On 15 October 2014, the EC announced that it had fined Slovak Telekom 39 million euros for abusing a dominant position in the Slovak broadband market. Deutsche Telekom, although not directly involved, was held jointly and severally liable for the abuse on the basis that it controlled the company through its 51 percent shareholding and majority on the board.
Slovak Telekom, the incumbent telecom operator in Slovakia, had refused to supply unbundled access to its local loops to competitors under fair conditions. It also had imposed a margin squeeze on alternative operators which made it impossible for them to use its local loops to offer retail broadband services in competition with Slovak Telekom without incurring a loss. The local loop is the metallic cable that connects a customer’s premises with the local telephone exchange.
To add insult to injury, Deutsche Telekom was fined an additional 31 million euros, since back in 2003, it (not Slovak Telekom) had been fined for the same type of abuse of dominance. This was despite the fact that the previous abuse had taken place in the German market.
This case shows once again how essential it is that suitable competition compliance programmes are in place in the EU and that these adequately cover all subsidiaries. Parent companies are liable for the behavior of their subsidiaries, and this can give rise to additional fines for recidivism, even where the parent was not actively involved in the infringement.
The case also shows that any company relying on a dominant competitor for supplies or access may be able to use refusal-to-supply or margin-squeeze arguments to improve its competitive position in the EU.