The European Commission is to lift the threat of a multimillion-pound fine on Telecom Eireann over its alleged use of its monopoly to penalise rival ESAT Telecom, The Irish Times has learned.
ESAT complained that Telecom had abused its position and overcharged it for access to telephone lines in 1994. Eireann over a complaint by ESAT Telecom about alleged abuse of its monopoly position and overcharging for access to its lines in 1994, The Irish Times has learned. But Brussels sources say that the formal decision not to proceed with the fine will be taken and announced by the Competition Commissioner, Mr Karel van Miert, within weeks.
The long-expected fine, initially proposed at €75 million (£59 million) and then reduced during internal Commission discussions to €10E15 million (£7.8-11.8 million), has been called into question by the Commission's own legal services.
ESAT complained that Telecom had abused its dominant position in the market in breach of EU competition rules by refusing until 1994 to give it access to its lines. When it did, ESAT alleges, the rates it proposed to charge were "200 per cent in excess of the upper limit of European best-practice rates" and did not bear any relationship to the real cost of providing the service.
In a lengthy commentary on the draft ruling proposed by the Competition Directorate (DG4), the legal service is understood to have warned some months ago that DG4 would be on "very weak grounds" if it ruled that Telecom Eireann had an obligation to provide ESAT with inter-connectivity on a cost basis.
Since then the decision has been repeatedly delayed despite a letter from Telecom complaining that, with flotation of the company imminent, it was important to remove doubts about possible future financial liabilities. The potential fine is listed in the Telecom prospectus as a contingent liability.
Sources say that DG4, in the interim, has been seeking unsuccessfully to persuade Telecom to accept liability with the promise that there would be no fine. The company has refused to do so, and the Commissioner is now understood to accept that a fine could not be sustained if challenged in the European Court of Justice. The complaint will not be upheld.
The legal service opinion is also understood to point out that the situation complained of has been resolved and that Ireland's interconnection tariffs are among the lowest in Europe. Last night a Commission spokesman would only say that a decision had yet to be taken.
