Esat Telecom may appeal the expected decision by the European Commission not to uphold Esat's complaint against Telecom Eireann for allegedly abusing its dominant position. It had been widely expected that the Commission would impose a multi-million pound fine on Telecom.

Informed sources said last night that Esat was taken aback by the disclosure that the Commission is unlikely to find against Telecom. The Irish company had previously been given indications by the Commission that the complaint would be upheld and a fine imposed.

Both Esat and Telecom refused to comment on a report in yesterday's Irish Times that a formal decision not to proceed with the fine will be taken and announced by Competition Commissioner Mr Karel Van Miert within weeks. Some sources said yesterday it should be announced by mid-July.

Three years ago Esat complained that Telecom had abused its position and had overcharged it for access to telephone lines. Telecom had resolutely defended its position. It had been expected that Telecom would lose the case but in recent months the issue had become more uncertain. Esat is said to be extremely angry about the decision.

It is open to the company to bring a legal action on the matter to the European courts. Telecom had indicated that it would pursue the issue legally if the Commission found against it.

The fine, which was initially proposed at £59 million, but was reduced to under £12 million during internal Commission deliberations, has been called into question by the Commission's legal services.

Esat had complained that Telecom had abused its dominant position in the market by refusing until 1994 to give it access to its lines. Then, when it did, Esat claimed that the rates it proposed to charge were 200 per cent in excess of the upper limit of European best practice rates.

In September 1997 the EU published a Statement of Objection on the case in which it accused Telecom of charging Esat and other operators too much for handling their calls. The statement appeared to strengthen Esat's case, although Telecom was given two months to reply to the accusations, which it did.

Observers last night offered differing perspectives on the issue. One source asked if Esat did not have a good legal case then why had it taken so long to arrive at a decision? Another said as time went on, it became apparent that Esat's arguments were not as clear-cut as had been first thought.