EU fines Deutsche Telekom

The European Union's executive Commission announced Wednesday that Deutsche Telekom would be fined a total of 69.9 million euros ($88.4 million) for violating the bloc's monopoly rules.

The German telecommunications giant had prevented rivals in Slovakia from accessing broadband infrastructure owned exclusively by its local subsidiary Slovak Telekom, the Commission said.

In recent years, the EU's executive arm has been eager to stop big corporations distorting market prices by exploiting their market dominance. Deutsche Telekom, for example, charged Slovak competitors excessive wholesale rates for using its infrastructure, making it impossible for them to generate a profit from their retail services. This tactic is called a "margin squeeze."

"Slovak Telekom's strategy has distorted competition in the broadband market in Slovakia during more than five years, to the detriment of competition and consumers," said EU Competition Commissioner Joaquin Almunia.

Noting that Deutsche Telekom was responsible for the "abusive conduct" of its Slovak subsidiary, the EU fined the Germany-based parent 31 million euros on top of a joint fine of 38.8 million euros for both companies.

Deutsche Telekom, which was already fined in 2003 for similar violations in Germany, rejected the charge.

"We do not understand the Commission's decision, because we have always assumed that Slovak Telekom acts in a competitive manner," the company said in a statement.

Deutsche Telekom's statement also said the EU Commission's investigation raised many questions and that it was intervening in a matter that fell under the competence of national regulators. Moreover, the company noted that the EU Commission had found no current wrongdoing, and accused it of speeding up procedures to push through a decision before the Commission's new leadership takes over on November 1.

uhe/nz (AFP, dpa, Reuters)