On Wednesday, Telefonica of Spain was subjected to a record fine of U.S. $205 million by the European Commission (EC), which found that Telefonica abused its dominant position in the Spanish broadband market by setting wholesale Internet prices too high to enable competitors to realize a profit. The EC’s penalty is far steeper than fines imposed in similar antitrust cases involving Deutsche Telekom (U.S. $17 million) and Wanadoo, the Internet services arm of France Telecom ($13 million), and is exceeded only by the European Union’s landmark fine of $613 million assessed against Microsoft Corp. Telefonica controls the fixed line network used for 80% of all ADSL broadband connections in Spain. Claiming that, since 2001, Telefonica has subjected rivals seeking access to its broadband network facilities to an illegal margin squeeze that has “restricted competition on the retail market,” the EC filed formal charges against Telefonica last year. As a consequence of Telefonica’s alleged anticompetitive conduct, the EC claims that Spanish consumers are forced to pay 20% more than their counterparts in other EU member states for high-speed Internet access and that many Spaniards have chosen “not to pay that price.” Announcing the fine, EC Competition Commissioner Neelie Kroes said, “when consumers and businesses are harmed in such a major market, the entire economy suffers.” Telefonica, which condemns the EC decision as “unjustified and disproportionate,” has promised to appeal.