 on Portugal Telecom, SGPS S.A. for agreeing not to compete with each other on the Iberian telecommunications markets, in breach of Article 101 of the Treaty on the Functioning of the European Union which prohibits anti-competitive agreements. In July 2010, in the context of the acquisition by Telefonica of the Brazilian mobile operator Vivo, which was until then jointly owned by both parties, the parties inserted a clause in the contract indicating they would not compete with each other in Spain and Portugal as from the end of September 2010. The parties terminated the non-compete agreement in early February 2011, after the Commission opened antitrust proceedings.

Instead of competing with each other for offering clients the most advantageous conditions, as is expected in an open and competitive market, Telefonica and Portugal Telecom deliberately agreed to stay out of each other's home markets. By preserving the status quo in Spain and Portugal, the agreement hindered the integration process of the EU telecoms sector. Non-compete agreements are one of the most serious violations of EU competition rules, as they potentially result in higher prices and less choice for consumers.

The fines were set on the basis of the Commission's 2006 Guidelines on fines. In setting the level of fines, the Commission took into account the duration of the infringement (4 months) and its gravity, including the fact that the agreement was not kept secret by the parties. The early termination of the agreement was also taken into account by the Commission as a mitigating circumstance.