Telecoms company eir has agreed to pay €3 million to settle a High Court action brought by ComReg against it over a lack of proper controls between the firm's wholesale and retail divisions.

As part of the settlement, a payment of €9 million will also be placed in an escrow account in case the agreed remedies and rules are not put in place.

The agreement will also see a new independent oversight body set up to oversee the relationship between the company's two arms.

A majority of that five-member board, including its chairman, will be appointed by ComReg with the remaining two members coming from eir.

Eir will also implement improved internal governance arrangements and carry out detailed reporting to the oversight body.

The former state-owned telecom company will also increase the independence of its wholesale arm from the rest of its business, with increased transparency over internal decision making.

The agreement also includes measures to remediate eir's IT systems and associated controls to ensure that access to those systems is appropriately governed, ComReg said.

The action arises from ongoing complaints by eir's rivals and from ComReg that the company was giving favourable treatment to its own retail arm in areas such as fault fixing and new connections.

Eir's wholesale division is obliged by law to give equal priority to rivals as it does to its own retail operations.

In a statement, eir's CEO Carolan Lennon said the company welcomed the agreement and settlement.

"This will allow us to concentrate on our key strategic plans, most importantly our ongoing investment of €1bn in our networks," she said.

"While we have significantly enhanced our regulatory governance in recent years, with many of today's provisions already in place, we appreciate the importance of transparency.

"We therefore welcome the further confidence that the independent oversight will give industry and ComReg that eir's regulatory governance is robust and effective."

ComReg Commissioner Jeremy Godfrey said: "When fully implemented, the commitments will give significant assurances that Eircom will comply with its regulatory obligations.

"This will enable alternative operators who use Eircom's network to invest with confidence, thus bringing the benefits of competition and choice to consumers."

Mr Godfrey said the proceedings had highlighted the issue of enforcement powers.

"To be an effective regulator, ComReg needs enforcement powers that are a clear deterrent to non-compliance," he added.

"We continue to seek enhanced powers, including a power for us to impose substantial financial penalties where appropriate. Ultimately, this is a matter for the Government and the Oireachtas. 

"We are currently working on this issue with the Department of Communications, Climate Action and Environment, who are committed to ensuring that we have the best, most appropriate and most effective powers available."