Neutral citation [2007] CAT 36
IN THE COMPETITION Case Number: 1080/3/3/07
APPEAL TRIBUNAL
Victoria House
Bloomsbury Place
London WC1A 2EB
21 December 2007
Before:
VIVIEN ROSE
(Chairman)
PETER CLAYTON
ARTHUR PRYOR CB
Sitting as a Tribunal in England and Wales
BETWEEN:
ORANGE PERSONAL COMMUNICATIONS SERVICES LIMITED
Appellant
- and -
OFFICE OF COMMUNICATIONS
Respondent
- and -
BRITISH TELECOMMUNICATIONS PLC
HUTCHISON 3G UK LIMITED
VODAFONE LIMITED
T-MOBILE (UK) LIMITED
Interveners
_____________________________________________________________________
JUDGMENT ON THE PRELIMINARY ISSUES
_____________________________________________________________________
APPEARANCES
Miss Marie Demetriou (instructed by Field Fisher Waterhouse) appeared on behalf of
the Appellant.
Mr. Peter Roth QC and Mr. Ben Lask (instructed by the Office of Communications)
appeared for the Respondent.
Mr. Graham Read QC and Miss Anneli Howard (instructed by BT Legal) appeared on
behalf of British Telecommunications plc.
Miss Dinah Rose QC (instructed by Baker & McKenzie) appeared on behalf of
Hutchison 3G (UK) Limited.
I BACKGROUND
"(1) This section applies in the case of a dispute relating to the provision of network access if it is –(a) a dispute between different communications providers;(2) This section also applies in the case of any other dispute if –
….(a) it relates to rights and obligations conferred or imposed by or under [Part 2 of the 2003 Act] or any of the enactments relating to the management of the radio spectrum that are not contained in this Part;(3) Any one or more of the parties to the dispute may refer it to OFCOM.
(b) it is a dispute between different communications providers; and
(c) it is not an excluded dispute.
…
(8) For the purposes of this section –(a) the disputes that relate to the provision of network access include disputes as to the terms and conditions on which it is or may be provided in a particular case; and
(b) the disputes that relate to an obligation include disputes as to the terms or conditions on which any transaction is to be entered into for the purpose of complying with that obligation".
"1. In the event of a dispute arising in connection with obligations arising under this Directive or the Specific Directives between undertakings providing electronic communications networks or services in a Member State, the national regulatory authority concerned shall, at the request of either party, and without prejudice to the provisions of paragraph 2, issue a binding decision to resolve the dispute in the shortest possible time frame and in any case within four months except in exceptional circumstances. The Member State concerned shall require that all parties cooperate fully with the national regulatory authority.2. Member States may make provision for national regulatory authorities to decline to resolve a dispute through binding decision where other mechanisms, including mediation, exist and would better contribute to resolution of the dispute in a timely manner in accordance with the provisions of Article 8. .…
3. In resolving a dispute, the national regulatory authority shall take decisions aimed at achieving the objectives set out in Article 8. Any obligations imposed on an undertaking by the national regulatory authority in resolving a dispute shall respect the provisions of this Directive or the Specific Directives".
"32. In the event of a dispute between undertakings in the same Member State in an area covered by this Directive or the Specific Directives, for example relating to obligations for access and interconnection or to the means of transferring subscriber lists, an aggrieved party that has negotiated in good faith but failed to reach agreement should be able to call on the national regulatory authority to resolve the dispute. National regulatory authorities should be able to impose a solution on the parties. The intervention of a national regulatory authority in the resolution of a dispute between undertakings providing electronic communications networks or services in a Member State should seek to ensure compliance with the obligations arising under this Directive or the Specific Directives".
"With regard to access and interconnection, Member States shall ensure that the national regulatory authority is empowered to intervene at its own initiative where justified or, in the absence of agreement between undertakings, at the request of either of the parties involved, in order to secure the policy objectives of Article 8 of [the Framework Directive], in accordance with the provisions of this Directive and the procedures referred to in Articles 6 and 7, 20 and 21 of [the Framework Directive]".
" 'access' means the making available of facilities and/or services, to another undertaking, under defined conditions, on either an exclusive or non-exclusive basis, for the purpose of providing electronic communications services. …"
'interconnection' means the physical and logical linking of public communications networks used by the same or a different undertaking in order to allow the users of one undertaking to communicate with users of the same or another undertaking, or to access services provided by another undertaking. Services may be provided by the parties involved or other parties who have access to the network. Interconnection is a specific type of access implemented between public network operators".
