The High Court dismissed Smart Mobile Limited’s challenge to ComReg’s decision not to award it a 3G mobile licence, finding that the company failed to provide acceptable performance bonds by the extended deadline.
Smart had won a competition for the remaining 3G mobile telecommunications B licence in November 2005. Its bid included a voluntary commitment to provide €100 million in performance guarantees, secured by a bond payable on demand. ComReg’s offer required the bond to be in a form acceptable to the regulator before the licence could issue.
ComReg initially set a 30-day deadline, then extended it by 45 days to 30 January 2006. The judgment records that Smart was repeatedly reminded of the deadline and that ComReg asked for draft bonds in advance so that any problems could be addressed. Smart did not provide drafts until 27 January.
The drafts proposed bonds backed by Huawei, BT and Smart. ComReg objected that they were conditional, including provisions that could limit payment if Smart became insolvent or its licence was revoked. The court found the drafts differed substantially from ComReg’s template and were not unconditional, on-demand bonds. No executed bonds were delivered by the 5pm deadline on 30 January. The judgment also found that the draft bonds had not received formal bank approval.
After the deadline, ComReg met Smart and considered whether to allow more time. The court found that Smart did not provide bonds or give ComReg a satisfactory assurance that it could produce acceptable ones within a reasonable period. ComReg’s commissioners decided that the tender process required them to treat the offer as at an end. A letter dated 13 February 2006 notified Smart that it would not receive the licence.
Smart pursued a limited public-law claim, seeking a declaration that ComReg could not end negotiations until it had given Smart a reasonable period to meet the bond requirements or propose alternatives. It had abandoned its private-law claims, including its claim for specific performance, during the trial.
Mr Justice Kelly found that ComReg acted lawfully and reasonably, and that Smart had no entitlement to further time. He declined the declaration sought and dismissed the action. The court did not decide whether ComReg should award the licence to another applicant; that decision remained for ComReg.