No obligation to supply air time to unlicensed mobile telephone service operators

Meridian Communications Limited and Cellular Three Telecommunications Limited (plaintiffs) v Eircell Limited (defendant).

Telecommunications - Contract - Competition - Abuse of a dominant position - Interlocutory injunction - Volume discount agreement - Supply of air time - Licence to operate mobile telephone network - Postal and Telecommunications Services Act 1983.

The High Court (before Miss Justice Carroll); judgment delivered 20 July 1999.

THE plaintiffs were not licensed under section 111 of the Postal and Telecommunications Services Act 1983 to provide a mobile personal communications service. The defendant was only entitled to make air time available for resale to a licensed service operator. The court would not oblige the defendant to supply air time to the plaintiffs. Notwithstanding these considerations Miss Justice Carroll accepted undertakings from the defendant that it would honour the volume discount agreement it had entered into with the plaintiffs until termination of the said agreement, that being the end of December 1999.

John Gordon SC, Richard Nesbitt SC and Brian Cregan BL for the plaintiffs; Paul Sreenan SC and Michael Collins BL for the defendant.

Miss Justice Carroll outlined the facts of the case. Meridian Communications Limited and its subsidiary Cellular Three Telecommunications Limited (the plaintiffs) applied for an injunction to require Eircell Limited (the defendant) to continue to supply air time to them both during and after the present volume discount agreement ("the VDA") expired. The defendant had entered into a contract solely with the first plaintiff (Meridian) in 1997. In 1998 this contract was successfully renewed for a further 12 months. The plaintiffs had thus the benefit of a discount agreement in relation to air time supplied to them by the defendant. The plaintiffs were then in a position to have private mobile lines transferred to them, become responsible for payment of those lines at a discount and then bill the customers in question passing on a portion of the discount to those customers. The plaintiffs argued that they were in fact purchasing air time and then reselling it on. However Miss Justice Carroll felt that a more accurate description would be that the plaintiffs had the benefit of a discount agreement, a portion of which was then passed on.

The defendant claimed that it had been unaware that the plaintiffs had in fact decided to expand into the market of offering a portion of their discount to customers. In any event by January 1999 the defendant became aware that a number of its own customers had transferred to the plaintiffs. The defendant took objection to this which culminated in informing people that it would not renew the relevant VDA.

It was common case that the earliest date of termination of the present VDA between the parties was 31 December 1999. The plaintiffs claimed in these proceedings that there were a number of issues to be tried. Principal among these were: (1) whether the plaintiffs had a contractual right to renew the agreement; (2) whether the defendant was estopped from refusing to renew the agreement; (3) whether the actions of the defendant amounted to an abuse of a dominant position; and (4) whether the defendant had been guilty of behaviour amounting to breach of contract, injurious falsehood and intentional interference with economic interest.

The plaintiffs further claimed that damages would not be an adequate remedy in the event that the Court declined to grant the relief sought. The plaintiffs claimed that if it were to lose the discounted air time this would mean the end of their business and also of any opportunity they may have had in the emerging deregulated telecommunications market. In response to these arguments Miss Justice Carroll considered the statutory framework behind the mobile telecommunications market. Section 111 of Postal and Telecommunications Services Act 1983 provided that a licence is required to operate a mobile telephone service. This section, as amended, is set out in Schedule 1 of the European Communities (Telecommunications Licences) regulations 1998, SI No 96 of 1998. The defendant was licensed to operate such a network. The plaintiffs claimed that they were a "virtual mobile phone operator" in that they did not have their own network but simply had access to the defendant's and thus did not require a licence to do this. In this regard Miss Justice Carroll also looked at the terms of the licence itself which had been granted to the defendant.

The defendant, on its own behalf, claimed that it was not in a dominant position and had no power to act independently of its own competitors. If a dominant position did exist it had not abused this position. Furthermore the defendant asserted that it would not continue to supply air time on a basis which discriminated in favour of the plaintiffs. The court should not grant an injunction forcing it to do business with the plaintiffs.

Miss Justice Carroll considered that indeed there were serious issues to be tried particularly in view of the fact that the matter took five days at hearing. Miss Justice Carroll also accepted the plaintiffs' arguments that damages would not be an adequate remedy should they be refused an injunction. Miss Justice Carroll stated that she had treated the question of the legality of the plaintiffs' action as part of the balance of convenience rather than as an ad limine issue. In the light of the foregoing Miss Justice Carroll held that the plaintiffs were not licensed under section 111 of the 1983 Act to provide a mobile personal communications service and that the defendant was only entitled to make air time available to licensed operators. Furthermore Miss Justice Carroll held that the fact that the defendant's licence could be revoked for failure to abide by its conditions would be grounds enough to preclude the court from making such an order sought by the plaintiffs. Miss Justice Carroll referred in passing to the cases of Pesca Valentia Limited v Minister for Fisheries and Forestry [1985] IR 193 and Carrigaline Community Television v Minister for Transport [1994] 2 IR 359 which had been cited by the plaintiffs in support of their case. Miss Justice Carroll held that the principles outlined in these cases had no application here.

Miss Justice Carroll so held in refusing to grant the relief sought by the plaintiffs. She did however allow the defendant to give an undertaking to the court that it would honour the agreement it had made with the plaintiffs up until the 31 of December 1999. She held that such an undertaking would suffice to meet the requirements of the situation.

Solicitors: Dominic Dowling (Dublin) for the plaintiffs; Arthur Cox (Dublin) for the defendant.