"2.1 This Agreement takes effect on the date hereof and shall continue until termination pursuant to this Agreement. …2.3 A Party may terminate this Agreement by giving at any time to the other not less than 24 months' written notice to terminate.
2.4 After a notice has been given pursuant to paragraph … 2.3 a Party may request the other Party to carry on good faith negotiations with a view to entering into a new agreement.
2.5 Following a request pursuant to paragraph 2.4, if on termination of this Agreement either Party would be obliged under its Licence to enter into a new interconnection agreement with the other Party the Parties shall carry on good faith negotiations with a view to entering into a new agreement within a reasonable period …"
"13. OPERATOR SERVICES13.1 For an Operator service or facility BT shall pay to the Operator the charges specified from time to time in the Carrier Price List.
13.2 The Operator may from time to time by sending to such person, as BT may notify to the Operator from time to time, a notice in writing in duplicate request a variation to a charge for an Operator service of facility ("Charge Change Notice"). Such notice shall specify the proposed new charge and the date on which it is proposed that the variation is to become effective ("Charge Change Proposal"). BT shall within 4 Working Days of receipt of such notice acknowledge receipt and within a reasonable time notify the Operator in writing of acceptance or rejection of the proposed variation.
13.3 BT may from time to time by sending to such person, as the Operator may notify to BT from time to time, a notice in writing in duplicate request a variation to a charge for an Operator service of facility ("Charge Change Notice"). Such notice shall specify the proposed new charge and the date on which it is proposed that the variation is to become effective ("Charge Change Proposal"). The Operator shall within 4 Working Days of receipt of such notice acknowledge receipt and within 14 days of receipt of such notice notify BT in writing of acceptance or rejection of the proposed variation. If the Operator has not accepted the Charge Change Proposal within 14 days of receipt of such notice (or such longer period as may be agreed in writing) the proposed variation shall be deemed to have been rejected.
13.4 If the Party receiving a Charge Change Notice accepts the Charge Change Proposal the Parties shall forthwith enter into an agreement to modify the Agreement in accordance with the Charge Change Proposal.
13.5 If the Party receiving a Charge Change Notice rejects the Charge Change Proposal the Parties shall forthwith negotiate in good faith.
13.6 If following rejection of a Charge Change Proposal and negotiation the Parties agree that the Charge Change Notice requires modification, the Party who sent the Charge Change Notice may send a further Charge Change Notice.
13.7 If following rejection of a Charge Change Proposal and negotiation the Parties fail to reach agreement within 14 days of the rejection of the Charge Change Proposal, either Party may, not later than 1 month after the expiration of such 14 days period, refer the matters in dispute to the Director General.
13.8 If the Director General upholds the Charge Change Proposal in the Charge Change Notice without modification the Charge Change Proposal shall take effect on the date specified in the Charge Change Notice and the Parties shall forthwith enter into an agreement to modify the Agreement in accordance with this paragraph 13.8.
13.9 If the Director General does not uphold the Charge Change Proposal in the Charge Change Notice without modification then that Charge Change Notice shall cease to be of any effect. In the event that the Director General proceeds to make an order, direction, determination or requirement following a referral pursuant to paragraph 13.7 then the Party who sent the Charge Change Notice shall send a further Charge Change Notice in accordance with the order, direction, determination or requirement of the Director General and the Parties shall forthwith enter into an agreement to modify the Agreement in accordance with this paragraph 13.9".
"I should make clear that BT was influenced to take this decision of 3rd July 2006 by two factors. Firstly BT was in commercial negotiations with Orange over a completely separate and very substantial project. BT was therefore inclined in all the circumstances not unnecessarily to "rock the boat" with Orange. There were also other commercial reasons why BT thought it might in all the circumstances be appropriate to accept the rates. However the second major factor was that only Vodafone and Orange had so far sought a price rise. In particular O2 and T- Mobile had not sought to raise their rates. BT therefore felt financially it could accommodate Orange's rate rises provided O2 and T-Mobile did not also try to go to a blended rate charge."However all of that changed within literally the next few days when O2 and T- Mobile served OCCNs on BT. Whatever the previous commercial reasons for agreeing Orange's original OCCN, BT felt it had no option but to challenge all the MNOs which were moving to a blended rate. Thus on 19th July, BT served an OCCN on Vodafone. On the same day BT served an OCCN on Orange. This was all a direct response to the fact that all the MNOs were now seeking to move to a blended rate".
