EU mobile roaming caps legal and fair, says court

The EU-wide mobile roaming charge cap imposed by the European Commission is legal, the European Court of Justice has ruled. The cap cut average prices by more than half for European mobile subscribers roaming within the EU, but was opposed by a consortium of UK network operators.

Orange, T-Mobile, Vodafone and O2 had complained to the High Court over the UK's adoption of the roaming caps in 2007. The case escalated and the ECJ ruled on Tuesday that the Commission had been right to mandate the caps across Europe. The ECJ said piecemeal national laws addressing the problem "would have been liable to cause significant distortions of competition and to disrupt the orderly functioning of the (European) Community-wide roaming market".

Before the telecoms commissioner at the time, Viviane Reding, imposed the caps, the average retail charge for a roaming call was €1.15 (96p) per minute. As the ECJ pointed out in its judgement on Tuesday, this was "more than five times higher than the actual cost of providing the wholesale service".

The restrictions on pricing have been implemented in annual steps, which will culminate on 1 July in a €0.39-per-minute limit on the cost of making calls, and a €0.15-per-minute limit on the cost of receiving calls.

As the ECJ put it, Reding introduced the so-called 'Eurotariff' caps in order to "ensure that retail charges for Community-wide roaming services provide a more reasonable reflection of the underlying costs involved in the provision of those services than has been the case".

The operators had also contended that it was disproportionate to force them to tell their customers precisely what they were being charged for making or receiving calls or text messages while abroad. The ECJ disagreed, noting that the obligation to share this information "reinforces the effectiveness of the regulation of retail charges and is therefore justified by the objective of consumer protection".

The Commission welcomed the ruling in a Tuesday statement. It noted that the caps had only followed a failed attempt to "avoid the need for regulation by calling on operators to voluntarily reduce prices to a reasonable level".

"Today's court ruling is significant because it confirms the Commission's view that legislation of this type was necessary and that the EU was entitled to impose limits on the prices charged by mobile operators for roaming calls in the interest of the EU's single market," the Commission said.

Vodafone had also tried to argue that retail pricing caps were anti-competitive, because they caused operators to all charge the same amount for roaming services.

In his October 2009 advice to the ECJ, court advocate general Miguel Poiares Maduro noted that this clustering of prices was less evidence of the Commission stifling price competition, and more "evidence of the absence of price competition in relation to roaming, supporting the conclusion that the previous higher prices would have remained in place were it not for the legislator intervention".