Wednesday, 9 June 2010

Mobile phone bills without shocking factor (II)

The Roaming Regulation is valid. In its judgment of 8 June 2010, the CJEU determined that the adoption of the Regulation was justified on the basis of Article 95 EC (now: Article 114 TFEU) in order to protect the proper functioning of the Internal Market.

The Roaming Regulation puts a limit on the amount of roaming charges that mobile phone operators may charge consumers when they make phone calls outside their own network. Moreover, it imposes a ceiling for wholesale roaming charges, i.e. the price the consumer’s network pays to the foreign network the consumer uses when travelling abroad (see also an earlier post on this blog about the amendment of this Regulation).

Good news for consumers, but not for mobile phone operators. Four of the main European operators (Vodafone, Telefónica O2, T-Mobile and Orange) challenged the validity of the Regulation before the High Court of Justice of England and Wales. That Court sent a preliminary question to the Luxembourg Court concerning the validity of the legal basis of the Regulation and its compliance with the principles of proportionality and subsidiarity.

According to the CJEU, Internal Market interests justified EU intervention in the regulation of roaming charges, given the high level of retail prices at the time the Regulation was adopted, and the likelihood that Member States would adopt diverging measures in order to lower these charges. Therefore:

‘As regards the functioning of the roaming market (…) and taking into consideration the considerable interdependence of retail and wholesale charges for roaming services, it is clear that a divergent development of national laws seeking to lower retail charges only, without affecting the level of costs for the wholesale provision of Community-wide roaming services, would have been liable to cause significant distortions of competition and to disrupt the orderly functioning of the Community-wide roaming market, as is clear from recital 14 in the preamble to Regulation No 717/2007. Such a situation justified the Community legislature’s seeking to protect the proper functioning of the internal market (…).’ (para. 47 of the Court’s judgment)

This conclusion seems to follow the line of the opinion of Advocate-General Maduro, who analysed the risk of different price control measures in the absence of Community legislation and suggested that ‘it would be possible to justify Community intervention under Article 95 on the fact that national rules did not prevent the discriminatory treatment of cross-border mobile communications’ (para. 24).

Concerning the proportionality of the Regulation, the CJEU finds that maximum retail charges could be considered appropriate and necessary for the protection of consumers against high levels of roaming charges. I cite from the Court’s judgment (paras. 68 and 69):

‘In those circumstances, and particularly in the light of the broad discretion which the Community legislature has in the area at issue, which involves choices to be made of an economic nature, requiring complex assessments and evaluations, it could legitimately take the view that regulation of the wholesale market alone would not achieve the same result as regulation such as that at issue, which covers at the same time the wholesale market and the retail market, and that the latter was therefore necessary.

Finally, in the light of the importance of the objective of consumer protection within the context of Article 95(3) EC, intervention that is limited in time in a market that is subject to competition, which makes it possible, in the immediate future, to protect consumers against excessive prices, such as that at issue, even if it might have negative economic consequences for certain operators, is proportionate to the aim pursued.’

As regards the compliance of the Regulation with the principle of subsidiarity, the CJEU determines that given the interdependence of retail and wholesale charges, the Community legislature could legitimately take the view that a common approach at Community level was necessary to ensure the smooth functioning of the Internal Market, thus allowing operators to act within a single coherent regulatory framework (para. 77).

In sum, this leads to a reassuring conclusion for all EU consumers who will be roaming through other Member States in the coming (holiday) months.

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