Three claims ComReg decision will put it at competitive disadvantage

Mobile phone network brings High Court case against regulator over auction system

Mobile phone network operator Three Ireland has claimed it will suffer a price disadvantage between €20 million and €40 million against rivals under a new auction system to award spectrum bands for mobile and wireless broadband services.

Three Ireland and Three Ireland Services, both part of the CK Hutchison Holdings multinational conglomerate, have brought High Court proceedings to appeal a December 18th decision, made by telecommunications regulator ComReg, to hold a multi-brand spectrum award which will assign rights across four spectrum bands for the next 20 years.

The decision provides for issuing new rights in the 700 MHz, 2.1 GHz, 2.3 GHz and 2.6 GHz bands, by way of a “combinatorial clock auction” whereby participants bid on generic lots of spectrum rather than individual lots. Three claims this would put it at a competitive disadvantage.

The company wants court orders to set aside certain parts of that decision, on the grounds that ComReg has made significant error or errors of fact and/or law and/or assessment.

Three claims ComReg has failed to establish a plausible distortion of competition, focused on potential harm to Eir, and failed to establish the likelihood of this concern arising or the likelihood of it affecting consumers.

ComReg has also allegedly failed to seek evidence, or adequate evidence, to support its finding that the distortion of competition is substantial and likely to arise.

Unjustified advantage

Three's head of regulatory affairs, Niamh Hodnett, said in an affidavit that while the apparent objective of the auction system is to protect Eir, "in reality it gives an unjustified advantage to Vodafone".

The decision goes beyond what is necessary to protect Eir’s position – something Three does not accept as being a legitimate objective – and would constrain Three’s ability to compete, she said.

The detrimental impact on Three is significant financially and goes beyond what is necessary to secure any legitimate objective of ComReg, she added.

Three has been advised by economic consultants that a “realistic estimate of the price disadvantage Three will suffer” from the auction relative to its rivals is in the region of €20 million to €40 million.

Three applied this week to have the proceedings admitted to the fast-track Commercial Court list.

Mr Justice David Barniville, who was told ComReg sought an early hearing because the decision was important to the Irish telecommunications infrastructure, said he was satisfied the proceedings should be entered to the list.

He has set a date in June for the hearing of the case over five days.

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