TELECOMMUNICATIONS/COURT OF JUSTICE : HIGH-SPEED NETWORKS: COMMISSION WINS CASE AGAINST BERLIN.

The European Commission has won a three-year legal battle against Germany on the sensitive issue of the development of high-speed internet networks. The EU Court of Justice ruled in Case C-424/07, on 3 December 2009, that with its telecoms law of February 2007, Berlin failed to fulfil its EU obligations. In cause is the principle of "non-regulation" of the new networks, which works to the advantage of Deutsche Telekom.

The case had already been under dispute for a year before being referred to the Court of Justice by the Commission. The stakes are huge. On one side, the Commission accused the member state of introducing regulatory holidays' by applying a principle of non-regulation. This situation worked to the sole advantage of Deutsche Telekom, which undertook the development of its high-speed network (VDSL). The EU executive also wished to set an example in its reaction: it was in the midst of developing its (recently adopted) telecoms package aimed at strengthening competition on this market. On the other side, Germany, which held the EU Presidency at the time, totally rejected the executive's criticisms. The battle was waged in the framework of the telecoms package.

Two years later, the court has ruled in favour of the Commission. The executive had two key objections: 1. Germany limited the discretionary power of the national authority in the sector by introducing into its law the concept of new markets' and by laying down the principle of non-regulation; 2. the German law does not respect the procedures for consultation of the Commission imposed by EU rules.

The Commission won its case on both points. First, the court rejected the German argument that the principle of non-regulation of new markets is built into the regulatory framework (adopted in 2002). Berlin invoked in particular a...