Feeds

EC fines Wanadoo €10m for predatory pricing

Sold ADSL too cheaply

  • alert
  • submit to reddit

Business security measures using SSL

The European Commission has slapped a €10.35m fine on Wanadoo for predatory pricing on consumer ADSL services in France.

An EC investigation found that the France Telecom-owned ISP deliberately set prices on broadband products at lower than cost. This restricted the opportunities of rivals to enter the market and constituted an abuse of a dominant market position, the Commission ruled.

Wanadoo's below-cost prices were enacted from the end of 1999 to October 2002. The ISP began mass-marketing its ADSL products heavily in March 2001, and it is from this point that it is deemed to have abused its position. Between January 2001 and September, 2001, Wanadoo's market share jumped from 46 per cent to 72 per cent in a market that grew five-fold. At the end of the period, no other broadband access provider - and this includes cable companies - held more than 10 per cent market share. And one ADSL provider, Mangoosta, went bust.

From January 2001 to September 2002, Wanadoo's market share rose from 46% to 72%, on a market that grew five-fold.

We'll let the European Commission pick up the story:

Wanadoo suffered substantial losses up to the end of 2002 as a result of this practice. The practice coincided with a company plan to pre-empt the strategic market for high-speed Internet access. While Wanadoo was suffering large-scale losses on the relevant service, France Télécom, which at that time held almost 100% of the market for wholesale ADSL services for Internet service providers (including Wanadoo), was anticipating considerable profits in the near future on its own wholesale ADSL products.

Wanadoo's policy was deliberate, since the company was fully aware of the level of losses which it was suffering and of the legal risks associated with the launch of its eXtense service. According to in-house company documents, the company was still expecting at the beginning of 2002 to continue selling at a loss in 2003 and 2004.

In October 2002, France Telecom slashed wholesale access prices by 30 per cent and since then, the broadband market in France has grown in a more balanced way, the EC says.

The Commission says it may investigate more Wanadoo-type cases in other member countries. It notes also its the decision of 21 May in which the Commission fined Deutsche Telekom for the prices it charged for access to the local loop.

Freeserve, the UK's biggest ISP, is a wholly-owned subsidiary of Wanadoo. ®

Security and trust: The backbone of doing business over the internet

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
ISPs' post-net-neutrality world is built on 'bribes' says Tim Berners-Lee
Father of the worldwide web is extremely peeved over pay-per-packet-type plans
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Turnbull: NBN won't turn your town into Silicon Valley
'People have been brainwashed to believe that their world will be changed forever if they get FTTP'
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
Blockbuster book lays out the first 20 years of the Smartphone Wars
Symbian's David Wood bares all. Not for the faint hearted
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.