ESAT confirmed last night that the European Commission had rejected its complaint against its rival, Eircom, and said it was considering an appeal. Company sources said they believed there had been "intervention at the highest levels" to ensure the outcome.

Eircom said the decision represented "a resounding victory" and that the judgment was rooted in law, not political influence.

Esat was initially expected to win the judgment, which centred on whether Eircom overcharged for carrying Esat's telephone traffic. In September 1997, the EU published a Statement of Objection on the case in which it accused Eircom - Telecom Eireann at the time - of charging too much.

In a statement, Esat said it was "perplexed" by the decision and was seeking advice from its lawyers on a possible appeal to the European Court of First Instance.