"The scope of the disputes is to assess the charges either proposed to BT or paid by BT for call termination in relation to each of the respective MNOs during the periods covered by the respective disputes. Specifically, Ofcom will consider whether:1 http://www.ofcom.org.uk/static/archive/oftel/publications/eu_directives/2003/endcon0503.pdf
• Prior to 13 September 2006, there is any reason why BT should not have been charged on the basis of the disputed call termination charges; and
• With effect from 13 September 2006, the disputed call termination charges either proposed to BT or paid by BT were not reasonable terms and conditions as set out in the End-to-End obligation.
If Ofcom establishes that the answer to either of these questions is 'yes', Ofcom will consider whether it is appropriate to determine call termination charges in this case, and if so, will determine what these charges should be. Ofcom will also consider whether it is appropriate to require that H3G, Orange and Vodafone make any repayments to BT in respect of the disputed call termination charges and also whether it is appropriate to require that BT make any repayments to T-Mobile and O2 in respect of the disputed call termination charges".
"This Directive establishes rights and obligations for operators and for undertakings seeking interconnection and/or access to their networks or associated facilities. It sets out objectives for national regulatory authorities with regard to access and interconnection, and lays down procedures to ensure that obligations imposed by national regulatory authorities are reviewed and, where appropriate, withdrawn once the desired objectives have been achieved".
"National Regulatory Authorities shall, acting in pursuit of the objectives set out in Article 8 of the Framework Directive encourage and, where appropriate ensure, in accordance with the provisions of this Directive, adequate access and interconnection, and interoperability of services, exercising their responsibility in a way that promotes efficiency, and sustainable competition and gives the maximum benefit to end-users.In particular, without prejudice to measures that may be taken regarding undertakings with significant market power in accordance with Article 8, national regulatory authorities shall be able to impose:
(a) to the extent that is necessary to ensure end-to-end connectivity, obligations on undertakings that control access to end-users including in justified cases the obligation to interconnect their networks where this is not already the case".
"In markets where there continue to be large differences in negotiating power between undertakings, and where some undertakings rely on infrastructure provided by others for delivery of their services, it is appropriate to establish a framework to ensure that the market functions effectively. National regulatory authorities should have the power to secure, where commercial negotiation fails, adequate access and interconnection and interoperability of services in the interest of end-users. In particular, they may ensure end-to-end connectivity by imposing proportionate obligations on undertakings that control access to end-users".According to OFCOM, the fact that the example given in this Recital relates to ensuring end-to-end connectivity should not be interpreted as limiting the power to that type of situation. They agree that the regulator's intervention should be aimed at securing that access and interconnection take place. But they do not accept that this rules out all disputes as to the terms and conditions for interconnection once access has been established. They do not accept, therefore, that the wide wording of Article 5(4) – that it covers disputes "with regard to access and interconnection" – is qualified either by Article 5(1) or by other provisions of the Access or Framework Directives. They interpret the requirement in Article 5(4) that the powers to intervene must be exercised "in accordance with the provisions of this Directive" as meaning that, for example, the national regulatory authority cannot impose the kind of obligation that comes within the subsequent articles of the Directive without complying with the procedural requirements of those subsequent articles.
"129. There is a second error apparently underlying OFCOM's position (or at least its present position) on this point. The error relates to its perception of the limits to its powers in this area, as expressed in submissions. Part of the regulatory picture at this stage of the argument is the fact that under the statute OFCOM has (or appears to have) the power to determine the price of connection if there is a disagreement between the parties about it. As part of his argument in this appeal Mr Roth sought to argue that OFCOM did not have that power unless it had first made an SMP decision in relation to the party seeking to charge the price. This, if correct, would take the possibility of dispute resolution out of the picture, and perhaps strengthen the case for saying that BT's bargaining position was weakened to the extent that it had no sufficient CBP to stand against the apparent strength of H3G's position. Mr Roth went so far as to submit that in the absence of an SMP designation, OFCOM would have to decide the pricing dispute in favour of H3G, because to do otherwise would be to impose forbidden price control. He based his argument on the true construction of the Access Directive.130. We do not agree that that is the effect of the relevant provisions. We have set out above the relevant provisions of the 2003 Act. There is nothing there that supports Mr Roth's arguments. Section 190(4) refers to SMP conditions, but nothing in the wording of the Act suggests that SMP had to be found before the regulator decided a dispute over price. …. Mr Roth submitted that a ruling by OFCOM as to the price which should be charged for interconnection (in order to resolve a dispute) was price control which Article 8(3) [of the Access Directive] forbad in the absence of an SMP determination.
