The High Court has referred a question to the Court of Justice of the European Union in eir’s appeal over ComReg’s refusal to fund the net cost of universal service obligations. The reference concerns how a regulator must assess whether that cost is an unfair burden on a universal service provider.
The appeal challenges five ComReg decisions made on 18 April 2019. They found that the net cost to eir of providing access at fixed locations between 2010–2011 and 2014–2015 was not an unfair burden, and refused eir’s funding applications. Eir brought the statutory appeal on 15 May 2019.
The judgment records that ComReg calculated the five-year net cost at just under €43 million. It relied on reports by economic consultants Oxera, which concluded that the cost had not significantly affected eir’s profitability or its ability to earn a fair return on capital. For 2014–2015, the judgment says, eir’s fixed-line business return on capital employed was 11.4%, compared with a regulated weighted average cost of capital of 8.18%. ComReg concluded that it did not need to assess whether the cost would distort competition.
Eir argued that ComReg should assess the cost in the context of the market and compare eir’s position with that of its competitors. It said that placing the cost on one provider could disadvantage it where rivals also benefited from universal service connections. ComReg argued that the relevant test focused on the provider’s own ability to bear the cost, and that profitability was an appropriate measure.
Vodafone Ireland Limited opposed making a reference, arguing that the proceedings were time-barred. The judge noted that no preliminary hearing had been set to decide that objection and considered it appropriate to seek EU court guidance before a trial on the substance. The Three Ireland interests took a neutral position on whether a reference should be made.
The question sent to the Court of Justice asks whether, under the Universal Service Directive, a national regulator may assess the provider’s ability to bear the cost by looking exclusively at that provider’s characteristics, or must assess its position relative to competitors in the relevant market.
This is a preliminary reference, not a decision on the appeal. The High Court did not resolve the time-bar objection, decide whether ComReg’s decisions were lawful, or determine whether eir is entitled to funding. The judge gave all parties liberty to apply.