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Peter Alexiadis, May 12, 2008
* The author is reminded of the alleged statement made by a gentleman in the audience at a public lecture. When asked what he thought of the speaker, the gentleman commented that he found the contents of the speaker’s presentation “both informative and interesting.” “Unfortunately,” the gentleman went on to say, “the interesting bits were not informative and the informative bits were not interesting.” The contents of the CFI’s judgment bear no small resemblance to this maxim.
On April 10, 2008, the European Court of First Instance delivered its long-awaited judgment in the Deutsche Telekom AG v. European Commission appeal. In doing so, the CFI upheld the Commission’s 2003 decision, where it had been found that the German fixed incumbent telecommunications operator, Deutsche Telekom, had been abusing its dominant position on the market for access to its fixed network. It had acted abusively by creating a margin squeeze between the prices charged to its competitors for wholesale access, on the one hand, and its own retail access charges, on the other. The case is notable insofar as it finally brings legal certainty to a complex area of practice where law and economics collide, and which is a strategically important precedent for the European Commission given the liberalization of ex-utility sectors that will no doubt give rise to many more margin squeeze cases in practice. That legal certainty has been won, however, at the expense of some much-needed analytical sophistication being developed on how to deal with complex pricing policies in the wake of disruptive technological change. It is, in short, a very blunt legal precedent. Subscribers can download the entire article available in the column on the left.