European Court of Justice dismisses Deutsche Telekom "margin squeeze" appeal

Confirming the General Court’s ruling of 10 April 2008, the European Court of Justice (ECJ) has dismissed Deutsche Telekom’s (DT) appeal against a Commission decision which found DT had abused its dominant position in the German telecoms market between 1998 and 2001. The Commission found that DT had been engaging in "margin squeeze" whereby it charged rival telecoms providers a higher price for using its network infrastructure than its own retail customers, preventing competition in the downstream telecoms market. The Commission fined DT €12.6 million.

DT had argued that because the German Telecoms regulator, RegTP, had approved its wholesale prices, it should not be liable to punishment. It also argued that the margin squeeze test that had been applied was not appropriate because wholesale prices for access to DT’s network infrastructure were regulated. The ECJ confirmed, however, that the approval by RegTP of DT’s wholesale prices did not free DT from its obligations under EU competition law. Furthermore, the ECJ also endorsed the margin squeeze test applied by the Commission in order to establish abuse of dominance. The Commission has welcomed this judgment, believing that it confirms the legitimacy of its approach toward Article 102 TFEU investigations, and that it reaffirms the principle that dominant companies cannot justify abusive behaviour by reference to national regulatory clearance.

MEMO/10/493 - 14 October 2010