Observance of Market Regulations

The level of application of the telecommunication regulations depends on the position held by the Company in each county and of the activity developed, with the traditional fixed telephone being subject to the toughest regulation.

In 2008, the Group increased the preventative measures to detect possible infringements of competition regulations

Telefónica and its competitors compete in the market and are subject to the different telecomunication sector regulations at a national level in the different states and on a transnational scale, as is the case of the European telecommunications framework, which is currently under review. In addition, they are also subject to competition regulations.

Telefónica’s Business Principles recognise its commitment with respect to the law, and the Company has adapted its internal structure with a clear focus on the observance of the regulatory framework surrounding the competition rules. This commitment is even more significant when it applies in those countries where the company enjoys a leading market position.

Telefónica has a Regulation Committee composed of 6 Directors, the majority of whom are external, and whose aim is to understand and analyse the most relevant Company facts in relation to the regulatory framework. This Committee held four meetings during 2008. Also, in place are units focused on regulatory management that have the support of specialised legal units in telecommunications law and competition, in order to guarantee that the decisions combine the ability to satisfy customers needs while also respecting the telecommunication and competition framework.