Reinvestigation of complaint from Floe Telecom Ltd against Vodafone Ltd about an alleged refusal to supply

29 June 2005

CW/00805/12/04

Complainant: Floe Telecom Ltd (in administration) (‘Floe’)
Complaint against: Vodafone Ltd (‘Vodafone’)
Case opened: 1 December 2004
Case closed: 28 June 2005
Issue: Following the Competition Appeal Tribunal’s judgment in Floe Telecom Limited (in administration) v Office of Communications (Case No. 1024/2/3/04) of 19 November, Ofcom undertook to reinvestigate the complaint submitted by Floe on 18 July 2003. Ofcom’s investigation assessed whether Vodafone infringed Section 18 of the Competition Act 1998 (‘the Chapter II prohibition’) and/or Article 82 of the EC Treaty by disconnecting telecommunications services it was providing to Floe and by continuing to refuse to supply Floe, while allegedly continuing to supply the same services to other companies operating GSM gateways.

Relevant Instrument: Chapter II of the Competition Act 1998 (abuse of a dominant position) and Article 82 of the EC Treaty

Ofcom has concluded that Vodafone has not infringed the Chapter II prohibition of the Competition Act 1998 or Article 82 of the EC Treaty by disconnecting the services it was providing to Floe for use in Floe’s GSM gateways, while allegedly continuing to supply the same services to other companies for use in GSM gateways. There are therefore no grounds for action against Vodafone.

A non-confidential version of the decision is available at the link below.

Update note - 3 March 2005

On 3 March 2005 Ofcom published a statement on certain issues relevant to this investigation.

Please see the related item.

Ofcom is seeking the views of interested parties on any of the matters discussed in this statement until 5pm on 31 March 2005.

Please send responses to:

Robert MacDougall
Competition and Markets
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA

or by email to Robert.MacDougall@ofcom.org.uk

End of update note

On 18 July 2003 Floe submitted a complaint to Oftel. Oftel opened an investigation on 7 August 2003 (further details can be found at http://www.ofcom.org.uk/bulletins/comp_bull_index/comp_bull_ccases/closed_all/cw_662/). Oftel issued a non-infringement decision on 3 November 2003 (http://www.ofcom.org.uk/static/archive/oftel/publications/mobile/2003/gsm1103.pdf). Following the Competition Appeal Tribunal’s judgment (http://www.catribunal.org.uk/documents/Jdg1024Floe011204.pdf) Ofcom has undertaken to reinvestigate the complaint.

GSM Gateways are devices containing one or more SIMs for one or more mobile networks, which enable calls from fixed phones to mobile networks to be routed via a GSM link into the relevant mobile network. Floe employed GSM Gateways to provide discounted mobile termination to UK companies. On 18 March 2003 Vodafone suspended the SIMs that it had provided to Floe. Floe has also asserted that Vodafone periodically disconnected further GSM Gateways operated by Floe after 18 March 2003.

Under section 25 of the Competition Act 1998, Ofcom may conduct an investigation if there are reasonable grounds for suspecting that the Chapter II prohibition and/or Article 82 of the EC Treaty have been infringed. In light of Ofcom’s market review statement “Wholesale Mobile Voice Call Termination” (http://www.ofcom.org.uk/consult/condocs/mobile_call_termination/) Ofcom has reasonable grounds to believe that Vodafone may be dominant in the supply of wholesale mobile voice call termination on its own network.

Ofcom’s investigation will assess whether Vodafone has abused a dominant position by disconnecting the SIMs used in Floe's GSM Gateways and by continuing to refuse to supply Floe with SIMs for use in GSM Gateways. Ofcom will also assess whether Vodafone acted in a discriminatory manner by refusing to supply Floe with SIMs, while allegedly continuing to supply such services to other companies that operated GSM Gateways. In carrying out its investigation, Ofcom will take into account the judgment of the Competition Appeal Tribunal of 19 November 2004 and, in particular, the factors set out in paragraphs 287, 338 and 339 of that judgment.

As part of this investigation, Ofcom anticipates that it will issue a statement setting out Ofcom’s view on the interpretation of the current Wireless Telegraphy Act licences, in particular whether licensees such as Vodafone can authorise the commercial use of GSM Gateways under their licence. Ofcom will issue this statement in due course, and will seek the views of interested parties on that statement.

Case leader: Robert MacDougall ( e-mail:Robert.MacDougall@ofcom.org.uk
Case reference: CW/00805/12/04