The European Union Commission Thursday said it would launch a formal in-depth investigation into roaming prices charged in Germany by Vodafone Group PLC (VOD) and T-Mobile International AG (TMO.YY).
The regulators can impose fines of up to 10% of annual turnover if they find the two mobile phone companies guilty of abusing their dominant positions in the German cell phone market to set excessive prices for roaming, a service provided to cell phone users outside their home country.
In practice the levies are a fraction of the 10% limit.
The Commission said its aim was “to ensure that European consumers are not overcharged when they use their mobile phones on their travels throughout the E.U.”
E.U. officials in Brussels have been investigating T-Mobile and Vodafone since 2001.
Since the 1990s, mobile phone companies have charged higher prices for roaming than for conventional phone calls.
The E.U. Commission has been cracking down. In July it issued a threat to Vodafone and MmO2 PLC (OOM) about roaming rates in the U.K.
The problem, said E.U. spokesman Jonathan Todd, is that these companies have been overbilling foreign phone companies whose customers “roam” in Germany and the U.K.
Todd said the Commission had looked at other countries but “we established that Germany and England had the highest prices”.
E.U. competition commissioner Neelie Kroes had to absent herself from the case because she once served on the board of 02. Commission president Jose Manuel Barroso handled the case. It’s the third time Kroes has had to step down because of a conflict of interest.
Todd said that resolution of the Germany and U.K. investigations were “months away.”
As Dow Jones Newswires reported earlier this week, Vodafone has already promised the E.U. it will cut roaming charges throughout Europe this summer, according to an E.U. official who declined to be named.
When the new charges are applied, Vodafone clients will pay a flat fee for roaming calls, which will be much lower than the current charge of EUR0.89 a minute within the E.U., the official said.
Vodafone spokesman Jens Kuerten declined to comment, only saying that the company will talk about fees when it is ready.