Out-Law / Your Daily Need-To-Know

A law that caps mobile phone call charges levied on European travellers has been upheld by the EU's highest court. The Roaming Regulation is valid and in the interest of the internal market, the Court of Justice of the European Union (ECJ) ruled today.

The European Commission, Parliament and Council placed a cap on roaming calls in 2007 to curb what they saw as excessive costs for users when they made or received calls while in another EU member state.

The cap was contained in a law called the Roaming Regulation, which also imposes a ceiling for wholesale roaming charges, i.e. the price paid by the consumer’s network to the foreign network which that consumer uses when travelling abroad.

Four major EU mobile networks took a case in the UK against the cap, arguing that it was a disproportionately harsh way of dealing with the problem of high prices and that it undermined the right of countries to govern themselves.

The High Court asked the ECJ to rule on whether the actions violated EU laws on proportionality and subsidiarity. The ECJ ruled today that no laws were broken. 

The Roaming Regulation was adopted on the basis of Article 95 of the EC Treaty, which permits EU laws to harmonise the laws of Member States where necessary to improve the conditions for the establishment and functioning of the internal market. Vodafone, Telefónica O2, T-Mobile and Orange said  that this was an inadequate legal basis for the Roaming Regulation.  The ECJ disagreed with the mobile operators.

"As is clear […] the level of retail charges for international roaming services, at the time of adoption of [the Roaming Regulation], was high and the relationship between costs and prices was not such as would prevail in fully competitive markets," ruled the ECJ. "Thus, the excessive retail charges resulted both from wholesale charges levied by the foreign host network operator and, in many cases, from high retail mark-ups charged by the home provider."

"It is also evident that the high level of retail charges had been regarded as a persistent problem by [National Regulatory Authorities], public authorities and consumer protection associations throughout the Community and that attempts to solve the problem using the existing legal framework had not had the effect of lowering charges," said the judgment.

The ECJ ruled that the object of the Roaming Regulation "is indeed to improve the conditions for the functioning of the internal market and that it could be adopted on the basis of Article 95 EC."

As regards the proportionality of the regulation, the Court said that maximum retail charges could be considered to be appropriate and necessary for the purpose of protecting consumers against high levels of charges.

The ECJ also considered the principle of subsidiarity, which provides that the Community may not act unless the Member States are not in a position to achieve the same goal adequately.

The judgment concluded that, given the interdependence of retail and wholesale charges, the Community legislature could legitimately take the view that a common approach at Community level was necessary.

"In this respect, it must be pointed out that the Community legislature, wishing to maintain competition among mobile telephone network operators, has, in adopting [the Roaming Regulation], introduced a common approach, in order in particular to contribute to the smooth functioning of the internal market, allowing those operators to act within a single coherent regulatory framework," said the ECJ.

A Vodafone spokesman told OUT-LAW that the company will be reading in detail the reasons for the ECJ's decision. "Our roaming prices are already below those set by regulation so the decision will not affect the prices that our customers pay today," he said.

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