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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> France Telecom v Commission (Competition) [2007] EUECJ T-340/03 (30 January 2007) URL: https://www.bailii.org/eu/cases/EUECJ/2007/T34003.html Cite as: [2007] 4 CMLR 21, [2007] ECR II-107, [2007] EUECJ T-340/3, [2007] EUECJ T-340/03, [2008] All ER (EC) 677 |
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(Competition ' Abuse of a dominant position ' Market for services in high-speed Internet access Predatory pricing)
In Case T-340/03,
France Télécom SA, formerly Wanadoo Interactive SA, established in Paris (France), represented by O. Brouwer, H. Calvet, M. Pittie, J. Philippe and T. Janssens, lawyers,
applicant,
Commission of the European Communities, represented initially by S. Rating and É. Gippini Fournier, acting as Agents, and subsequently by Mr Gippini Fournier,
defendant,
APPLICATION for annulment of the Commission's decision of 16 July 2003 relating to a proceeding under Article [82 EC] (Case COMP/38.233 ' Wanadoo Interactive) or, in the alternative, for annulment or reduction of the fine imposed on the applicant,
composed of M. Vilaras, President, M. E. Martins Ribeiro, F. Dehousse, D. Šváby and K. Jürimäe, Judges,
Registrar: J. Palacio González, Principal Administrator,
having regard to the written procedure and further to the hearing on 26 April 2005,
gives the following
Facts and procedure
Forms of order sought
annul the decision;
in the alternative, cancel or reduce the fine;
order the defendant to pay the costs.
dismiss the action;
order the applicant to pay the costs.
Law
I The claim for annulment of the decision
A The plea alleging breach of the rights of the defence and of essential procedural requirements
1. Arguments of the parties
2. Findings of the Court
'This statement of objections is aimed at the pricing practices of [WIN], part of the France Télécom group, for its high-speed Internet access services, Wanadoo ADSL and Pack [eXtense], in the course of 2001.
...
In the course of the investigation, it has become apparent that [WIN] has, since the beginning of 2001, undertaken pricing practices in relation to the services in question which are below cost and capable of being classified as predatory and a breach of Article 82 [EC].'
'[At this stage,] the policy of predatory pricing pursued by [WIN] since the beginning of 2001 constitutes an abuse of a dominant position [within the meaning of] Article 82(a) and (b) [EC]. The practice in question took place at a critical stage in the development of the market for high-speed Internet access for residential users, at the same time as the roll-out of ADSL in France. It gave [WIN] a significant lead over its competitors or prevented them from entering, or maintaining their position on, that market.'
'From March 2001 to October 2002, [WIN] infringed Article 82 [EC] by charging for its eXtense and Wanadoo ADSL services predatory prices that did not enable it to cover its variable costs until August 2001 or to cover its full costs from August 2001 onwards, as part of a plan to preempt the market in high-speed Internet access during a key phase in its development.'
'Following its analysis, the Commission takes the view at this stage that the policy of predatory pricing pursued by [WIN] since the beginning of 2001 constitutes an abuse of a dominant position ... For the reasons set out above, the Commission proposes to take a decision requiring [WIN] to bring the infringement to an end ...'
B The plea in law alleging failure to state reasons
1. Arguments of the parties
2. Findings of the Court
'First of all, from a point of view of principle, it is true that new entrants or undertakings which are not in a dominant position are entitled to charge promotional prices for limited periods. Their sole aim is to draw the consumer's attention to the very existence of the product, more persuasively than by a mere advertisement, and such offers do not have any negative impact on the market. On the other hand, alignment by the dominant operator on the promotional prices of a non-dominant operator is not justified. Whilst it is true that the dominant operator is not strictly speaking prohibited from aligning its prices on those of competitors, this option is not open to it where it would result in its not recovering the costs of the service in question. Whilst the fact that an undertaking is in a dominant position cannot deprive it of its entitlement to protect its own commercial interests when they are attacked, such behaviour cannot be countenanced if its actual purpose is to strengthen that dominant position and abuse it. The dominant undertaking thus has a special responsibility not to allow its behaviour to impair genuine undistorted competition on the common market.'
C The plea alleging breach of the principle that penalties must be specific to the offender
1. Arguments of the parties
2. Findings of the Court
D Breach of Article 82 EC
1. Dominant position
a) Incorrect market definition
Arguments of the parties
Findings of the Court
b) Flawed assessment of dominance
Arguments of the parties
Findings of the Court
2. The abuse of a dominant position
a) The complaints in relation to the recovery of costs test
Error as to the method of calculating the rate of cost recovery
Arguments of the parties
Findings of the Court
Errors of calculation when applying the method used
Arguments of the parties
Findings of the Court
b) The complaints relating to the test of predation
WIN's right to align its prices on its competitors' prices
Arguments of the parties
Findings of the Court
Absence of a plan of predation and reduction in competition
Arguments of the parties
Findings of the Court
a document dating from July 2000 expressing the following objective for the second quarter of 2000 and for 2001: 'pre-empting the ADSL market with an all-inclusive offer [plus] package and accelerating investments for 2001, but with a negative impact on the balance sheet';
an electronic mail of July 2000 relating to a discussion on the appropriate level of prices, stating: 'we will have difficulty in pre-empting this market if our prices are too high';
the framework letter for 2001 containing the following wording: 'our pre-emption of the ADSL market is imperative';
a presentation dated 28 February 2001 on the subject of a 'pre-emption campaign in the high-speed domain by [WIN]';
the strategic plan for 2002 to 2004 reiterating the robust development of high-speed access for the period from 2001 to 2003 and the objective of 'pre-empting a market considered to generate value'.
