Telekom says the fine is inexplicable

Deutsche Telekom(DT) has been fined 12.6m euros (�9m; $14.8m) by Brussels for thwarting competition.

The European Commission said the German telecom giant was charging start-up rivals too much to access its local networks.

"This is clearly harmful to consumers, because competition between operators is the best means to bring overall prices down," said competition commissioner Mario Monti.

DT, with a market share of 95%, remains the dominant provider of broadband and narrowband retail access in Germany.

But the Commission said the telecoms group had not yet solved its unfair pricing practices, despite having introduced new prices on 1 May.

Upping the fee

The Commission said Telekom was charging competitors higher fees for access to its local network than it charged its own subscribers - making it difficult for new entrants to compete for consumers.

Deutsche Telekom immediately hit back, saying it might appeal to European Union courts.

"We can't comprehend that decision. These are regulated prices," said a DT spokesman.

He said the company would decide about legal action when it had seen the full decision.

DT's rivals need to access the wires that run through Deutsche Telekom's exchanges to customers' homes and offices.

But the Commission said it found Deutsche Telekom had charged its rivals higher fees for wholesale access to the local loop than the fees it charges for fixed line retail subscriptions.

Although the group reduced its wholesale prices in May, the Commission said new entrants are not able to compete for retail subscribers.

Pay-up

"Many new entrants have tried to compete with the incumbent operator," said Mr Monti.

"None of them has been able to reach significant market share, not least because DT charges competitors higher fees for local loop access than it charges its end users."

An EU spokesman said the German telecoms group would have to reduce its charges immediately and that the Commission would review in two months whether it had complied.