The High Court has set aside part of ComReg’s price control decision for Vodafone, finding that the regulator could not use an average of mobile call termination rates from seven other EU countries as the basis for the Irish price caps.
In a judgment delivered on 14 August 2013, Mr Justice Cooke allowed Vodafone Ireland Limited’s appeal in part. The appeal challenged two ComReg decisions: one identifying Vodafone and other providers as having significant market power in relevant mobile termination markets, and a second setting cost recovery and pricing obligations.
ComReg’s price control decision capped Vodafone’s weighted average mobile termination rate at 2.60 cents per minute from 1 January to 30 June 2013, then set a maximum flat rate of 1.04 cents per minute from 1 July. These are wholesale charges for calls that arrive on a mobile network from another network.
ComReg had not completed its own “Pure BU-LRIC” cost model for Ireland. Instead, it used a simple average of rates set by regulators in seven other member states. Vodafone argued that this approach did not reflect costs and conditions in the Irish market and that the figures could be below the cost of providing the service.
The court held that the regulations required the regulator’s price control to be grounded in an analysis of the operator and market concerned. The court found that the price caps based on the foreign benchmark were outside ComReg’s authority under the regulations. It also considered that the small group of countries and lack of adjustment for differences between markets made the benchmark insufficiently robust. The court said ComReg had wrongly treated Vodafone as bearing the burden of showing that the benchmark rate would be below Irish costs.
The court also set aside the direction requiring providers to set rates according to a Pure-LRIC methodology, because that direction operated alongside a cap that could prevent an operator charging a rate supported by its own cost calculation. The court described the combination as contradictory to a cost-orientation obligation.
The ruling was limited. The court did not decide whether Pure BU-LRIC is compatible with the regulations when applied through a model built for Ireland. It also did not rule on Vodafone’s remaining challenges to ComReg’s market analysis or other aspects of the price control decision, leaving those matters open for any later challenge.
The court said it would hear the parties further before making its order. It indicated that the order would set aside the price control decision instrument only insofar as it required Vodafone to comply with the directions imposing the figures in paragraphs 4.3 and 5.1 of the instrument.