'in the days when that we were owned by Cégétel, we launched an offer with Monaco Telecom and had 500 subscribers. We did not launch in France as France Télécom's ADSL retail offer is not a money-maker for us. Technically, we are ready, but we are not in the business of losing money'.
'The high-speed and ADSL market will, for the next few years, continue to be conquest-driven, the strategic objective being to gain a dominant position in terms of market share, the period of profitability only coming later.'
Recoupment of losses
Arguments of the parties
Findings of the Court
'42 For sales of non-aseptic cartons in Italy between 1976 and 1981, [the Court of First Instance] found that prices were considerably lower than average variable costs. Proof of intention to eliminate competitors was therefore not necessary. In 1982, prices for those cartons lay between average variable costs and average total costs. For that reason, in paragraph 151 of its judgment, the Court of First Instance was at pains to establish and the appellant has not criticized it in that regard that Tetra Pak intended to eliminate a competitor.'
43 The Court of First Instance was also right, at paragraphs 189 to 191 of the judgment under appeal, to apply exactly the same reasoning to sales of non-aseptic machines in the United Kingdom between 1981 and 1984.'
'[I]t would not be appropriate, in the circumstances of the present case, to require in addition proof that Tetra Pak had a realistic chance of recouping its losses. It must be possible to penalize predatory pricing whenever there is a risk that competitors will be eliminated. The Court of First Instance found, at paragraphs 151 and 191 of its judgment, that there was such a risk in this case. The aim pursued, which is to maintain undistorted competition, rules out waiting until such a strategy leads to the actual elimination of competitors.'
II The alternative claims for the cancellation or reduction of the fine
A Breach of the principles that penalties must be specific to the offender and have a proper legal basis
1. Breach of the principles that penalties must be specific to the offender
a) Arguments of the parties
b) Findings of the Court
2. The plea alleging breach of the principle that penalties must have a proper legal basis
a) Arguments of the parties
b) Findings of the Court
B Absence of effects of the conduct in question
1. Arguments of the parties
2. Findings of the Court
C Duration of the infringement wrongly determined
1. Arguments of the parties
2. Findings of the Court
D Breach of the principle of proportionality
1. Arguments of the parties
2. Findings of the Court
Costs
On those grounds,
hereby
1. Dismisses the action;
2. Orders the applicant to pay the costs.
Vilaras |
Martins Ribeiro |
Dehousse |
Šváby |
Jürimäe |
Delivered in open court in Luxembourg on 30 January 2007.
E. Coulon |
M. Vilaras |
Registrar |
President of Chamber |
Facts and procedure
Forms of order sought
Law
I The claim for annulment of the decision
A The plea alleging breach of the rights of the defence and of essential procedural requirements
1. Arguments of the parties
2. Findings of the Court
B The plea in law alleging failure to state reasons
1. Arguments of the parties
2. Findings of the Court
C The plea alleging breach of the principle that penalties must be specific to the offender
1. Arguments of the parties
2. Findings of the Court
D Breach of Article 82 EC
1. Dominant position
a) Incorrect market definition
Arguments of the parties
Findings of the Court
b) Flawed assessment of dominance
Arguments of the parties
Findings of the Court
2. The abuse of a dominant position
a) The complaints in relation to the recovery of costs test
Findings of the Court
Errors of calculation when applying the method used
Arguments of the parties
Findings of the Court
b) The complaints relating to the test of predation
WIN's right to align its prices on its competitors' prices
Arguments of the parties
Findings of the Court
Absence of a plan of predation and reduction in competition
Arguments of the parties
Findings of the Court
Recoupment of losses
Arguments of the parties
Findings of the Court
II The alternative claims for the cancellation or reduction of the fine
A Breach of the principles that penalties must be specific to the offender and have a proper legal basis
1. Breach of the principles that penalties must be specific to the offender
a) Arguments of the parties
b) Findings of the Court
2. The plea alleging breach of the principle that penalties must have a proper legal basis
a) Arguments of the parties
b) Findings of the Court
B Absence of effects of the conduct in question
1. Arguments of the parties
2. Findings of the Court
C Duration of the infringement wrongly determined
1. Arguments of the parties
2. Findings of the Court
D Breach of the principle of proportionality
1. Arguments of the parties
2. Findings of the Court
Costs
* Language of the case: French.