Smart Telecom yesterday opened its High court challenge of the decision by the Commission for Communications Regulation not to grant the company a third generation mobile phone licence. It is claimed ComReg acted unfairly towards Smart.
The action follows ComReg's decision last February not to award the licence to Smart Mobile because of what the Commission claimed was a failure by Smart to provide, in a form acceptable to ComReg and within the specified deadline, a €100 million performance guarantee bond.
Smart Telecom was the successful tenderer for one of the lucrative 3G mobile telecommunciations B licences which was awarded after a public tendering process in November 2005. ComReg said it would grant the licence to Smart Mobile if Smart fulfilled certain conditions.
Smart began legal poceedings after ComReg stated on February 13th, 2006 it was not granting the licence to Smart because of its alleged failure to meet the terms of the tender process.
Smart was told on November 16th, 2005 it had won the bid for the licence. Smart Mobile was required to provide a cheque or bank draft for €44 million, the first annual spectrum fee of €1.1 million for the 3G spectrum, a guarantee payable on demand of €7.6 million and a performance guarantee bond for €100 million.
These payments were sought as financial guarantees to underpin the rollout and coverage obligations. A further €12 million was sought for the GSM spectrum fee.
Smart says it complied with the conditions and furnished three separate performance guarantee bonds for €100 million for consideration and approval by ComReg. On that basis, it claimed ComReg was obliged from January 30th, 2006 to grant the 3G licence to Smart.
Smart claims that ComReg informed it that the draft performance guarantee bonds were not acceptable and the deadline of 5 p.m. on January 30th, 2006 was absolute.
Smart contends that, in emails, ComReg raised a number of amendents on January 28th and January 29th, 2006 in relation to the draft bonds and sought to impose significant additional requirements on Smart.
ComReg denies the claims and denies it acted unfairly or disproportionately.
Opening the case before Mr Justice Peter Kelly yesterday, Michael Cush SC, for Smart, said one of the objectives of the competition for the licence was to promote competition in the mobile telephone market.
Smart Telecom was the winner of the competition and ComReg had an obligation to negotiate with Smart with a view to issuing the licence, he said. Smart had a right to negotiate with that end in view.
However, ComReg failed to fulfull its obligations and interfered with Smart Telecom's rights in an unfair and disproprotionate manner, counsel argued.
Mr Cush said ComReg had stipulated that, in the event of the licensee failing to meet performance targets, an amount in performance guarantee bond would be payable to the regulator. A programme to measure performance targets and compliance was to be put in place and this had to be negotiated and concluded prior to the issue of the licence.
The licence could not be issued until that negotiation had concluded and it had not concluded, Mr Cush said. ComReg had lost sight of that fundamental requirement.
In the action, expected to last six days, Smart Mobile is seeking a declaration that there exists a "concluded contract" between Smart and ComReg for the awarding of the licence.
Alternatively, Smart wants a declaration that, having selected Smart as the successful tenderer for the 3G licence, ComReg was and is obliged to give Smart a reasonable period of time to comply with the terms and conditions additional to those set out in the tender document.
