European Watchdog Hits Telecommunications Giants in Internet Anti-Trust Raid

Germany's Deutsche Telekom and France's Orange are accused of abusing their dominant market position to restrict net neutrality and increase broadband Internet costs.

COLOGNE, Germany -- European anti-trust watchdogs have raided the offices of several telecommunications giants, including Germany's Deutsche Telekom and France's Orange (formerly France Telecom) as part of an investigation into Internet access on the continent.

The European Commission is looking into accusations that former state telecom monopolies have been abusing their still-dominant position as Internet Service Providers to restrict competition and drive up access costs for competitors and content providers.

A legacy of Europe's former state-owned telecommunications systems is that in most countries the now-privatized groups control much of the Internet infrastructure and competitors must pay them for wholesale broadband access. 

European authorities said they had carried out raids in “several member states” but did not name the companies under investigation. Both Deutsche Telekom and Orange have confirmed their offices were searched. Spain's Telefonica, which has been fined by the European Commission for anti-competitive actions in the past and was also reportedly part of the raid, has so far declined comment. 

In a statement, Deutsche Telekom said it was “astonished” by the raid and insisted it was the wrong target.

"Deutsche Telekom faces intense competition on the global Internet traffic market," it said. "The market is dominated by big U.S. providers, and as such we are not the right target of these investigations."

Both Orange and Telekom noted that similar investigations by their respective national anti-trust offices had been dropped.

The U.S.-based operator Cogent Communications Group filed a complaint with French regulators in 2011 claiming Orange was too slow to upgrade its network and violating net neutrality agreements by effectively throttling traffic from competitors it carried on its networks. The French investigation was wrapped up last September and Orange was not charged. Cogent also has accused Deutsche Telekom of violating net neutrality.

It is not known whether the raids this week and the European Commission investigation stem from Cogent's or any other complaint. The Commission has the authority to begin investigations on its own initiative, and there is no legal deadline for them to complete their inquiries.

In 2007, the European Commission found Telefonica had unfairly been squeezing its rivals by charging inflated wholesale access prices and fined the Spanish group around €152 million ($200 million).