CAT Judgement on mobile termination rates

On 3 May 2012, the Competition Appeal Tribunal (CAT) handed down its Judgement in relation to the appeal brought by British Telecommunications Plc (BT), Vodafone Ltd, Hutchinson 3G UK Ltd and Everything Everywhere Ltd (EE) in respect of Ofcom’s 2011 decision on the wholesale mobile call termination rates (MTRs) charge control. This follows the CAT’s referral to the Competition Commission (CC) on 30 June 2011 on a number of questions related to the appeals and the CC’s determination in this regard on 14 February 2012, which found, amongst other things, that Ofcom did not err in adopting a pure LRIC cost standard for the setting of the charges. The CC also considered that Ofcom should have adopted a three-year glide path to pure LRIC instead of a four-year one.

Vodafone and EE raised judicial review challenges against aspects of the CC’s Determination. For example, EE claimed in its first ground of appeal that the CC was faced with a lack of satisfactory evidence to resolve the question of whether LRIC or LRIC+ was the appropriate cost standard and that it had not dealt with this lack of evidence appropriately. In relation to the duration of the glide path, EE argued that the CC erred in making its decision as the CC had failed to take into account the potential adverse effects on mobile customers.

After reviewing the CC’s Determination, the CAT concluded that no part of the Determination should be set aside on judicial review grounds, dismissing the challenges brought forward by EE and Vodafone. In particular, in relation to the CC’s Determination on the appropriateness of the pure LRIC cost standard, the CAT concluded that the CC was sufficiently detailed and thorough and that EE’s criticism of the failure to seek further evidence was unfounded given the CC’s duties. In particular, the CAT noted that it was not incumbent on the CC to produce evidence itself and that the CC was obliged to determine on the matter.

In relation to the CC’s determination that the glide path should be three years instead of four, the CAT noted that the question was one of judgement and that the Determination was not susceptible to a challenge on judicial review grounds.

In light of its conclusions, the CAT has proposed to remit the Statement to Ofcom with the direction that it is implemented, as corrected by the Determination.

DotEcon provided expert economic advice and testimony in support of BT’s appeal and in its intervention in support of Ofcom’s decision to adopt a pure LRIC cost standard. In particular, DotEcon supported BT in relation to its appeal of Ofcom’s decision to adopt a four-year instead of a three-year glide path. The CAT’s Judgement can be found here.

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