The European Commission levied a €10.35m fine on French internet service provider Wanadoo after finding it guilty of stifling competition in the market for high-speed internet access.
"The commission found that up until October 2002, the retail prices charged by Wanadoo were below-cost," the commission stated. This practice, it said, "restricted market entry and development potential for competitors."
Wanadoo, which is 72% owned by French government-controlled France Télécom, saw its market share of high-speed internet access service provision jump from 46% to 72% between January 2001 and September 2002 in a market that grew fivefold during that time.
By October, no competitor held a market share of more than 10%, and one ADSL service provider, Mangoosta, went out of business in August 2001. The commission added that the impact of Wanadoos' below-cost strategy was also felt by cable operators offering high-speed internet access.
The commission also pointed out that while Wanadoo was making substantial losses during this period, its parent was making healthy profits on its provision of wholesale ADSL connections to competitors of Wanadoo.
"The commission considers that practices designed to capture strategic markets such as the high-speed internet access market call for particular vigilance," the EU executive said, adding that it may open similar investigations in other member states.
Earlier this year the commission fined Deutsche Telekom €12.6m for failing to unbundle the local telecommunication loop in Germany.
Paul Meller writes for IDG News Service