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Brussels, 30th January 2007

Competition: Commission welcomes judgment of the Court of First Instance in French broadband case

The European Commission welcomes the 30th January judgment by the Court of First Instance (Case T-340/03) dismissing in its entirety the appeal by France Télécom SA, formerly Wanadoo Interactive SA, in respect of the Commission's 2003 decision concerning predatory pricing and confirming the €10.35 million fine imposed by the Commission.

On 16 July 2003, the Commission fined Wanadoo €10.35 million for charging predatory (below cost) prices for its Pack eXtense and Wanadoo ADSL services as part of a plan aimed at excluding competitors from the market for high speed internet access (see IP/03/1025). The CFI rejected Wanadoo's appeal in its entirety and confirmed all aspects of the Commission decision. Broadband is a strategic sector highly important to the European economy and the Commission's strategy for growth and jobs. The Commission is determined to prevent exclusionary practices by incumbent operators on strategic markets. The Court also confirmed the Commission's approach as regards the calculation of the fines imposed on the company. In addition, France Télécom SA has to pay the Commission's costs of the CFI proceedings.

The judgment of the Court of First Instance

The Court held that the Commission was right to consider Wanadoo to have a dominant position on the French market of high-speed internet access during the period covered by the investigation. The Court held that the fast-growing nature of the sector does not preclude the application of competition rules. Regarding predatory pricing, first, the Court held that prices below average variable cost must always be considered abusive. Secondly, prices below average total costs but above average variable costs are to be considered abusive if an intention to eliminate competitors can be shown. The Court held that the Commission applied correct methodology which led to conclude that there was predatory pricing. The Court also found that the Commission furnished solid and consistent evidence as to the existence of a plan of predation for the entire infringement period.

The Commission's investigation

The product concerned is the high-speed Internet access for residential customers. The Commission decision held that Wanadoo, a subsidiary of France Télécom, had a dominant position in this market. The Commission found that, from March 2001 up to October 2002, the retail prices charged by Wanadoo were below cost. The practice coincided with a company plan to pre-empt the strategic market for high-speed Internet access. This practice restricted market entry and development potential for competitors, to the detriment of consumers, on a market which is key to the development of the information society.
The Commission considered that the abusive behaviour constituted a serious infringement of Article 82 of the European Union Treaty and on 16 July 2003, the Commission imposed a fine of €10.35 million on Wanadoo Interactive for predatory pricing in the French residential broadband market during the critical take-off period of broadband in France.

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