Brussels vs Berlin - summer showdown

30 Mar 2007

London’s Financial Times reports that the European Commission (EC) is to take the German government to court in the summer after Berlin rejected claims that its efforts to protect incumbent Deutsche Telekom’s (DT) EUR3 billion (USD3.9 billion) investment in a VDSL network contravened European competition laws. Despite warnings from EU Information Society and Media Commissioner Vivene Reding, the government changed its telecoms law to allow the regulator, Bundesnetzagentur, to exempt new networks from regulation while the companies building them are able to recoup their investment. A formal letter threatening court action if the law was not changed was sent by Ms Reding to Berlin last month. Berlin’s reply rejected the accusations, saying that changes in its law address gaps relating to new telecoms markets which EU telecoms regulations does not cover, and are not designed to protect any single company. The German reply went on to propose a meeting to ‘air differences’ but noted that the EC seemed to be ‘complaining about the means rather than the goal’. An EC spokesman said in response there was, ‘no willingness on the German side to respect EU law,’ adding that the case could come before the EU’s highest court in June. This could lead to the potentially embarrassing situation in which Germany, current holder of the rotating six-month EU presidency, finds itself before Europe’s most senior judge on charges of flouting EU law. The incumbent DT has pledged to extend its VDSL network to 50 cities by the end of 2008, but has not yet said what new services it will be offering.

Germany, Deutsche Telekom (DT)