The European Commission's antitrust unit on Wednesday fined Deutsche Telekom AG (DTEGY.PK) and its unit Slovak Telekom A.S. 69.9 million euros for eliminating rivals from the Slovak broadband-services market, in breach of EU antitrust rules.
The Commission imposed a fine of 38.8 million euros fine on Slovak Telekom and Deutsche Telekom for having pursued during more than five years an abusive strategy to shut out competitors from the Slovak market for broadband services.
In particular, the Commission concluded that Slovak Telekom refused to supply unbundled access to its local loops to competitors, and imposed a margin squeeze on alternative operators. Deutsche Telekom as parent company with decisive influence is also responsible for the conduct of its subsidiary and liable for the fine, the EC said.
Deutsche Telekom was also slapped with an additional fine of 31 million euros to ensure deterrence as well as to sanction its repeated abusive behavior, having already been fined in 2003 for a margin squeeze in broadband markets in Germany.
According to the Commission, in 2005, Slovak Telekom set the conditions under which alternative operators could access the local loop—which made it unfeasible. Moreover, Slovak Telecom set prices at such levels that, in order to compete, its rivals would be forced to incur losses.
Commission Vice-President Joaquín Almunia, in charge of competition policy, said: "Slovak Telekom's strategy has distorted competition in the broadband market in Slovakia during more than 5 years, to the detriment of competition and consumers."
"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."
Deutsche Telekom is a majority shareholder of Slovak Telekom, holding 51 percent of its shares, and has a special rights such as the right to nominate the majority of the Board and to be informed about all management matters within Slovak Telekom.
The Commission opened an in-depth investigation in April 2009 into Slovak Telekom and in December 2010 into Deutsche Telekom.
The Commission's probe revealed that Deutsche Telekom did indeed exercise decisive influence notably through overlaps in senior management personnel and by influencing the decision-making process at Slovak Telekom.
Slovak Telekom, the incumbent telecom operator in Slovakia, offers, among other things, fixed broadband services over its legacy metallic telephone networks and over fiber networks.
In Germany, Deutsche Telekom stock is trading at 10.52 euros, down 0.28 euros or 2.59%, on a volume of 14.4 million shares.
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