IP/07/595

Brussels, 3 May 2007

Telecoms: Commission takes next step in infringement proceedings because of Germany's "regulatory holiday" law

In the dispute about Germany's new telecom law, the Commission sent today a reasoned opinion, the second stage of infringement proceedings. So far, Germany failed to remove new provisions in German law that could grant Deutsche Telekom a 'regulatory holiday' in spite of its dominant position in the broadband market. The Commission's reasoned opinion is the last step before referring the case to the European Court of Justice. Germany will only have one month to reply.

The infringement procedure launched at the end of February (see IP/07/237) concerns amendments to the German telecoms law that entered into force that month. These amendments could lead to an effective exemption of Deutsche Telekom AG’s fast internet access network (VDSL) from competition. Such ‘regulatory holidays’ would be granted without consulting the Commission and regulatory authorities in other Member States, as is mandatory under EU telecom rules to ensure transparency and a better functioning internal market.

Germany adopted the rules in question despite the Commission's early warnings that they were incompatible with EU rules.

When launching the infringement proceedings the Commission reiterated its well-known view that the new German law jeopardises the competitive position of Deutsche Telekom's existing competitors and makes it much harder for new competitors to enter German markets. The Commission emphasised that the new provisions also attempt to limit the discretion granted to the German telecoms regulator (the 'Bundesnetzagentur') under EU rules which allows it to decide, on the basis of an in-depth market analysis, whether or not to allow competitors access the new VDSL-network currently being built by Deutsche Telekom.

Germany replied to this letter only after the Commission ultimately agreed to prolong the deadline given to Germany by a further 15 days. However, Germany was still not willing to amend the telecoms law to take account of the Commission's concerns but continues to defend the controversial provisions.

In today's reasoned opinion, the Commission rebuts Germany's arguments and exposes them as unfounded. The Commission has again chosen a shortened deadline for Germany to reply given the urgency of the matter, as the new law creates a lot of uncertainty in the market and could deter competition. If Germany does not amend the law to accommodate the Commission's concerns, the case could be referred to the Court in June.

Further information on infringement proceedings in the telecom sector: http://ec.europa.eu/information_society/policy/ecomm/implementation_enforcement/