Court Of Appeal Rules In Favour Of Mobile Phone Operators

On 20 April 2010, the Court of Appeal ruled in favour of four mobile phone operators, Telefónica O2, T-Mobile, Vodafone and Orange in an appeal brought against a judgment of the Competition Appeal Tribunal ("CAT"). The appeals to the Court of Appeal followed directions issued by the CAT to the Office of Communications ("Ofcom") at the conclusion of the mobile call termination appeals. In particular, the mobile operators challenged the CAT's power to direct Ofcom to amend price controls imposed on the operators with retrospective effect.

The issue stems from Ofcom's 2007 market review of mobile call termination, which imposed price controls requiring operators to progressively reduce their charges for terminating calls on their networks over a four year period. This decision was subsequently challenged by BT in the CAT and, following a lengthy inquiry by the Competition Commission, the CAT found that the permitted price controls had been set at too high a level and that Ofcom should have pressed for steeper cuts. In April 2009, the CAT directed that Ofcom reset the price controls at a lower level for the whole of the price control period 2007-2011, notwithstanding the fact that two years had elapsed in the course of the appeals during which time the operators had complied with the prevailing higher rates.

With the difference between the original rates and the new rates potentially amounting to hundreds of millions of pounds, the mobile operators challenged the CAT's judgment, arguing that the CAT had no power to direct Ofcom to impose revised price controls for periods that had elapsed during the appeal as...