BT is accused of breaking competition law and faces £440m fine

BT accused on infringing competition law after two-year investigation

If the charges are upheld by Ofcom, BT could face a fine of up to 10 per cent of the turnover of its "wholesale calls" product for the period under investigation.

Communications regulator Ofcom has accused British Telecom of infringing competition law and abusing its dominant position to throttle rivals. The Ofcom charges relate to BT's wholesale call products.

BT could be facing a fine of up to £440m after the official watchdog issued a "statement of objections" saying that the telecom giant may have resorted to a "margin squeeze" to "eliminate or weaken" rivals in the UK's highly competitive landline calls market.

Ofcom issued the statement as follow-up to a two-year investigation after complaints from two of BT's smaller rivals, Gamma Telecom and Thus, now a part of Cable and Wireless Worldwide, in August 2008.

The rivals alleged that BT may have deliberately set a low price for renting capacity on its network in a bid to kill off competition.

BT denied that it had applied incorrect pricing to its wholesale calls product between July 2008 and April 2009, but offered full cooperation in the Ofcom investigation.

If the charges are upheld by Ofcom, BT could face a fine of up to 10 per cent of the turnover of its "wholesale calls" product for the period under investigation.