Antitrust Scrutiny of Telecoms in Europe

European Union antitrust authorities said on Thursday that they had investigated major telecommunications companies, including Deutsche Telekom of Germany, on suspicion that the companies were using their dominant market positions to limit Internet providers’ access to their networks.
The European Commission, the executive arm that oversees antitrust policy across the 28-member bloc, did not identify the companies or say how many had been inspected in the operation, which took place Wednesday.
But Deutsche Telekom confirmed on its Web site that a raid had occurred, adding that e-mails and other data had been seized. Reuters reported that the authorities had also raided the offices of Orange of France and Telefónica of Spain.
Big telecommunications companies provide the networks that link smaller sites, like movie-streaming services, to the Web, effectively acting as a gateway. In a statement, the commission said it was concerned that the companies may have violated antitrust rules “that prohibit the abuse of a dominant market position.” Those companies provide services “crucial for the functioning of the Internet” so consumers can gain access to “Internet content with the necessary quality,” it said.
Inspections are a preliminary step in an antitrust investigation. Companies found to have broken European Union competition laws can be fined as much as 10 percent of their annual global sales.
Cogent Communications, a company based in Washington that sells Internet access to third parties, said the inspections were probably linked to complaints it had filed in Germany against Deutsche Telekom and in France against Orange, previously known as France Télécom.
Dave Schaeffer, the chief executive of Cogent, said by telephone that the major telecommunications companies in France, Germany and Spain were impeding his business by refusing to upgrade congested networks. The result, he said, was that services for Cogent clients like Netflix, the film-streaming service, or YouTube, the online video-sharing site, would be slowed or difficult to access.
He cited Dailymotion, the French video-sharing site that is owned by Orange. “For example, Orange owns the direct competitor to YouTube,” Mr. Schaeffer said. Orange “wants French consumers to use Dailymotion instead of YouTube.”
The French state holds a stake of about 27 percent in Orange. This year, the government of President François Hollande expressed its objections to plans by Yahoo to buy a controlling stake in Dailymotion.
Mr. Schaeffer said his company had discussed the matter with the commission but that Cogent had not submitted a formal complaint. He said national authorities in France and Germany had rejected his company’s complaints against Orange and Deutsche Telekom but that Cogent was appealing the French decision. Cogent has also had difficulties in Spain but has not filed a complaint there, he said.
Deutsche Telekom said on its Web site that it was “surprised by the initiation of further investigations by the commission into the global market for Internet traffic, since previous allegations have all turned out to be unfounded.”
“Similar investigations carried out by national regulatory bodies, who have also dealt with the issue in great detail, have also been abandoned,” it said. “This market is dominated by major providers based in the United States, which means we are not the right target for these investigations.”
 
By James Kanter
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