This week’s decision by France’s competition regulator to fine Fr...

Competition Council sanctioned FT for failing to let competitors enter the broadband DSL market in 1999-2002. The case arose in a 1999 Neuf Telecom complaint that FT was offering a broadband access product to ISPs but not giving other telcos access to its network in a way that let them offer competing products. In 2000, the council told FT to make such a product available. FT came up with a wholesale offer, ATM Connect ATM. However, it cost too much and had technical limits curbing competitors’ ability to build competing offers, Maxwell said. In 2002 French telecom regulator ART (now ARCEP) forced FT to lower its price. However, Maxwell said, the Competition Council felt FT ignored the substance of its 2000 order. In May 2004, it fined FT 20 million. The telco appealed. The appeals court doubled the fine, and this week the council, after reviewing the case, levied 80 million on top of that, saying FT’s behavior seriously hurt France’s economy. Specifically, the regulator said, FT practices: (1) Led to closure of the market for ADSL access, guaranteeing FT was the sole supplier. (2) Went on for 3 years despite Council injunctions and ART intervention. (3) Were carried out by a traditional vertically integrated operator that, due to its dominant position, bore a particular responsibility to the market. (4) Hampered an emerging market’s growth. The fine is significant, Maxwell said, because it shows the council’s “muscle” under the leadership of new Chmn. Bruno Lasserre. Lasserre, head of France’s telecom ministry in the early 1990s, was the “key architect of liberalization” of the telecom sector. The ruling is “a good example of ARCEP and the Competition Council working together in their respective roles,” Maxwell said. ARCEP has the power to force FT to modify wholesale offers, and the council has authority to sanction the telco’s anticompetitive behavior. FT called the ruling disproportionate, saying it will appeal. It cited mitigating factors, including Neuf Telecom’s filing its complaint before ART defined conditions for opening the market; that the ATM Connect ATM product was regulated and monitored as of 2001; and that the wholesale product FT sold to ISPs was instrumental in developing the broadband market in France, which “has become the leading European country both in terms of number of ADSL lines and number of unbundled lines.”