On Tuesday, the Luxembourg-based Court of First Instance—the second highest court in the European Union (EU)—dealt a setback to France Telecom (FT), upholding a 2003 decree by the European Commission (EC) that FT’s Wanadoo Internet subsidiary abused its dominant market position by engaging in predatory pricing. Observing that rates charged by Wanadoo for its ADSL services did not enable the company to recover its costs, the EC ruled four years ago that Wanadoo’s pricing scheme constituted “a plan to pre-empt the market in highspeed Internet access during a key phase in its development.” Describing Wanadoo’s conduct as an abuse of its market position, the EC ordered FT to pay a fine of U.S. $12.97 million. On appeal, FT took issue with the EC’s contentions on Wanadoo’s dominance, arguing that the subsidiary was one of several players in the Internet services sector at that time and that it did not control the market. Rejecting FT’s claims, the court found that Wanadoo had eight times the number of ADSL subscribers of its closest competitor, giving Wanadoo “very high market share during the period at issue.” The court also asserted that Wanadoo’s ties with FT “conferred on it advantages over its competitors.” Sources say FT may decide to take the case to the top court in the EC, the European Court of Justice.
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EU court upholds antitrust decision against FTsubsidiary
- Paul, Weiss, Rifkind, Wharton & Garrison LLP
- European Union
- February 2 2007
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