Vodafone Ltd & Ors v British Telecommunications Plc & Anor

An appellate tribunal may identify an error in a price control and state what the control would have been if calculated correctly. It may direct the regulator to take only action that the regulator would otherwise have power to take when the decision is remitted.

Where statutory price controls are ex ante obligations directed to future conduct, the power to modify them is subject to the same forward-looking limits as the power to impose them. A modification cannot retrospectively alter obligations for an elapsed period unless clear statutory language authorises that result. An appeal remains effective even though the passage of time may limit the available remedy.

Ofcom imposed four-year wholesale mobile call termination price controls on mobile network operators under the Communications Act 2003. British Telecommunications plc appealed to the Competition Appeal Tribunal, which referred price-control matters to the Competition Commission.

The Tribunal held in the Disposal Powers Judgment that it could direct Ofcom to reset the control for the whole 2007–2011 period. Following the Commission’s determination, the Tribunal upheld BT’s appeal and directed Ofcom to adopt revised controls for all four years. The operators and Ofcom appealed. The central issue was whether the Tribunal could direct a retrospective revision of price controls for periods that had elapsed before the revisions took effect.

1. The appeals were allowed unanimously. The Tribunal had no power under section 195 to direct Ofcom to impose revised price controls retrospectively for an elapsed period.
2. Section 195(5) expressly limits the Tribunal’s directions to action that Ofcom would otherwise have power to take in relation to the decision under appeal. The relevant question concerns Ofcom’s power when the decision is remitted, not a power it might have had when the original decision was made.
3. Ofcom’s power to modify conditions under section 45(10)(e) is subject to the same constraints and purposes as its power to set them. The statutory and European framework treats SMP price controls as ex ante regulation. They address future pricing behaviour, promote efficiency and sustainable competition, and benefit end-users. Accordingly, modification is prospective rather than retrospective.
4. The directions in this case purported to alter the content of binding past obligations. That could retrospectively place operators who had complied with the original control in contravention of the modified control and expose them to the enforcement provisions in sections 94 to 104. Clear statutory language would be required for so surprising a result, but section 45(10)(e) contains no such language.
5. The construction was not altered by the possible effect on BT’s private-law claims or by Ofcom’s dispute-resolution powers under sections 185 to 190, including the power in section 190(2)(d) to adjust sums previously paid. The Tribunal could identify the error and state the corrected control, and could make forward-looking directions within Ofcom’s powers. The lapse of time did not make the appeal ineffective under Article 4 of the Framework Directive.
6. The court declined to decide the separate question whether the Tribunal could impose a future-adjusted price control, as that issue was not raised by the directions actually under appeal and had not been argued.

• Competition Appeal Tribunal: in [2009] CAT 1, held that it could direct Ofcom to reset the price control for the whole 2007–2011 period.
• Competition Appeal Tribunal: in [2009] CAT 11, dismissed the operators’ challenges to the Commission’s determination, upheld BT’s appeal to the stated extent, and directed Ofcom to adopt revised price controls for all four years.
• Court of Appeal (Civil Division): allowed the operators’ and Ofcom’s appeals and rejected the Tribunal’s retrospective approach.