Judgment (Core issues)

Neutral citation:

[2008] CAT 12

Published:

20 May 2008

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Summary:

Judgment on an appeal by a number of communications providers under section 192 of the Communications Act 2003 against several determinations by OFCOM to resolve disputes about wholesale charges for mobile call termination.

The Tribunal found that OFCOM had made a number of errors of law in the way it went about determining the disputes. Accordingly, the Tribunal held that the four appeals were well founded in so far as they related to certain issues in the appeals, referred to as the “core issues”.

In particular the Tribunal found that OFCOM must approach dispute resolution having regard to all its statutory obligations and not focus unduly on the existence of other regulatory constraints imposed on one or other of the parties to the dispute, such as BT’s end-to-end connectivity obligation.

The Tribunal also found that OFCOM erred in drawing too rigid a boundary between the exercise of its dispute resolution powers and its SMP-related powers. The Tribunal held that OFCOM had erred in rejecting any form of cost based analysis of the reasonableness of the price comparison.

The Tribunal held that OFCOM had placed too much weight on the need for consistency and erred in relying on the conclusions in its statement dated 1 June 2004 on Wholesale Mobile Call Termination without properly weighing the factors which the appellants argued meant that these conclusions were no longer valid.

The Tribunal held that OFCOM’s interpretation of the purpose of the end-to-end connectivity obligation was too narrow. The purpose of that obligation was not just to achieve interconnection, but to do so in a manner which promotes, or at least is not inconsistent with, other regulatory objectives.

Furthermore, the Tribunal concluded that the “gains from trade test” applied by OFCOM was seriously flawed and should not have been used in resolving the disputes. It was not an appropriate test for determining what was reasonable as between the parties or from OFCOM’s perspective as a regulator.

The Tribunal provided guidance on how OFCOM should approach the task of resolving disputes in future.

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.