Following on from our last ezine, which reported on the High Court's judgment, ComReg has come out fighting and lodged its appeal against the High Court's decision in the case. ComReg had also sought to have the effect of the judgment suspended (ie, stayed) pending its appeal, but was unsuccessful. Given that the waiting list for Supreme Court hearings is roughly two to three years, we might be waiting some time for the final outcome of this saga.
As readers of our previous ezine will have learned, the case centres on ComReg's use of a benchmarking approach (based on practices in seven other EU Member States which employed a bottom up LRIC methodology) to set MTRs for operators designated as having significant market power (SMP) in the market for mobile voice call termination.
Vodafone lodged an appeal against the decision and was successful in so far as the High Court found the use of benchmarking was ultra vires ComReg's powers. The Court's judgment was delivered in August 2013, but the exact wording of the Court Order was not confirmed until 17 October 2013. The terms of the Order confirmed the following:
- Despite arguments from the parties, the Price Control Decision (D12/12) (which imposed a cost orientation obligation) was held to be a single decision addressed to all SMP operators, rather than comprising six different decisions directed at the six different SMP operators. Had the Court found there were six different decisions, it would have been open to the Court to quash Part 4 of "Vodafone's Decision" while leaving in place Part 4 of each of the other operators' decisions. This would have been unattractive for a number of reasons and risked creating an unacceptable level of asymmetry in the market and conferring significant costs advantages on Vodafone.
- Section 4 of the Price Control Decision has been quashed and set aside in full. This has the effect of quashing not only the benchmarking approach which had been found by Cooke J. to be ultra vires ComReg's powers, but also the specific cost orientation obligation based on a pure LRIC standard (although operators remain subject to the general cost orientation obligation contained in section 12.1 of the SMP Decision (D11/12)).
- Vodafone's weighted average MTR should be no more than 2.60c per minute ie, the interim rate previously set by ComReg from 1 January 2013 to 1 July 2013. This represents a significant uplift from the 1.04 cent MTR set out in ComReg's decision.
Although it is clear that Vodafone must now charge a maximum of 2.60 cent per minute, other operators are left with a general obligation of cost orientation. ComReg, in what may be seen as an attempt to gain some balance in the market, issued an Information Notice indicating that "the High Court has clarified that the maximum rate of 2.60 cent per minute referred to in its Order of 17 October 2013 applies from 1 July 2013".
However, this may all be for nothing as the Court has left the door open for further litigation. Although various arguments were made during the course of the hearing as to the legality of the Pure LRIC approach, Cooke J confirmed that he intended to wait until ComReg had built its Pure LRIC cost model before reaching a decision as to the suitability of that cost methodology in the market. Accordingly, it could be back to square one if, when finally ready, operators decide that they do not like the look of ComReg's Pure LRIC model – how this will all sit with the current appeal is anyone's guess at this stage.
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