International Roaming
Vodafone, Telefonica lose challenge to EU roaming cap
Vodafone Group Plc, Telefonica SA's O2 and other mobile-phone companies lost a challenge at the European Union's highest court to legislation that forced them to cut international roaming rates.
The EU authorities had the right to impose EU-wide caps on the prices charged by mobile-phone operators for roaming calls to allow for a "smooth functioning" of the market, the European Court of Justice in Luxembourg said today.
The legislation was proportionate "even if it might have negative consequences for certain operators" because it was designed to protect consumers and limited to a fixed time period, a 13-judge panel of the court ruled.
Companies, including Deutsche Telekom AG's T-Mobile unit and France Telecom SA's Orange, challenged the EU law that capped the rates they can charge customers for calls made while abroad. The regulation, adopted in June 2007, cut into annual revenue from international roaming fees, which amounted to 8.5 billion euros ($10.2 billion) in 2006, according to the EU.
The EU rules capped rates for making mobile-phone calls abroad at 49 euro cents a minute and for receiving calls at 24 euro cents. Charges have decreased further since then. Additional legislation adopted last year also regulated the price of text messages and data roaming.
Lower Prices
"Vodafone's roaming prices are already below those set by regulators so today's decision will not have an effect on what our customers pay today," company spokesman Simon Gordon said by telephone.
Telefonica spokesman Simon Lloyd declined to immediately comment.
A win for the companies would have allowed them to more freely set rates. It would also have undermined the legal basis for additional price caps adopted last year for sending mobile- phone text messages from abroad.
The Brussels-based European Commission, which first proposed the roaming price cap in 2006, welcomed today's ruling, spokesman Jonathan Todd said.
The mobile-phone companies contended that the phone rules were set up by the EU using an invalid legal basis -- the part of the bloc's founding treaties that justify legislation. They said the legal basis for the regulation wasn't appropriate because it is typically applied to harmonize divergent national rules or to minimize the risk of discordant regula
The commission, the 27-nation EU's executive agency, has said it will review the rules before they expire in 2012. The agency is scheduled to submit a report on market developments to EU lawmakers this month.
The High Court in London referred the case to the EU court in February 2008 to weigh the law's validity.
The case is C-58/08, Vodafone Ltd. v. Secretary of State for Business, Enterprise and Regulatory Reform.
(Published by Bloomberg – June 8, 2010)