Brussels, 14/10/2010 (Agence Europe) - On Thursday 14 October, the European Court of Justice (ECJ) upheld the €12.6million fine imposed on Deutsche Telekom by the European Commission in May 2003, for abuse of dominant position in the fixed telephony market in Germany (EUROPE 8467). The ECJ therefore also upholds the decision by the Court of First Instance on 10 April 2008 (T-271/03) and responded to each of the points made in the arguments put forward by Deutsche Telekom to oppose this ruling.
The Commission decided that Deutsche Telekom had been abusing its dominant position in the markets for direct access to its fixed telephony network since 1998 by charging competitors prices for network access services (“local loop access services”) that were higher than the retail prices which Deutsche Telekom's end-users were charged for access. Such pricing forced competitors to charge their end-users prices higher than those which Deutsche Telekom charged its own end-users.
The Court of First Instance (EUROPE 9640) had given a nonsuit to the German company, which had requested an annulment of the Commission's decision or, at the very least, for a reduction of the fine imposed, because it judged that Deutsche Telekom's price practices were “unfair”.
Deutsche Telekom protested against this decision but the ECJ ruled that:
- Deutsche Telekom had generated the margin squeeze, even though wholesale charges for local loop access services and retail charges for end-user access services were set by the regulatory authorities. Deutsche Telekom effectively had a sufficient margin of manoeuvre to modify wholesale invoice prices to its subscribers, although these were subject to a given regulation. Article 82 of the treaty and the principle of legitimate trust have not therefore been reached, as claimed by Deutsche Telekom;
- By squeezing the margins of its competitors who are just as efficient, thereby driving them from the market, Deutsche Telekom strengthens its dominant position and, consequently, causes damage to consumers by limiting the choices available to them as well as their prospects of benefiting from a longer-term reduction of retail prices for end-user access services as a result of competition exerted in that market;
- To ascertain whether the practice was abusive, the Tribunal and the Commission appropriately applied the criteria of “an equally efficient competitor”, which consists of examining whether price practices of a dominant company risked making market penetration more difficult for an economic operator that was as equally efficient economically. This examination was based exclusively on the prices and costs of the latter and not on the specific situation of its competitors. This would have allowed verifying whether, in the same conditions as its competitors, Deutsche Telekom would have been able to propose its wholesale services to subscribers without making a loss. This is, moreover, in compliance with the principle of legal security, given that in this case, it enabled Deutsche Telekom, which was aware of its costs and prices, to assess the legality of its behaviour.
- Deutsche Telekom's behaviour effectively had anti-competitive effects in so far as it has made access to the wholesale market more difficult for its equally competitive market rivals and subsequently distorted competition.
Taking into account all these different elements, the ECJ rejected the appeal and upheld the fine. (F.G./transl.fl)