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Roaming caps legal, advises EU advocate general

The EC's imposition of roaming caps on Vodafone and other mobile operators did not stifle competition, according to the European Court of Justice's advocate general
Written by David Meyer, Contributor

A legal challenge to roaming caps imposed on operators by the European Commission is likely to fail, the European Court of Justice's advocate general has advised, citing inexplicable profit margins before the caps were introduced.

Miguel Poiares Maduro's opinion was published on Thursday, in the course of a legal challenge to the roaming caps that was brought in the UK High Court by Vodafone and fellow operators T-Mobile, O2 and Orange. The Commission imposed voice roaming caps in 2007, followed by text and data roaming caps in July this year.

Vodafone and the other operators argue that the Commission did not have the right to impose the caps under European competition law, and have claimed that the mobile roaming market was competitive before the caps were imposed.

The court's final judgement will come out later this year or early next year.

Poiares Maduro advised that the roaming caps were necessary to remove "restrictions to free movement arising from the behaviour of private parties which disfavours cross-border economic activity".

"The differences in price between calls made within one's own member state and those made while roaming can reasonably be regarded as discouraging the use of cross-border services such as roaming," Poiares Maduro wrote. "There is perhaps no clearer cross-border economic activity in the mobile telecommunications sector than roaming itself."

Poiares Maduro noted that, before voice roaming caps were imposed, operators had been making retail profit margins of more than 200 percent for calls made while roaming, and of close to 300 or 400 percent for calls received while roaming. "Prices varied widely in ways that could not be explained by underlying costs," he added.

In addition, the advocate general questioned the logic of Vodafone's claim that the caps had "stifled competition".

"Vodafone also noted that, following the enactment of the regulation, prices for roaming services had clustered around the maximum limit and asserted that this was evidence that the regulation had stifled price competition in this area," Poiares Maduro wrote.

"However, the clustering of prices in this manner could equally be regarded as 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."

A spokesperson for Vodafone told ZDNet UK on Friday that the operators' case was "not about retail roaming prices", but was rather "about clarifying the legal principles for regulatory intervention in the first place".

The spokesperson added: "Our challenge initially was to clarify the powers of the European Union to implement regulation on what we believe was a competitive marketplace. We are not looking to reverse the decision. Prices will continue to come down — there is no appetite to put prices up."

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