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European Commission - Press release

Antitrust: Commission sends statement of objections to Slovak Telekom and Deutsche Telekom

Brussels, 08 May 2012 - The European Commission has informed Slovak Telekom a.s. (ST) and its parent company, Deutsche Telekom AG, of its objections against their behaviour on several wholesale broadband markets in Slovakia. At this stage, the Commission takes the view that Slovak Telekom may have refused to supply unbundled access to its local loops and wholesale services to competitors, and may have imposed a margin squeeze on alternative operators by charging unfair wholesale prices, in breach of EU antitrust rules. Deutsche Telekom may be liable for the conduct of its subsidiary. The companies now have three months to reply to the Statement of Objections (SO).

Access to ST's wholesale broadband services is crucial for alternative operators wishing to provide retail services to end-users in Slovakia. However, alternative operators have experienced unreasonable and burdensome technical and commercial terms proposed by ST. ST also used delaying tactics and obstructed negotiations over these terms, in particular as regards unbundled access to local loops.

Moreover, ST set its wholesale prices at a level that made it impossible for alternative operators to profitably enter and operate in the retail broadband market in Slovakia (margin squeeze). This practice has recently been condemned by the General court in the Telefónica case (see Memo/12/233). This has hindered the development of the broadband retail market in Slovakia.

The Commission therefore reached the preliminary conclusion that ST has breached Article 102 of the Treaty on the Functioning of the European Union (TFEU) that prohibits the abuse of a dominant market position.

The Commission also considers on a preliminary basis that Deutsche Telekom may be held liable for the conduct, because of the nature and degree of its links with its subsidiary ST, in which it owns a majority stake of 51%.

Background

The telecommunications market in the EU is fully open to competition since 2002 and in Slovakia since its accession to the EU in May 2004. New market entrants – so-called alternative operators - may need to get access, against remuneration, to the network and services of incumbent operators, because a duplication of such networks, built by incumbents under monopoly conditions, would not be economically viable. The liberalisation and competition rules ensure that such access is possible at reasonable conditions. Market opening and competition allow for a greater choice of services and more competitive prices for consumers as well as the creation of more companies and job opportunities.

On 8 April 2009, the Commission opened proceedings against Slovak Telekom, the Slovak incumbent telecoms operator, because of concerns about abusive behaviour that may prevent or hinder competition in broadband internet access and other electronic communications markets in Slovakia (see Memo/09/203). On 13 December 2010 the Commission extended these proceedings to Deutsche Telekom in order to establish whether Deutsche Telekom has been involved in the suspected infringement or whether as a parent company of Slovak Telekom it is liable for it (see IP/10/1741).

A Statement of Objections (SO) is a formal step in Commission antitrust investigations in which the Commission informs the parties concerned in writing of the objections raised against them. The addressee of an SO can reply in writing, setting out all facts relevant to its defence. The party may also request an Oral Hearing to present its comments on the case. The Commission may then take a decision on whether the conduct addressed in the SO is compatible with the EU antitrust rules. Sending an SO does not prejudge the outcome of the investigation.

Contacts :

Antoine Colombani (+32 2 297 45 13)

Marisa Gonzalez Iglesias (+32 2 295 19 25)


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