Comreg to send observers into Eir as part of €12m peace deal

Eir agrees to allow committee of outsiders to monitor its internal structures for five years

Eir headquarters: new ownership regime under French investor Xavier Neil seeks to repair difficult past dealings with Comreg. Photograph: Alan Betson

Eir headquarters: new ownership regime under French investor Xavier Neil seeks to repair difficult past dealings with Comreg. Photograph: Alan Betson

 

Telecoms regulator Comreg has agreed a wide-ranging peace deal with Eir, the biggest operator in the market, to end a swathe of rancorous legal disputes over issues including how Eir keeps its wholesale division separate from its retail arm.

Under a deal struck on Monday, Eir has agreed to allow an independent committee of outsiders, majority-handpicked by the regulator, to set up camp inside the company to monitor its internal structures.

This is believed to be a first for the Irish telco industry, as Eir’s new ownership regime under French investor Xavier Neil moves to draw a line under its often testy past dealings with the regulator.

Eir has also agreed to pay a €3 million fine to settle enforcement proceedings taken last year by Comreg, following complaints from its rivals who alleged it was not giving them fair access to its wholesale network. The regulator had originally sought a €10 million penalty.

Eir has also agreed to put €9 million in an escrow account, from which Comreg will draw further penalties if the company fails to meet a long list of undertakings it has given, which will be monitored by the independent group.

The genesis of the wider dispute lay in concerns at Comreg over aspects of how Eir gives its retail rivals access to its Openeir wholesale network, which it is obliged to do by law. Its rivals regularly alleged to Comreg that Eir gave its own retail division more favourable access, although the company has disputed these claims.

Wholesale vs retail

Comreg commissioned two reports by consultants KPMG and Cartesian who found “serious concerns” over Eir’s regulatory governance model (RGM), the way it keeps its wholesale and retail arms separate.

In June 2017, Comreg took two legal cases against Eir over related issues, seeking a total of €10 million in fines. A week later, Eir sued the State, disputing the legal basis for the Comreg case.

Those proceedings had remained unresolved until this week’s peace deal, which now also attempts to settle nine other disputes over everything from Eir’s pricing to letting rivals use its telegraph poles to its fibre rollout.

In June of this year, a couple of months after Mr Neil’s regime took control of Eir, both sides asked the High Court for time to reach a peace deal.

The 86-page settlement, signed on Monday by Eir chief executive Carolan Lennon and Comreg’s commissioner Jeremy Godfrey, stipulates that the independent oversight committee will comprise five people and be in place for five years.

Comreg will select three of the members, including the chairman, and Eir will pick the other two. The body will publish an annual report on Eir’s compliance with agreed rules for a so-called “enhanced RGM”. It will advise Eir’s board on actions to take.

Legal proceedings

Eir has agreed to pay the €3 million fine in three tranches every six months, beginning next July. Comreg, meanwhile, has agreed to kill off its legal proceedings by Christmas, while Eir will end its court challenge.

Eir has agreed to strengthen the independence of Openeir’s management, and also to keep all senior staff of Openeir physically separate from other senior Eir people in different offices. In addition, it has signed up to a long list of technical and governance demands designed to maintain Openeir’s independence.

“The commitments given today address the main findings of [the KPMG and Cartesian] reports,” said Mr Godfrey.

“This will enable alternative operators who use Eir’s network to invest with confidence,” he said, before adding that Comreg wants its power to issue fines beefed up by the State.

“While we have significantly enhanced our regulatory governance in recent years, with many of today’s provisions already in place, we appreciate the importance of transparency,” said Ms Lennon, who insisted Eir’s regulatory governance is “robust and effective”.