2003/707/EC: Commission Decision of 21 May 2003 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-1/37.451, 37.578, 37.579 — Deutsche Telekom AG) (Text with EEA relevance.)(notified under document number C(2003) 1536)

• Published date: 14 October 2003
• Subject Matter: concorrenza,posizione dominante,competencia,posición dominante,concurrence,position dominante
• Official Gazette Publication: Gazzetta ufficiale dell’Unione europea, L 263, 14 ottobre 2003,Diario Oficial de la Unión Europea, L 263, 14 de octubre de 2003,Journal officiel de l’Union européenne, L 263, 14 octobre 2003

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2003/707/EC: Commission Decision of 21 May 2003 relating to a proceeding under Article 82 of the EC Treaty (Case COMP/C-1/37.451, 37.578, 37.579 — Deutsche Telekom AG) (Text with EEA relevance.)(notified under document number C(2003) 1536)

Official Journal L 263 , 14/10/2003 P. 0009 - 0041

Commission decision

of 21 May 2003

relating to a proceeding under Article 82 of the EC Treaty

(Case COMP/C-1/37.451, 37.578, 37.579 - Deutsche Telekom AG)

(notified under document number C(2003) 1536)

(Only the German text is authentic)

(Text with EEA relevance)

(2003/707/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation No 17 of 6 February 1962, the first Regulation implementing Articles 85 and 86 of the Treaty(1), as last amended by Regulation (EC) No 1216/1999(2), and in particular Articles 3 and 15(2) thereof,

Having regard to the complaints lodged on 18 March 1999, 19 July 1999 and 20 July 1999 by Mannesmann Arcor AG & Co. and 14 German regional fixed-network operators, alleging infringement of Article 82 of the EC Treaty by Deutsche Telekom AG and asking the Commission to put an end to that infringement,

Having regard to the Commission decision of 2 May 2002 to initiate proceedings in this case,

Having heard the undertakings concerned in accordance with Article 19(1) of Council Regulation No 17 and Commission Regulation (EC) No 2842/98 of 22 December 1998 on the hearing of parties in certain proceedings under Articles 81 and 82 of the EC Treaty(3),

Having consulted the Advisory Committee on Restrictive Practices and Dominant Positions,

Having regard to the report by the Hearing Officer,

Whereas:

I. THE FACTS

(1) This decision concerns unfair pricing contrary to Article 82(a) of the EC Treaty. The prices in question are charged to competitors and end-users by Deutsche Telekom AG ("DT") for access to its local networks. DT's local networks each consist of a number of local loops. In accordance with Article 2(e) of Directive 2002/19/EC of the European Parliament and of the Council of 7 March 2002 on access to, and interconnection of, electronic communications networks and associated facilities (Access Directive)(4), the local loop is the physical circuit connecting the network termination point at a subscriber's premises to the main distribution frame or equivalent facility in the fixed public telephone network.

(2) On 18 March 1999, Mannesmann Arcor AG & Co. lodged a complaint against DT under Article 82 of the EC Treaty and against Germany under Article 86 of the EC Treaty.

(3) The Commission received two further complaints in respect of the same facts, one on 19 July 1999, from TeleBeL GmbH and seven other companies (see recital 9) (Case COMP/C-1/37.37.58) and one on 20 July 1999, from EWE TEL GmbH and five other companies (see recital 10) (Case COMP/C-1/37.579). All of these additional 14 complainants are German local and regional telecommunications operators active in different German towns or cities.

(4) The main contention in all three complaints is that the margin between the prices DT charges its competitors for unbundled access to local loops in Germany and the prices it charges end-users for access to its fixed network is not sufficient to enable its competitors to compete with it to provide end-user access over local networks. The main accusation made against Germany is that the German regulatory authority for telecommunications and posts (Regulierungsbehörde fur Telekommunikation und Post, abbreviated to RegTP and hereinafter referred to as "the regulatory authority") has fixed the wholesale charges at a level exceeding the retail charges.

(5) Charges for access to local networks are partly regulated by the regulatory authority, but this decision is concerned with unfair prices which have been set by DT itself in the exercise of its own commercial freedom, and for which it is directly responsible.

II. THE UNDERTAKINGS

A. THE PARTY AGAINST WHOM THE COMPLAINTS ARE MADE

(6) DT is the incumbent telecommunications operator in Germany. It operates the fixed telephone network originally built using public resources. DT was at one time wholly owned by the German State. On 18 November 1996, 25 % of the equity was sold on the open market to private investors: this package amounted to 714 million shares known as "T" shares, and was sold for DEM 20,1 billion. Following a capital increase in June 1999, the percentage of shares owned by private investors rose to 33 %. At that time a 65 % stake was still held by the German State (43 % direct and 22 % through the German recovery bank Kreditanstalt für Wiederaufbau, or "KfW"), while 2 % was held by France Télécom. When DT took over the United States mobile operator VoiceStream/Powertel in 2000, the State and KfW gave up part of their holdings. France Télécom sold its shares back to DT. Currently, 30,92 % of the shares are held by the State, 12,13 % by KfW, and 56,95 % by institutional and private investors.

