EU regulators raid Slovak Telekom in antitrust probe

EU antitrust regulators raided Slovak Telekom last week on suspicions that the group had violated European anti-monopoly rules.  EU officials raided the company’s offices accompanied by national competition authorities as part of a probe into the company, 51-percent owned by Deutsche Telekom with the rest belonging to the Slovak state.  For story click here.

At the end of 2007, the Slovak anti-monopoly authority, PMU, had fined Telekom 526 million koruna for anti-competitive behavior.

EU regulators fined Spain’s Telefonica SA almost Euro152 million in 2007 for the same type of behavior, saying the company unfairly squeezed rivals by setting wholesale Internet prices too high to allow them turn a profit.

There has been a significant uptick in EU Commission antitrust action in the past year, reflected by the uptick in document review work in Europe as well as other contract attorney work.  The EU Commission has focused on companies infringing EU rules on abuse of a dominant market position.  The suspected conduct may include refusal to supply, margin squeeze and tying, possibly as part of an overall strategy to exclude competitors from the market.

In January 2008 EU regulators raided the offices of a number of pharmaceutical companies, including Pfizer, GlaxoSmithKline, Sanofi-Aventis, AstraZeneca, Merck Sharp & Dohme, Johnson & Johnson’s Belgian unit, Wyeth.  The EU is looking for evidence of patent abuse.  The EU antitrust division is examining whether companies were deliberately preventing new firms from entering the market by abusing patent rights and launching “vexatious litigation” to ward off potential rivals.  The probe was partly triggered by its 2005 case against AstraZeneca in which the company was fined 60 million euros ($73 million) for filing misleading information to patent offices to delay generic versions of its ulcer drug Losec for most of the 1990s.

In February 2008 Commission antitrust regulators raided Intel offices and computer retailers as part of an ongoing investigation into whether they have followed rules that ensure competition.

In October 2008 the EU  made “unannounced inspections” at the premises of several European smart card chip manufacturers.  The EC characterized the measure as a “preliminary step” in the investigations.  The EU antitrust authorities are  conducting investigations against a number of semiconductor companies active in the smart card chip business.   Allegations include illegal price fixing and customer allocation.   The market for such chips has been characterized by heavy price pressure over the past years.

In such EU raids/investigations, it does not mean the company targeted by a probe is guilty or that the EU prejudges the outcome of the investigation.   In several respects this is similar to DOJ civil and criminal investigatory demands.