France Telecom has lost an appeal against a fine of 10.35 million for attempting to corner the market in ADSL internet access, in a judgement of the EU Court of First Instance given on 30 January. The judgement (Case T-340/03) stated that the European Commission had correctly concluded an abuse of dominant position by the company's then subsidiary Wanadoo.

The Commission imposed the fine in July 2003 on France Telecom's subsidiary, Wanadoo Interactive SA (WIN), under Article 82 of the EC Treaty for predatory pricing - selling below costs in order to price out competitors in the French market. The Commission found that over the period 1999 to 2002, Wanadoo had marketed two products - Wanadoo ADSL and eXtense - at prices below average cost. In particular, it deliberately failed to cover its variable costs up to August 2001 and then to cover its full costs from August 2001 to October 2002.

At the time, France Telecom ran its internet business through a group of subsidiaries, owning 72% of Wanadoo SA, which itself held almost all (99.9%) of the shares in WIN. France Telecom acquired the whole of WIN in a merger in 2004 - hence it being the plaintiff in this case.

Wanadoo had argued that the high-speed and low-speed internet access markets were distinct. The Court rejected this argument and pointed out that WIN had eight times the number of ADSL subscribers as its nearest competitor and benefited from its close relationship with France Telecom.

Wanadoo also argued that the Commission had gone against the...

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