Brussels, 10/04/2008 (Agence Europe) - According to a decision by the Court of First Instance on Thursday 10 April, the prices set by Deutsche Telekom (DT), between 1998-2003 for internet services, were anti-competitive. This decision backs up the Commission's decision of 23 May 2003 (EUROPE 8467), which Germany's traditional operator had appealed against at the Court of First Instance (CFI). DT is now obliged to pay the costs of the trial and the original fine of €12.6 million (case T-271/03).
Jonathan Todd, the spokesman for the European commissioner for competition, Neelie Kroes, welcomed this decision which confirms the ruling against the “margin squeeze” practised by the telecommunications operator. Mr Todd informed the press that “German consumers were therefore deprived of the benefits of choice and competition for more than five years”. This “margin squeeze” occurs when the dominant provider on a market charges retail prices or even higher than its own retail prices. Competitors were therefore unable to buy from this provider and sell at competitive prices or obtain any profit margin. DT informed the Court of First Instance that its consumer prices respected the ceiling imposed by the German regulatory authority. The CFI argued that DT had sufficient scope for ending or reducing this margin squeeze. Despite its respect for national regulation, DT was also compelled to respect its obligations under Article 82 of the EC treaty, given its dominant position. In the case in point, DT controlled 95% of broadband and normal internet access in Germany. The CFI also pointed out that the Commission was correct to analyse DT prices without taking into account the apparent effect on competition or the pricing of other analogue service providers. Indeed, under Community law, given DT's dominant position, the simple fact that it was charging its competitors more for access to the network than it was charging its own retail subscribers is enough to put the company in the wrong.
The spokesman explained that this was the first time the Commission had applied Community rules on abuses of dominant position to such a case in this sector. Since then the Commission (in July 2007) has fined the Spanish telecoms operator Telefónica for similar behaviour (EUROPE 9461). The company is currently appealing to the CFI (Cast T-33/07). (C.D.)