Margin Squeeze - Landmark & Judgment On The Application Of Abuse Rules

The Court of Justice of the European Union (CJEU) has today rejected an appeal by Deutsche Telekom against an earlier judgment by the General Court that Deutsche Telekom had imposed a margin squeeze in breach of EU competition rules.  This is a landmark case, since it represents the CJEU's first judgment on the issue of margin squeeze.  A fine of €12.6m, originally levied by the European Commission, has been upheld.
 
A "margin squeeze" occurs when a dominant undertaking charges its competitors an unfair price for an input which is essential to the competitors' business.  In a May 2003 decision, the European Commission found that pricing implemented by Deutsche Telekom from 1998 to 2003 represented a margin squeeze and thereby breached the prohibition of the abuse of a dominant position at what is now Article 102 of the Treaty on the Functioning of the European Union.  In April 2008, this decision was largely upheld by the then Court of First Instance (now called the