The Competition Authority has issued proceedings against Telecom Eireann for abuse of a dominant position and demanded that the company allow rivals use the copper wire and cable infrastructure entering the Republic's homes and businesses, writes Sean Mac Carthaigh.A spokesman for the authority said the High Court action was being taken to force the "unbundling of the local loop".

The move comes in the context of a consultative process currently being run by a separate regulatory body, the Office of the Director of Telecommunications Regulation (ODTR). The telecommunications regulator, Ms Etain Doyle, is due to report on this process next month.

How the issue is resolved is of central importance to the development of the telecommunications industry in the Republic. One side of the argument calls for all companies to have access to Telecom's copper wires at minimum cost, the other suggests that cheap access to the local loop removes the incentive for building infrastructure and could therefore hinder development.

Sources in the Competition Authority said last night the agency had discussed the unbundling of the local loop issue with the ODTR and that the court proceedings would not have come as a surprise to Ms Doyle.

In March, the Competition Authority wrote to Telecom Eireann, stating that in its view the State-owned firm was in breach of Section 5 of the Competition Act, "abuse of a dominant position".

Telecom Eireann said its position was that it would consider unbundling the local loop only if "a proper cost structure" were agreed.

The business lobby, IBEC, last night criticised the legal move, warning that it was "effectively pre-empting the views of the ODTR".