The European Court of First Instance Tues. upheld a ...

10.4 million fine levied against France Telecom (FT) for antitrust violations in France’s Internet access market. The case arose from a 2001 EC inquiry into prices Wanadoo Interactive, then part of FT Group, charged retail customers for high-speed access. In July 2003, the EC found Wanadoo undercut rivals, trying to corner the high-speed Internet access market at a key stage in its evolution. The court fined Wanadoo 10.4 million for abusing its dominant market position. Wanadoo appealed. Backing the EC, the court said: (1) Wanadoo dominated the market with very high share, 8 times the number of ADSL subscribers of its nearest competitor and a link with FT conferring advantages over rivals. (2) Wanadoo pricing, first, below average variable costs and, later, below average total costs, showed a plan to eliminate competitors. (3) The EC correctly calculated the rate of cost recovery that led it to find predatory pricing. (4) The Commission solidly documented Wanadoo’s plan to skewer rivals during the entire period in question. The EC lauded dismissal of Wanadoo’s appeal, saying it’s “determined to prevent exclusionary practices by incumbent operators on strategic markets.” The ruling sets no precedent, but its analysis of the existence of a “dominant position” is interesting, Paris attorney Michel Debroux said. FT said the EC was wrong to find it dominated the high-speed Internet access market because that market was emerging and evolving and blamed the Commission for what it called a lack of “prospective analysis” of the situation, he said. The court, however, agreed with the EC that even if the market was growing quickly and was highly disputed, it no longer was emerging; market shares were stable, with FT the clear leader. In other words, Debroux said, the ruling shows dominance can be established even in a fast-growing market with evidence of stiff competition among players, as long as one holds very significant and relatively stable market shares.