Antitrust watchdog raids top European telecoms firms

Europe's competition watchdog is investigating some of the region's biggest telecoms firms over whether they abused their market position in deals with Internet companies to deliver content to consumers.

Offices of Deutsche Telekom , France's Orange SA and Spain's Telefonica were searched by antitrust regulators after a complaint by a U.S.-based competitor, two people familiar with the matter said on Thursday.

The amount that telecom operators charge for delivering content has become a sore point with some Internet companies. In the past, delivery was free. But with data traffic from streaming video and other downloads booming, operators argue that the Internet companies should pay more.

U.S.-based Cogent Communications - a middleman, or transit provider, that carries global traffic on behalf of Internet companies that want to reach consumers - has filed similar complaints against several European telecom operators in recent years.

Two people close to the situation said that the current Brussels inquiry was also related to the issues raised by Cogent.

The EU Commission said on Thursday it raided the offices of some telecoms providers in several countries on July 9 but did not identify the companies nor the specific objective, in line with its usual policy.

"The Commission has concerns that the companies concerned may have violated EU antitrust rules that prohibit the abuse of a dominant market position," the EU executive said in a statement.

"Internet connectivity ... is crucial for the functioning of the Internet and for end users' ability to reach Internet content with the necessary quality of service, irrespective of the location of the provider," it said.

Deutsche Telekom and Orange confirmed the raid. Orange and Telefonica said separately that they were co-operating fully with the inspections.

KPN and Belgacom said they were not raided. Nor was Telecom Italia , a person familiar with the case said.

Companies can be fined as much as 10 percent of their global turnover for breaching EU antitrust rules.

In France, competition regulators examined a complaint by Cogent that Orange was overcharging it to deliver content to Orange customers there. In September 2012, the French watchdog sided with Orange, saying the operator could legally ask Cogent for more money to compensate for the high level of traffic it was delivering.

German regulators also examined and dismissed a similar case involving Cogent, said a person familiar with the matter.

The raids are likely to worsen an already strained relationship between European regulators and big telecom companies. The Commission is working on a plan to be presented in September aimed at boosting investment in fixed and mobile networks and fostering a single market for communications services in the region.

Operators once had high hopes for the plan, but are now angry that the drafts include measures that will hit sales, such as an end to roaming fees by the end of next year, instead of the ones they backed such as looser merger rules.

The European telecom index was up 0.2 percent at 1308 GMT. Orange shares were up 2 percent, Telefonica 0.6 percent, and Deutsche Telekom up 1 percent.

(Reporting by Peter Maushagen in Frankfurt, Danilo Masoni in Milan, and Robert-Jan Bartunek in Brussels; Editing by Erica Billingham and Elaine Hardcastle)