MPs have expressed concerns over plans by the German government to restrict competition for high-bandwidth broadband.

According to the Commons European Scrutiny Committee, Germany plans to pass legislation that would allow its dominant telecoms supplier, Deutsche Telekom, a ‘regulatory holiday’ restricting local competition for broadband.

Such a move would affect rivals such as BT seeking to win business in the country.

The German government is justifying the move by saying that Deutsche Telekom should be encouraged to develop new higher-speed VDSL networks to keep up with the US, Japan and Korea.

But former UK minister of state for industry Margaret Hodge says this is against European competition law.

Deutsche Telekom says it could not afford to invest in the new infrastructure without the security of monopoly supply for a few years.

Hodge told the committee that effective regulation of wholesale access to monopoly networks was essential to effective competition, citing BT's Openreach subsidiary, which has led to more investment from competitors, increasing choice and decreasing prices.

’I do not believe, as some EU incumbent operators claim, that competition and investment conflict with each other,’ said Hodge.

‘I will continue to work with the Commission to ensure that the revised regulatory framework (to be negotiated from autumn 2007) continues to build on the remarkable progress of the original framework and does not take us backwards, as freedom from access regulation of monopoly infrastructure would do.’

The committee endorsed Hodge’s approach, and hopes it will be reflected in the Commission's proposals later this year.