Ruling on Eircell competition case expected today

The High Court will deliver judgment today in the longest running competition case in the history of the State. Mr Justice O'Higgins will rule on claims by Meridian Communications that Eircell was seeking to put it out of business to maintain a dominant position in the mobile phone market. Meridian owns the Imagine brand which offers discounted mobile services.

If Meridian prevails, it could open Eircell's network to other firms. This would promote the concept of mobile virtual network operators - firms offering mobile phone services to clients without owning a network - and increase competition.

The virtual operator concept, operating in Britain and expected to be mandated for third generation mobile services, has been vigorously opposed by Esat Digifone and Eircell.

The judgment will have serious financial consequences for the losing party with legal costs running to millions of pounds.

Meridian Communications and its wholly-owned subsidiary Cellular 3 operate the Imagine mobile phone service which has about 20,000 mobile phone customers in the Republic. Imagine supplies these customers by reselling air time, which it buys in bulk from Eircell through a volume discount agreement set almost 40 per cent below normal rates.

The original volume discount deal was signed in 1997. In 1999, Eircell sought to terminate it. Meridian then sued Eircell for damages in the High Court in a case which began in January last year. During the High Court case Eircell gave an undertaking to the Supreme Court that it would not terminate the agreement until the High Court had determined all the issues before it. The court dealt with the allegations in two parts and issued judgments on several issues last April.

Mr Justice O'Higgins dismissed Eircell's argument that Meridian needed a licence to resell mobile airtime. But he also found Eircell was entitled under the agreement to terminate that contract.

He found Meridian had no right to renewal of its air time purchase contract with Eircell when certain essential items such as price and duration were missing. At most, there was an agreement between the parties which was not legally binding, he found.

Tomorrow, Mr Justice O'Higgins, will rule on whether Eircell is in a dominant position in the market and has abused that position in day-to-day dealings with Meridian and whether Eircell breached certain contractual terms with Meridian.

A judgment in Eircell's favour would undermine Imagine's financial position. Eircell could take a case claiming substantial damages for the airtime it sold to Meridian on a discounted rate since the start of the case. Should Meridian prevail, it might pursue an action for damages on the customers it claims it failed to secure because of Eircell's action. The complicated High Court hearing lasted 94 days.