High Court rules Eircell not dominant but did breach contract

The High Court this morning ruled that Eircell is not dominant in the mobile market place and as such could not have abused its position.

Mr Justice Kevin O'Higgin's 158 page ruling on the case between Meridian Communications (which owns the Imagine brand offering discounted mobile services) and Eircell, means Eircell will now move to terminate its volume discount agreement (VDA) with Meridian. Under the VDA Meridian could purchase airtime off Eircell at 40% below normal rates.

On the issue of whether Eircell had breached contract with Meridian, however, Mr Justice Higgins found four cases where it had.

Speaking after the case Meridian's Sean Bolger said the issue of Eircell's market dominance was covered by European law, and he would go to the Supreme Court and then the European Court if necessary to prove his case.

He said it was a very serious issue for the subsidiary of a PLC to be found guilty of breach of contract, and said that he would be looking for costs and substantial damages from Eircell. Imagine currently has around 20,000 subscribers, and Bolger estimates that Eircell's actions have cost him 80,000 new customers.

Eircell director of strategy, Gerry Fahy, said he was delighted with the outcome of the case, and argued that the question of dominance was the substantive issue. He said the breaches of contract findings were only 'minor operational issues' to do with day to day administration.

He said Eircell planned to terminate the VDA agreement with Meridian after taking legal advice. This would put Imagine under serious financial pressure as its mobile airtime will cost substantially more and so limit discounts it can pass on to customers.

The judgement also makes it less likely that other so-called 'virtual' mobile operators will enter the market after seeing Meridian's problems, which have led to the longest running competition case in the history of the state, costing both sides millions of pounds in costs.

Bolger said the case should never have gone to court, and urged the telecoms regulator Etain Doyle to 'get off the fence' on the issue of mobile virtual network operators (MVNOs).

Asked whether the ruling was a death knell for MVNOs, Fahy said Eircell would be willing to enter agreements with operators on a commercial basis.

Both parties agreed with Mr Justice O'Higgins to meet at the end of the month to discuss the issue of costs.