In 2003, the EC imposed a fine of €10.4 million on Wanadoo Interactive, then a subsidiary of France Telecom, for predatory pricing. The EC found that Wanadoo set prices below costs, deliberately sacrificing profitability in order to drive competitors out of the ADSL market. In 2007, the Court of First Instance (“CFI ”) upheld this decision and France Telecom appealed this ruling before the European Court of Justice (“EC J”). France Telecom argued that Wanadoo had charged low prices in response to aggressive pricing by other ADSL service providers and could not recoup the losses suffered as a result of this price war. In April 2009, the EC J rejected France Telecom’s appeal. The EC J ruled that predatory pricing was abusive even if the dominant firm was not likely to recoup the losses resulting from pricing below costs. The EC J also reiterated that a dominant firm does not have an absolute right to align its prices to those of its competitors. This ruling is at odds with the approach adopted in the U.S., where the recoupment test is used to distinguish abusive predatory pricing from healthy price competition.
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