131. We consider this reasoning to be wrong. Under the Access Directive the NRAs have at least two sorts of powers. The first are powers to take steps to ensure end to end connectivity; the second are powers to intervene where SMP has been found. A power to determine a dispute as to connection is capable of falling within both, so it is certainly capable of falling within the former. If it does, the Directive makes it plain that an SMP finding is not necessary. This is apparent from the terms of Article 5. It will be noted that Article 8(3) is without prejudice to Articles 5(1), (2) and (3). [The wording of Article 5(1) was set out] … A power to resolve interconnection disputes is well within this wording, and there is no basis, as a matter of construction of Article 5, for separating out disputes as to price. Indeed, it would be illogical to do so. Pricing may be at the heart of a dispute; and some disputes about connection may have aspects which are not, by themselves, directly disputes about price, but may have pricing consequences so that one cannot decide one without the other. Determinations under this jurisdiction are not price control in the sense of Article 13. The two jurisdictions exist in parallel; the fact that Article 8(3) is without prejudice to the relevant parts of Article 5 demonstrates that they each have their separate existence.
132. Mr Roth's arguments in this respect therefore fail. The possibility of dispute resolution by OFCOM in the future is therefore part of the overall picture which has to be taken into account in assessing whether BT has a real and effective bargaining position that is sufficient to counter the factors which would otherwise point in favour of H3G having SMP".
"…. disputes as to the terms or conditions on which it is, or may be provided in a particular case" (emphasis added).
"(i) where the parties who have not interconnected fail to agree on the terms on which access is to be provided;(ii) where the parties are supplying interconnection on agreed terms and then one of them seeks to amend the contract to vary the terms of access to which the other refuses;
(iii) as in (ii), but the contract includes an express provision for variation by notice in the event that the counterparty accepts the variation and reference to Ofcom for resolution in the event that he does not;
(iv) as in (iii), where the party seeking the variation fails to refer the matter to Ofcom for resolution within the time frame set out in the contractual provision;
(v) where the parties are supplying interconnection on agreed terms but one of them serves notice terminating the contract (in accordance with a termination clause in the contract) and they fail to agree on the terms of a new contract".
"190 Resolution of referred disputes(1) Where OFCOM make a determination for resolving a dispute referred to them under this Chapter, their only powers are those conferred by this section.
(2) Their main power (except in the case of a dispute relating to rights and obligations conferred or imposed by or under the enactments relating to the management of the radio spectrum) is to do one or more of the following-
(a) to make a declaration setting out the rights and obligations of the parties to the dispute;(3) Their main power in the excepted case is just to make a declaration setting out the rights and obligations of the parties to the dispute".
(b) to give a direction fixing the terms or conditions of transactions between the parties to the dispute;
(c) to give a direction imposing an obligation, enforceable by the parties to the dispute, to enter into a transaction between themselves on the terms and conditions fixed by OFCOM; and
(d) for the purpose of giving effect to a determination by OFCOM of the proper amount of a charge in respect of which amounts have been paid by one of the parties of the dispute to the other, to give a direction, enforceable by the party to whom the sums are to be paid, requiring the payment of sums by way of adjustment of an underpayment or overpayment.
"187 Legal proceedings about referred disputes(1) Where a dispute is referred or referred back to OFCOM under this Chapter, the reference is not to prevent
(a) the person making it,(2) ….
(b) another party to the dispute,
(c) OFCOM, or
(d) any other person,
from bringing, or continuing, any legal proceedings with respect to any of the matters under dispute.(3) If, in any legal proceedings with respect to a matter to which a dispute relates, the court orders the handling of the dispute by OFCOM to be stayed or sisted-
(a) OFCOM are required to make a determination for resolving the dispute only if the stay or sist is lifted or expires; and(4) Subsection (1) is subject to section 190(8) and to any agreement to the contrary binding the parties to the dispute.
(b) the period during which the stay or sist is in force must be disregarded in determining the period within which OFCOM are required to make such a determination.(5) In this section "legal proceedings" means civil or criminal proceedings in or before a court".
"192 Appeals against decisions by OFCOM, the Secretary of State etc.…
(3) The means of making an appeal is by sending the Tribunal a notice of appeal in accordance with the Tribunal rules.
(4) The notice of appeal must be sent within the period specified, in relation to the decision appealed against, in those rules".
