June 24, 2014 / 3:28 PM / 5 years ago

Exclusive: Deutsche Telekom and its Slovak unit face EU fines - sources

BRUSSELS (Reuters) - Deutsche Telekom (DTEGn.DE) and its Slovak Telekom unit are likely to be fined by EU antitrust regulators for squeezing out competitors by charging unfair wholesale prices in Slovakia, two people with knowledge of the matter said on Tuesday.

The logo of German company Deutsche Telekom is pictured at the CeBit computer fair in this file photo taken in Hanover, March, 6, 2012. REUTERS/Fabian Bimmer/Files

The European Commission has long frowned on cases where dominant companies charge rivals excessive wholesale rates, making it impossible for competitors to generate a profit from their retail services.

Slovak Telekom’s high wholesale prices made it impossible for rival operators to compete profitably in the retail broadband market, the Commission said in 2012.

The regulator says such anti-competitive practices hamper the development of the Internet and the digital economy in the 28-country bloc.

“The Commission is likely to fine the companies after the August summer break, in September,” said one of the sources, adding there was a slim chance the decision could be issued next month. There is no final decision yet on the size of the fine.

The Commission in its 2012 charge sheet said Deutsche Telekom may be liable because of its 51-percent stake in Slovak Telekom. The Slovak government owns the remainder.

At the start of its probe in 2010, the regulator said the German operator may have been involved in the suspected wrongdoing.

Companies can be fined up to 10 percent of their global turnover for breaching EU antitrust rules. Deutsche Telekom made 60 billion euros in revenues last year while Slovak Telekom generated 827.6 million euros. It is not clear if the companies will be sanctioned separately or jointly.

A Commission spokeswoman and Deutsche Telekom declined to comment. A Slovak economy ministry spokesman and Slovak Telekom had no immediate comment.

The European Union competition watchdog handed down a 127-million-euro ($172.68 million) fine to Orange’s (ORAN.PA) Polish unit TPSA three years ago over similar margin squeeze practices.

Spain’s Telefonica (TEF.MC) was penalised 151 million euros in 2007 for more than five years of unfair prices in the local broadband market. Deutsche Telekom received a 12.6 million euro fine in 2003 for its anti-competitive tariffs for access to its local networks.

Additional reporting by Harro Ten Wolde in Frankfurt and Robert Muller in Prague; editing by Robert-Jan Bartunek and Elaine Hardcastle

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