Europe fines Wanadoo £7.3m for selling Net access below cost

Wanadoo, the internet service provider which owns Freeserve, has been fined €10.35m (£7.3m) by European Union regulators for selling high speed internet access below cost.

The French internet company, which is owned by France Telecom, was undercutting competitors by offering fast internet access to consumers at a price below cost, the European Commission said. "The abuse on which the Commission has taken action was designed to take the lion's share of a booming market, at the expense of other competitors."

It said Wanadoo had violated EU competition rules and found the company had a "dominant position in the form of predatory pricing" in internet access services.

Its investigation into the company found Wanadoo's predatory pricing had been in place for just over a year and a half, from March of 2001 to October of 2002.

"This practice restricted market entry and development potential for competitors, to the detriment of consumers, on a market, which is key to the development of the information society," it said.

The Commission calculated that Wanadoo grew three to seven times more than its closest competitor during the year-and-a-half.

The watchdog, which fined Germany's Deutsche Telekom €12.6m for a similar offence two months ago, warned yesterday it might now go after other companies. "The Commission may undertake investigations in other member states of the same type as that carried out in the Wanadoo case," it said, adding: "Practices designed to capture strategic markets such as the high-speed internet access market call for particular vigilance."