Competition: Court of Justice rules that Deutsche Telekom abused its dominant position by imposing unfair prices in the form of a margin squeeze

The Court of Justice (“CJ”) upheld in its entirety a General Court (“GC”) decision imposing a fine of EUR 12.6 million on Deutsche Telekom AG (“DT”) for abuse of dominant position in the German telecommunications market. For more than five years, DT charged its competitors higher prices for wholesale access to its fixed telephone network (local loops) than the prices it charged its own subscribers for retail access.

This margin squeezing forced competitors to charge their end-users higher prices than those that DT charged its own end-users. In its 2003 decision, the Commission found that from the beginning of 1998 to the end of 2001 and from 2002 to the adoption of the decision, DT had sufficient scope to end or reduce the margin squeeze while complying with the price ceiling imposed by the German Regulatory Authority (“GRA”). DT appealed the decision to the GC. However, the GC rejected all pleas by DT, thus confirming that dominant operators who have a regulatory obligation to supply access to their networks cannot evade this obligation through a margin-squeeze pricing policy.

DT appealed to the CJ, which found, on examining Deutsche Telekom’s grounds of appeal, that the GC did not commit an error of law when it dismissed Deutsche Telekom’s action against the Commission’s decision. Consequently, the Court dismissed the appeal and upheld the fine of EUR 12.6 million imposed by the Commission. Source: Case C-280/08 P Deutsche Telekom AG v Commission 14/10/2010

Roschier, Attorneys Ltd. - Finland