EU rules against France Télécom in antitrust case

Europe’s second highest court threw out an appeal by France Télécom of the European Commission’s 2003 antitrust ruling against the firm on Tuesday, ordering it to pay the €10.35 million ($12.97 million) fine.

The Commission found Wanadoo, France Télécom’s Internet subsidiary, guilty of effectively shutting out competitors from the lucrative high-speed Internet market by setting its prices artificially low.

France Télécom appealed the decision claiming it wasn’t a dominant player at the time. Under E.U. law, predatory pricing, when a firm deliberately makes a loss in order to deter others from entering the market, is only illegal when carried out by dominant firms.

Tuesday’s ruling strengthens the Commission’s hand in dealing with other competition abuses in the telecom market. “The Commission is delighted with this ruling,” said Jonathan Todd, the regulator’s spokesman on competition issues.

Since the 2003 antitrust ruling, the French market for ADSL has grown enormously. “The French market has become one of the most competitive in Europe, thanks to the European Commission,” Todd said.

The Commission began investigating Wanadoo in July 1999 during an inquiry within the E.U. into the provision of local loop access services and use of the residential local loop.

Fourteen months later, the regulator opened a formal probe into the French company, examining the prices Wanadoo charged its residential customers in France for high-speed Internet access.

The Commission found that the predatory prices charged by Wanadoo for its eXtense and Wanadoo ADSL services did not enable it to cover its variable costs until August 2001 or to cover its full costs between then and October 2002 as part of a plan to preempt the market in high-speed Internet access during a key phase in its development.

The Commission concluded that this conduct constituted an abuse of its dominant position in the French market for residential high-speed Internet access.

The court found that Wanadoo had eight times the number of ADSL subscribers than its closest competitor during the period in question. That and its link with France Télécom, the incumbent telecommunications operator in France, “conferred on it advantages over its competitors,” the court said.

France Télécom said it retains its right to appeal to the European Court of Justice, the Union’s top court, but no decision to appeal had been made on Tuesday.