Deutsche Telekom hit with US$88m EU antitrust fine

[Brussels] Deutsche Telekom was fined 69.9 million euros (US$88.4 million) by EU antitrust regulators on Wednesday because its Slovak unit squeezed out rivals in Slovakia's broadband market over a five-year period starting from 2005.

The penalty underlines the European Commission's fight against dominant companies which charge competitors excessive wholesale rates, making it impossible for them to generate a profit from their retail services. Such a tactic is called a margin squeeze.

In addition to a 38.8 million euro joint fine with Slovak Telekom, German telecoms provider Deutsche Telekom was hit with a 31.1 million penalty as this was its second margin squeeze offence.

Deutsche Telekom holds a 51 per cent stake in Slovak Telekom, with the Slovak government owning the remainder. Reuters reported on June 24 that the two companies would be penalised by the European Commission.

The EU competition authority said Slovak Telekom's strategy between August 2005 and December 2010 harmed both consumers and competitors. "Slovak Telekom did not only refuse to give access to its unbundled local loops under fair conditions. It also pursued a margin squeeze policy which made it impossible for alternative operators to use its legacy telephone network infrastructure without incurring a loss," European Competition Commissioner Joaquin Almunia said in a statement.

Orange's Polish unit TPSA was penalised three years ago over similar margin squeeze practices while Spain's Telefonica received a 151 million euro fine in 2007 for more than five years of unfair prices in the local broadband market.

Deutsche Telekom was fined 12.6 million euros in 2003 for its anti-competitive tariffs for access to its local networks. REUTERS