ECJ Upholds €12.6 Million Margin Squeeze Fine on Deutsche Telekom

The €12.6 million fine imposed by the European Commission (the 'Commission') on Deutsche Telekom for abuse of its dominant position in the fixed telephony markets in Germany has been upheld by the European Court of Justice ('ECJ').

In 2003, following complaints from competitors, the Commission concluded that Deutsche Telekom had abused its dominant position by adopting unfair pricing practices resulting in margin squeeze.  Deutsche Telekom charged its competitors network access prices (for local loop access services) that were higher than the retail prices charged to its end-users.  This meant that Deutsche Telekom's competitors were forced to charge their end-users higher prices than those charged by Deutsche Telekom and made it impossible for competition to develop in the downstream market.