Judgment of the Tribunal in connection with an appeal brought by Telefónica UK Ltd (“Telefónica”) under section 192(1)(a) and (2) of the Communications Act 2003 (“CA03”) against a determination by Ofcom of a dispute between Telefónica and each of Hutchison 3G UK Ltd (“H3G”) and Vodafone Ltd (“Vodafone”) dated 14 September 2011 (“the Determination”).
The dispute related to termination charges levied by Vodafone and H3G in October 2010 (“the October 2010 charges”), and in particular a practice known as “flip-flopping”, a means by which mobile communications providers exploited the way in which average call termination charges were calculated under Ofcom’s mobile call termination statement published on 27 March 2007.
For the reasons set out in the judgment, the Tribunal rejected each of Telefónica’s grounds of appeal, and concluded that:
- Ofcom had clearly understood that dispute resolution constituted a separate limb of regulation, distinct from the pre-existing charge control regime.
- Ofcom had given consideration to the question of whether the October 2010 charges were fair and reasonable in the light of all of its regulatory duties and objectives, and in light of the prevailing regulatory regime.
- Section 190(2A) CA03 was inapplicable to the dispute as it was referred to Ofcom prior to 26 May 2011. The terms of the relevant statutory question determine the information that the decision-maker must obtain during the administrative process and the nature of the analysis that it conducts, such that section 190(2A) can only apply to those disputes that are conducted as well as determined once it is in operation. Further, disputes that appear to satisfy the criteria of both section 185(1) and section 185(1A) are to be treated, for the purposes of both section 186 and section 190, as falling within section 185(1A) with the specific consequence that the requirements of section 190(2A) do not apply to them.
- There was no error in law on Ofcom’s part in giving predominant weight to Vodafone’s and H3G’s putative compliance with the significant market power (“SMP”) regime, and in the absence of any error of law the weight to be attached to relevant factors was a matter for Ofcom alone.
- In the absence of any specific complaint of non-compliance with the SMP regime, Ofcom was free to decide whether to investigate that aspect of the matter, or whether to proceed on the assumption that the disputed charges, viewed in the context of the financial year as a whole, complied with the charge control. In the Tribunal’s judgment, it was eminently reasonably for Ofcom to decide to proceed on the latter basis.