"3. Pursuant to Rule 8(1) of the Tribunal Rules, the two-month time limit for lodging an appeal runs from the date on which the Appellant was notified of the disputed decision or the date of publication if earlier. On the face of it, therefore, appeals against such "intermediate" matters as a decision to accept a dispute for resolution or settling the scope of the dispute must be brought within two months from the date that they were notified or published as the case may be. Whilst the Appellant believes that the most practical course of action would be for appeals against such matters to be heard in the context of any substantive appeal against a final determination, the Appellant notes that the Tribunal's practice in this regard is yet to be settled. …. In these circumstances, the Appellant considers it prudent to lodge this Appeal".
"In my judgment, the general intention behind the Tribunal's rules is that the initial time limit for lodging an appeal is intended to be strict. Cases that do not involve force majeure in the strict sense will, in my judgment, only rarely give rise to "exceptional circumstances"As far as the Tribunal is concerned, respect for the deadline in commencing proceedings is, in many ways, the keystone of the whole procedure. In my judgment, therefore, derogations can be granted only exceptionally under Rule 6(3) [now Rule 8(2)]." .
"4. It is clear that if the challenge is to the resolution (as it may be) time runs from that date, but the question on the present appeal is whether, if the application is amended to challenge the grant of planning permission rather than the resolution, time runs from 15 September 1999 or 12 May 2000.5. In my opinion, for the reasons given by Lord Steyn, where there is a challenge to the grant itself, time runs from the date of the grant and not from the date of the resolution. It seems to me clear that because someone fails to challenge in time a resolution conditionally authorising the grant of planning permission, that failure does not prevent a challenge to the grant itself if brought in time, i.e. from the date when the planning permission is granted. I realise that this may cause some difficulties in practice, both for local authorities and for developers, but for the grant not to be capable of challenge, because the resolution has not been challenged in time, seems to me wrongly to restrict the right of the citizen to protect his interests. The relevant legislative provisions do not compel such a result nor do principles of administrative law prevent a challenge to the grant even if the grounds relied on are broadly the same as those which if brought in time would have been relied on to challenge the resolution".
"38. …. it can readily be accepted that for substantive judicial review purposes the decision challenged does not have to be absolutely final. In a context where there is a statutory procedure involving preliminary decisions leading to a final decision affecting legal rights, judicial review may lie against a preliminary decision not affecting legal rights. Town planning provides a classic case of this flexibility. Thus it is in principle possible to apply for judicial review in respect of a resolution to grant outline permission and for prohibition even in advance of it: see generally Wade & Forsyth, Administrative Laws, 8th ed, p 600; Craig, Administrative Law, 4th ed, pp 724-725; Fordham, Judicial Review Handbook, 3rd ed (2001), para 4.8.2. It is clear therefore that if Mrs Burkett had acted in time, she could have challenged the resolution. These propositions do not, however, solve the concrete problem before the House which is whether in respect of a challenge to a final planning decision time runs under Ord 53, r 4(1) from the date of the resolution or from the date of the grant of planning permission. It does not follow from the fact if Mrs Burkett had acted in time and challenged the resolution that she could not have waited until planning permission was granted and then challenged the grant.39. As a matter of language it is possible to say in respect of a challenge to an alleged unlawful aspect of the grant of planning permission that "grounds for the application first arose" when the decision was made. The ground for challenging the resolution is that it is a decision to do an unlawful act in the future; the ground for challenging the actual grant is that an unlawful act has taken place. And the fact that the element of unlawfulness was already foreseeable at earlier stages in the planning process does not detract from this natural and obvious meaning" (emphasis added).
"186 Action by OFCOM on dispute reference(1) This section applies where a dispute is referred to OFCOM under and in accordance with section 185.
(2) OFCOM must decide whether or not it is appropriate for them to handle the dispute.
(3) Unless they consider-
(a) that there are alternative means available for resolving the dispute,(4) As soon as reasonably practicable after OFCOM have decided-
(b) that a resolution of the dispute by those means would be consistent with the Community requirements set out in section 4, and
(c) that a prompt and satisfactory resolution of the dispute is likely if those alternative means are used for resolving it, their decision must be a decision that it is appropriate for them to handle the dispute.(a) that it is appropriate for them to handle the dispute, or(5) The notification must state the date of the decision.
(b) that it is not, they must inform each of the parties to the dispute of their decision and of their reasons for it.(6) Where-
(a) OFCOM decide that it is not appropriate for them to handle the dispute, but
(b) the dispute is not resolved by other means before the end of the four months after the day of OFCOM's decision, the dispute may be referred back to OFCOM by one or more of the parties to the dispute".