Mobile phone No.1 seeking 500 million in compensation

While the European Commission launched a plan on Wednesday to slash the cost of using mobile phones abroad, targeting what it sees as excessive prices, Mobile phone giant Vodafone is seeking more than 500 million euros in damages from Italy's biggest phone group for alleged abuse of its dominant market position .

Vodafone Group, the world's largest mobile phone company, has filed a suit with a Milan court claiming 525 million euros in compensation from Telecom Italia .

The UK company accuses the former state monopoly of "illicitly exploiting its position on the fixed line market to strengthen its position on the connected mobile market to the damage of competitors".

According to Vodafone, Telecom's 2005 buyout of its mobile phone division TIM is at the root of the alleged market distortion .

Vodafone says Telecom, which controls 80% of the land-line market, monitors its own customers so it can tell which ones are using rival firms for mobile services .

It accuses it of then using this profiling information to create targeted discount deals - particularly for families - so that Telecom clients find it cheaper to use TIM as well .

Vodafone noted that up until the Telecom-TIM merger in mid-2005, TIM was losing tens of thousands of clients to its competitors every quarter .

It said that since the link-up, TIM had consistently gained more customers .

It said that from June 2005-March 2006, some 3.5 million new clients signed up with TIM .

Vodafone has also filed complaints with Italy's Anti-trust Authority and the country's privacy watchdog .

Telecom Italia, meanwhile, denies the accusations .

In an interview with financial daily Il Sole 24 Ore last month, the phone group said that "there is no crossover of information between our two divisions and there are very efficient controls to prevent such violations" .

"The complete separation (of Telecom and TIM) is guaranteed by the most advanced systems in Europe and is certified every year by external inspectors," Telecom told the Milan daily .