The European Commission is expected formally to throw out Esat's complaint against Eircom for allegedly abusing its dominant position. A spokesman for Eircom would not comment last night but the Commission will this week say the case has been dropped and no fine will be imposed.
Four years ago, Esat had complained that Eircom, then called Telecom Eireann, had abused its position and had overcharged for access to telephone lines. Telecom had consistently refuted this charge saying it was operating within Irish law, and six months ago reliable sources in Brussels were saying the Commission was unlikely to find against Telecom.
Initially, Eircom was expected to lose the case. The fine was initially proposed at £59 million (€75 million), but was reduced to under £15 million during internal Commission deliberations. This was called into question by the Commission's legal services.
Esat had complained that Telecom had abused its dominant position in the market by refusing, until 1994, to give Esat access to its lines. And when it did, Esat claimed the rates it proposed to charge exceeded by 200 per cent European best practice rates.
In September 1997, the EU published a Statement of Objection on the case in which it accused Telecom of charging too much. This appeared to strengthen Esat's case. But Telecom was given two months to reply to the accusation, which it did.
Although the findings of the Commission were expected they will come as a welcome relief to Eircom shareholders who have seen their shares performing dismally. With Dutch telecoms company KPN and Sweden's state-owned Telia are committed to selling their joint 35 per cent stake in the company, Eircom is at a crossroads.
There have been tentative feelers for the stakes, according to reliable sources. With the move towards consolidation, it is generally accepted that interested telecoms companies will make an offer.
Alternatively there may have to be a secondary share offering.
BT's strong move into the Irish market through the proposed take-over of the Esat group increases the competition. Eircom is one of 13 telecoms groups, however, which have applied to take part in an auction of five high-tech new generation mobile phone licences in Britain, worth more than £2 billion.
Eircom, like the other applicants, had to put up a £50 million refundable deposit. The auction takes place in March.
The licences are expected to be awarded in June. Eircom is bidding through a company it established called 3G (UK).
The licences are expected to cost some £500 million each. But analysts reckon it will cost some £2 billion to set up the necessary infrastructure over 10 years and the first products are expected to be available from 2002.
After making the initial application, Eircom said it would make a final decision on whether to put in a formal bid shortly. But the spokesman said it was the company's "intention to bid".
If it succeeds, it is likely to bring in partners to share the costs.
