A Minnesota administrative law judge ruled Friday that Qwest Communications deliberately violated federal laws to block local telephone competitors.
Qwest could face fines of $50 million if the ruling is upheld by the Minnesota Public Utilities Commission. The ruling could hurt its chances of approval to sell long-distance services in Minnesota.
The ruling by Judge Allan Klein said Qwest violated federal law 25 times through 12 secret agreements that favored some of its telephone competitors over others. The agreements provided the competitors with discounted telephone services, the ruling said.
Klein also said Qwest used the agreements to quell potential dissent in its effort to enter the long-distance market in Minnesota.
“The administrative law judge’s recommendation is wrong,” said Charles Ward, Qwest’s vice president of policy and law. “This is a very unsettled area of federal law, which will ultimately be decided by the Federal Communications Commission, not by a state administrative law judge.”
The Public Utilities Commission has the authority to accept, modify or disregard the judge’s findings, and it can set penalties.
Qwest is also facing investigations from federal authorities on its accounting practices. The Securities and Exchange Commission has been investigating whether the company improperly boosted revenues, and Qwest has said it expects it will have to restate revenues for 2000 and 2001.