European Commission Raids Three ISPs

Jul 15, 2013

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Early last week the European Commission carried out raids on three European Internet service providers (ISP) in what appears to be the early stages of an antitrust investigation. The Commission said the raids were carried out amid concerns that the three companies were abusing their market positions. Such abuse would be a violation of European law. According to various sources, the three companies in question are Deutsche Telekom (Germany), Orange (France), and Telephonica (Spain). At the time of this writing only Deutsche Telekom and Orange had officially responded to news reports of the raids. The German company defended its position by attesting to the fact that all previous efforts attempting to link them to violations of antitrust laws have failed. Apparently, the company has been the target of similar investigations by a number of regulatory agencies, all of which have turned up nothing. The company has never been charged. Deutsche Telekom went further by placing the blame for any alleged violations on US-based companies. In the remarks, the company claimed the European ISP market is dominated by American interests, which, by default, would be responsible for any antitrust issues. The official response from Orange included the fact that their company was cooperating fully with the investigation. Like their German counterpart, Orange officials denied any wrongdoing in the matter. The company claims that their compliance with French regulations ensures they are also in compliance with the European Commission's antitrust rules. It should be noted that in both cases the investigations are still ongoing. It is also worth noting that the EC investigation has nothing to do with the local data centre, hosting company, or cloud-computing outfit. For now, it is confined strictly to ISP operations offering Internet access at both the residential and commercial levels.

What Happens Next

If the European Commission's investigation turns up nothing, the three companies will continue on their way doing business as usual. However, if investigators find enough evidence to bring charges, a costly and expensive legal battle could ensue. Unfortunately, the Commission hasn't identified what the potential abuses being investigated are, so there's no way to really tell how far this might go. Even so, abusing one's market position in order to dominate a given market seems to be awfully difficult to prove to a court. The Internet is so interconnected on so many levels, how do you decide what constitutes market abuse and what constitutes good business? Given that Deutsche Telekom has prevailed in all of their previous investigations, it would be no surprise if they prevailed here as well. It is quite likely that Orange and Telephonica would also be spared charges if Deutsche Telekom were cleared. Nevertheless, we'll have to wait and see what the investigations reveal. In the meantime, EC commissioner Neelie Kroes is still shooting for the 2015 implementation of a plan to create a single telecom market in Europe. One cannot help but wonder whether these raids have anything to do with that plan…