Deutsche Bundespost Telekom could face state-imposed penalties for paying around $1,170m in possibly illegal subsidies to its data services division, thus impeding private sector competition, German government officials said in Bonn: according to Reuter, the Federal Cartel Office is expected to rule that Telekom cross-financed its Datex-P X25 data network to the tune of $290m since 1990 with revenue from its basic telephone services; the European Commission, alarmed by the German investigation, is also considering what consequences the misdeeds could have for Telekom’s planned link with France Telecom; Horst Gellert, Telekom board member in charge of business customers, dismissed the allegations and said the problem lay in its bureaucratic accounting procedures – We have a problem with the accuracy of our data – Datex-P was profitable in our profit and loss statements; but a study by the Pecos consulting group commissioned by private sector service providers said Datex-P service operated at 46% below cost in 1992 and was still at 25% under cost in 1994, enabling it to hang onto a market share of over 90%.
