The European Commission has ordered two German mobile network operators to explain why they apparently overcharged mobile phone users visiting Germany, it announced on Thursday. If the operators fail to convince the Commission that their charges were justified they could face fines of up to hundreds of millions of euros.
The Commission sent statements of objections to T-Mobile Deutschland, in Bonn, and Vodafone D2 GmbH, in Dusseldorf, complaining that the pair charged other mobile network operators too much to use their networks in Germany, the Commission said.
The so-called roaming charges hurt consumers because the operators were passing the cost of the charges directly on to their customers, said a spokesman for the Commission, which serves as the antitrust regulator for the European Union.
The German operators' practices may have been "contrary to European Union Treaty rules" and constituted an abuse of a monopoly position, the spokesman said. Under EU competition law, if the companies cannot justify their charges the Commission can fine them up to 10 percent of their turnover for the period in question.
The investigation concluded last year and began in 1999 in T-Mobile's case and 2000 in Vodafone's case. The Commission found that the companies had abused their dominant position in the German market for providing international wholesale roaming services.
Vodafone D2 had turnover of €7.8bn (£5.4bn) for 2003/04. T-Mobile Deutschland had 2003 turnover of €8.5bn (£5.9bn).
The Commission's inquiry compared prices charged by the firms for airtime access to independent service providers (ISPs) with those charged for international roaming services. The Commission found that the roaming charges were in some instances up to three times higher than the rates charged to ISPs, although the markets are very similar.
The operators now have approximately three months to justify their rates to the Commission.
Philipp Schindera, head of corporate communications at T-Mobile, said his company was surprised by the Commission's conclusions and that it expects to prove they were not unreasonable. "We don't understand the reproaches because the prices are under the EU average," he said. "In any case, roaming charges are determined by foreign operators."
Bobby Leach, head of group financial media relations at Vodafone, confirmed that his company had received the Commission's statement of objections. While the company needs time to study the statement in detail, it believes the roaming market is competitive, he said, adding that Vodafone will challenge the Commission's arguments.
The decision to challenge the two firms follows a similar move against Vodafone and O2 in the UK in July 2004. The Commission has been concentrating on the mobile phone market in the UK and Germany after an investigation in 2000 concluded that those two countries had the biggest problems with a lack of effective competition.
The two UK operators have since replied to the Commission, which is considering their responses before deciding any further action, a Commission spokesman said.