On 6 March 2013, the UK’s Court of Appeal (CoA) passed its judgment on Everything Everywhere’s (EE) appeal of the Competition Appeal Tribunal’s (CAT) ruling in relation to wholesale mobile termination rates (MTR). The CoA rejected EE’s grounds of appeal.
This follows the EE and Vodafone challenge in March 2012 of the Competition Commission’s (CC) determination on the appeals brought by the mobile operators on Ofcom’s 2011 decision to regulate MTRs based on a pure LRIC cost standard. The CC’s determination on 14 February 2012 found that, amongst other things, Ofcom did not err in adopting a pure LRIC cost standard for the setting of wholesale MTRs. EE and Vodafone claimed that the CC’s determination should be set-aside on judicial review principles. On 3 May 2012 the CAT rejected EE and Vodafone’s challenges and upheld the CC’s conclusion (for more information see our news item).
EE appealed the CAT’s rejection of its and Vodafone’s appeals to the CoA. EE claimed that it had found a judicially reviewable error in the CC’s determination that arose from the CC’s recognition that it did not have reliable evidence on likely customer responses to price increases that would result from a move to a pure LRIC standard. According to EE, the CC was in no position to make a choice between pure LRIC and LRIC plus without this key information and thus should have referred the matter back to Ofcom to obtain the necessary evidence.
Whilst the CoA accepted the premise on which EE’s main ground of appeal was based, it considered that the real question in this appeal was whether the CC felt it had lacked key evidence that was determinative to the choice between pure LRIC and LRIC plus. The CoA concluded that the CC did not regard the evidence presented as insufficient to make a choice. Indeed, the CC was able to reach a conclusion. In the CoA’s view, the CC had demonstrated that although customer responses to price increases was a key issue, it was by no means determinative to the question of allocative efficiency and thus was not determinative to the choice between LRIC and LRIC plus.
DotEcon has provided expert economic advice and testimony in support of BT, as part of its intervention in support of Ofcom’s decision to adopt a pure LRIC cost standard.