European Commission: Deutsche Telekom, Telefónica and Orange no longer under investigation for internet connectivity services

The European Commission closed with its decision of 3 October 2014 (IP/14/1089) the investigation into practices of the telecoms operators Deutsche Telekom, Telefónica and Orange in the internet connectivity market. These companies provide internet access services to end-customers and also have an in-house internet transit division selling IP-traffic transit capacities to content providers and smaller internet access providers. US-network operator Cogent had filed a complaint with the EU Commission alleging that the telecom operators forced some content providers to buy access to their networks and pay for the data exchange (so-called “Peering”) separately. Upon the complaint the EC initiated a formal probe investigating, whether the companies had abused a dominant market position (Article 102 TFEU). On the basis of the evidence collected at unannounced inspections at the companies’ premises in July 2013, the EC came to the “provisional view” that the practices do not appear to breach antitrust law.

Despite the lack of evidence in this case, the EC pointed out that the acting of telecoms operators in the transit market – also often referred to as “wholesale market for internet connectivity” – can have a negative impact on competition on the downstream level of providing internet access and IP-content services. In fact, the vertical integration of telecoms operators (i.e. providing both, internet access or content services at the retail level and upstream connectivity services at the wholesale level) is susceptible to network operators foreclosing content providers from crucial connectivity services or providing an unfair advantage for own proprietary content services (such as DT’s “Entertain”), the EC said. In particular, the absence of an alternative third party transit operator on certain routes can lead to traffic congestion causing a deterioration in the service quality of competing content providers, especially those whose content requires a high bandwidth (e.g. video streaming).

Due to the significance of this matter for the services provided to the internet users, the EC announced that it will continue to monitor the sector closely. It is expected that the recent start of the US-streaming service “Netflix” in September in many European countries, including Germany, will bring the questions about “Peering” to the center of interest again.