That would generally be how competition works. But Eircom have the bulk of the market and are in a position to squash any competition before it even has a chance to take hold. Let's face it they haven't exactly been accomodating to other companies when it comes to broadband roll out. The restrictions on Eircom is to give others a chance to get a foot in the market first, then Eircom can go about competing.
It's a standard practice when you've had a monopoly for so long and have set about introducing competition. I think the BT experiences were that they lost customers to the new companies, but when the restrictions were lifted, they regained a lot of them back.
Eircom have a massive hold on all things telecommunications related, they have huge resources, they have the name and they have the trust element. It isn't an equal footing for competition to begin, so they introduce this restriction on Eircom undercutting competitors.