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February 21, 1999

AOL SEES DEUTSCHE TELEKOM INQUIRY AS PRECEDENT CASE

By CBR Staff Writer

The European Union competition watchdog’s decision to investigate Deutsche Telekom’s business practices in internet access, following a complaint from America Online Inc (AOL) and its German partner, Bertelsmann AG, has precedent value for AOL Europe. A spokesperson for the company said on Friday that, in a number of European markets, it suspected the incumbent telco of abusing its dominant position in the telephony market to weaken competition for internet access. The exception, they went on, was the UK, where British Telecommunications Plc has not managed to leverage its position in telephony into the access market. That said, however, the company said it is not considering registering complaints against the any other incumbents. We tend to see the DT case as a precedent, the spokesperson went on. AOLs allegations against DT are twofold. Firstly it argues that Telekom discriminates in the provision and pricing of internet-related services, as well as practicing predatory pricing to undercut the competition. This includes, AOL alleges, giving its wholly-owned business unit T-Online exclusive access to the Deutsche Telekom customer database for initial creditworthiness and verification of customers. Secondly, AOL reckons Telekom is using its nationwide billing structure to bundle TOL invoices illegally, thereby attempting to set up TOL to be the gatekeeper for all e-commerce in Germany. The company notes that a German court has already issued an injunction against DT after ruling that there was evidence the telecoms operator had been attempting to interfere with AOLÆs ISDN partners.

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