British Telecommunications Plc v The Office of Communications

The court’s provisional analysis was that a Member State’s duty to ensure universal service and its power to designate a provider are distinct. The duty permits a discretionary choice between relying on the market and intervening, subject to proportionality and minimising market distortion. A designation under Article 8(1) of the Universal Service Directive must require the designated undertaking to provide, or arrange the provision of, the relevant service to end-users. It does not authorise a free-standing wholesale obligation to supply a database to other providers at regulated prices where the undertaking is not required to provide the service. Wholesale data-sharing is addressed separately by Article 25(2). Because the issue was not beyond doubt, the court proposed a reference to the ECJ and left the appeals’ merits unresolved.

British Telecommunications plc and OFCOM appealed against the Competition Appeal Tribunal’s decision in [2008] CAT 33. The Tribunal had allowed The Number and Conduit’s appeals under section 192 of the Communications Act 2003 against OFCOM determinations concerning charges for BT’s OSIS database. It rejected OFCOM’s conclusion that Universal Service Condition 7 was unlawful under the regulatory framework and declined to refer the Community-law issue to the ECJ. The central questions before the Court of Appeal were whether the Universal Service Directive authorised the wholesale database obligation and regulated pricing imposed by USC 7, and whether the condition was valid under domestic law.

Lord Justice Patten gave the judgment. Lord Justice Maurice Kay and Lord Justice Waller agreed. The court did not finally determine the appeals. It proposed seeking a preliminary ruling from the ECJ before giving judgment.

1. EU regulatory framework. Article 3(1) of the Universal Service Directive imposes a mandatory obligation on Member States to ensure that specified services are available to all end-users at an affordable price. Article 3(2) requires an assessment of market provision and permits a discretionary choice between reliance on the market and regulatory intervention. It is concerned with the prior decision whether and how to intervene, not with defining the specific obligations that may be imposed under a designation.
2. Scope of designation. Article 8(1) permits designation of an undertaking to provide or guarantee the provision of the relevant universal service to end-users. The expressions “guarantee the provision” and “provide” were treated as having substantially the same effect. They require direct provision or provision through another undertaking. They do not authorise a preliminary wholesale obligation which merely makes data available to operators and leaves the market to provide the service.
3. USC 7. USC 7 required BT to supply OSIS to all persons seeking to provide directory enquiry services, at a regulated price, although BT was not designated to provide or guarantee a directory enquiry service. On the court’s provisional analysis, this was not an obligation authorised by Article 8(1). Article 25(2) provided a separate and narrower wholesale information obligation. The limited conditions for wholesale price control under the Access Directive also pointed away from the validity of USC 7. If invalid under EU law, USC 7 would also be ultra vires domestic legislation. The court did not finally decide that issue.
4. Reference. Under Article 234 EC, a reference is appropriate where the EU-law question is necessary and critical to judgment and the national court cannot resolve it with complete confidence. Applying R v International Stock Exchange of the United Kingdom & Republic of Ireland Limited ex parte Else [1993] QB 524, the court considered that differences between the authoritative texts and the arguments raised a real doubt. It therefore proposed reference of questions concerning the scope of Article 8(1), database obligations and regulated pricing.

Final judgment on the appeals was deferred pending the preliminary ruling.

1. Court of Appeal (Civil Division): Proposed a preliminary reference to the ECJ on the construction of Article 8(1) of the Universal Service Directive and deferred final judgment on the appeals.
2. Competition Appeal Tribunal: Allowed The Number and Conduit’s appeals against OFCOM’s determinations in [2008] CAT 33, rejected the alleged invalidity of USC 7, and declined to make an Article 234 EC reference. The Court of Appeal granted permission to appeal.