(7) Before the full liberalisation of telecommunications markets, DT enjoyed a legal monopoly in the retail provision of fixed-line telecommunications services. Since 1 August 1996, when the Telecommunications Act ("the Act")(5) entered into force, the German markets in the provision of infrastructure and in the provision of telephone services have been liberalised. DT now faces varying degrees of competition from alternative operators on the two markets.

B. THE COMPLAINANTS

(8) The complainant in Case COMP/C-1/37.451 is Mannesmann Arcor AG & Co., one of Germany's largest fixed-network operators, which offers end-users a wide range of telephone services. In 2000 Mannesmann AG was taken over by Vodafone Airtouch plc(6). Since April 2001 the complainant has traded under the name Arcor AG & Co. (hereinafter "Arcor"). On 30 September 1998 Arcor concluded an outline agreement with DT for local loop unbundling, in which charges were agreed only provisionally, pending authorisation by the regulatory authority, as required by the German rules on price regulation.

(9) The complainants in Case COMP/C-1/37.578 are TeleBeL GmbH (Wuppertal), CNB GmbH (Bremen), Citykom GmbH (Münster), HTN GmbH (Hanover), Hamcom GmbH (Hamm), KomTel GmbH (Flensburg), DOKOM GmbH (Dortmund) and KielNet GmbH (Kiel).

(10) The complainants in Case COMP/C-1/37.579 are EWE TEL GmbH (Oldenburg), HanseNet GmbH (Hamburg), ISIS Multimedia Net GmbH (Düsseldorf), NetCologne GmbH (Cologne), tesion Communikationsnetze Südwest GmbH & Co. KG (Stuttgart) and VEW TELNET GmbH (Dortmund).

(11) All 14 complainants in Cases COMP/C-1/37.578 and COMP/C-1/37.579 are local and regional fixed-network operators with geographically restricted licences, who connect end-users to their own networks within their licensed territory, in so far as their networks are within reach and operational. To connect customers that they cannot reach with their own networks these complainants need unbundled access to DT's local loops (see recital 64 et seq.). All 14 have concluded agreements with DT concerning local loop unbundling.

III. FACTS AND FIGURES

(12) In order to compete with DT, competitors secure network access either by using their own infrastructure (optical fibre, cable television, power lines, etc.), or by using DT's local network on the basis of unbundled access to local loops. The latter option is less cost-intensive, and gives even financially weaker competitors, who are unable to build complete infrastructures of their own, direct access to the German retail market. Countrywide providers of telecommunications services also depend on shared use of existing infrastructure. But in the case of telephone calls, as a result of network interconnection, alternative operators wishing to provide countrywide services in Germany no longer face any comparable bottleneck.

(13) New entrants do not have network infrastructures of their own that are as extensive as those of DT, and with traditional technologies they are unable to match the economies of scale and the coverage of the incumbent operator, which rolled out its local network over a long period under the protection of exclusive rights, and funded its investment out of monopoly rents(7).

(14) DT offers access to its local networks to other telecommunications operators and to end-users. The rules governing telecommunications in Germany regulate the two types of access in different ways.

A. WHOLESALE ACCESS: FULL UNBUNDLING

(15) At local level a distinction can be made between two different forms of access to incumbents' fixed telephone networks: one is full local loop unbundling, and the other is line sharing, or shared use of local loops. The charges for the two forms of access are different. This decision relates only to fully unbundled access to DT's local loops.

(16) With effect from June 1997 DT was required to offer its competitors fully unbundled access to the local loop(8). The requirement was imposed by decision of the Federal Ministry of Posts and Telecommunications in May 1997(9); at that time no such obligation yet existed under Community law(10). DT challenged the decision before the administrative courts(11); DT's application was finally dismissed by the Federal Administrative Court in 2001. On 30 August 1998, on the basis of this unbundling requirement, an outline agreement on unbundled access to DT's local loops was reached between DT and Mannesmann Arcor.

(17) Under German telecommunications law, charges for access to the local network must be cost-oriented(12) and must be authorised in advance by the regulatory authority(13). When deciding whether to authorise the wholesale prices that DT charges other operators, the regulatory authority has to satisfy itself that they correspond to the cost of efficient service provision(14), contain no special extra charges or discounts(15)...