After repeated warnings not to adopt legislation that could grant Deutsche Telekom a “regulatory holiday” in spite of its dominant position on the German broadband market, the Commission decided to launch fast-tracked infringement proceedings against Germany by sending it a formal notice letter. If the German Government does not withdraw the amendments to the German telecom law in favour of Deutsche Telekom, the Commission will refer the case to the European Court of Justice as soon as possible.

The amendments to the German telecom law would create an exemption for Deutsche Telekom’s fast internet access network (VDSL) from competition. The German incumbent operator, which is still partly owned by the German State, had requested such exemption to protect its investments in this new infrastructure. The Commission’s objection relates not only to the procedural negligence of the German State to grant such “regulatory holidays” without consulting the Commission and regulatory authorities of other Member States as is mandatory under EU telecom rules. The Commission also objects to the material fact that the amendments to the German law jeopardises the competitive position of Deutsche Telekom’s competitors and makes it harder for new competitors to enter German markets. Moreover, the amended law attempts to influence the German regulatory authority in charge of electronic communications (Bundesnetzagentur) on whether or not to grant competitors access to the new VDSL-network of Deutsche Telekom. The law therefore interferes with the authority’s discretion in defining and analysing markets under EU rules and sets aside the remedy proposed by the Bundesnetzagentur requiring Deutsche Telekom to open up its broadband networks (including VDSL) to its competitors. [26 February 2007]