In a significant telecommunications judgment handed down today (9th July), the Supreme Court has upheld BT’s termination charges for 0800, 0845 and 0870 calls. The judgment makes findings in relation to Ofcom’s approach to disputes over charges introduced under contractual terms – under a contract known as the Standard Interconnect Agreement or SIA- and the scope of Ofcom’s obligations under the EU Common Regulatory Framework Directives as regards interconnection pricing. The Supreme Court judgment also comments on the role of the Court of Appeal following findings of fact by the Competition Appeal Tribunal in an appeal on the merits from Ofcom’s decisions.
BT charged mobile network operators a rate which varied according to the amount which the operators charged the caller. The higher the charges to the caller, the greater the termination charge. Ofcom examined the charges and concluded that it was impossible to know whether or not they would lead to net benefits or net harm to consumers. It rejected them because it gave greater weight to the risk of an overall adverse effect. The Competition Appeal Tribunal overturned Ofcom’s decision, but the Court of Appeal restored it. The Supreme Court has now allowed BT’s appeal against the Court of Appeal’s judgment.
BT introduced the charges under Clause 12 of the SIA. The Supreme Court found that BT’s contractual rights were significant and that BT had no contractual right to require a price variation which was not consistent with objectives set out in Article 8 of the EU Framework Directive. Ofcom’s function therefore was to determine whether or not BT’s proposed charges exceeded the limits of its contractual discretion. The Supreme Court held that Ofcom had not made such a finding; although Ofcom’s view was that they might have adverse consequences for consumers, this was reached in the absence of any reason to think that they would do so. This was insufficient for Ofcom to conclude that BT had exceeded the limits of its contractual discretion. BT did not have to demonstrate positively that there was consumer benefit in order to be able to introduce its proposed charges and BT was entitled to introduce its prices under the SIA.
The Supreme Court also found that Ofcom’s approach involved applying an extreme form of precautionary principle at odds with the Directives’ market-oriented and essentially permissive approach. It held that the whole scheme of the Directives is to leave the arrangements for interconnection to the parties unless there are grounds for regulatory intervention.
In addition, the Supreme Court considered that Competition Appeal Tribunal had been entitled to make their factual judgment that restricting the price changes would have anti-competitive effects and to decide the weight to be attached to that factor. That was not open to rejection on appeal since appeals to the Court of Appeal from the Competition Appeal Tribunal lie only on points of law.
The judgment is here.
Sarah Lee appeared on behalf of BT in the Supreme Court and also in the CAT and Court of Appeal below.
Robert O’Donoghue appeared on behalf of Telefonica O2, the first Respondent, in the Supreme Court and also in the CAT and Court of Appeal below.
Sarah Love appeared on behalf of Gamma Telecom Holdings Ltd., which intervened in support of BT’s appeal in the Supreme Court.