GSM firms’ charges set for heavier investigation

Date: 07/06/01

By Peter Chapman

EUROPE is set to intensify its investigation into the high prices mobile (or GSM) phone companies charge when their users travel abroad.

European Commission competition watchdogs are preparing to target firms they believe may be abusing dominant positions or acting together with foreign rivals to over-charge for the service known as 'roaming'. "The question is about the follow-up," said competition chief Mario Monti's spokesman Michael Tscherny. "We will have to investigate in more detail specific allegations [of overcharging] by certain companies."

This could take two forms: the infamous 'dawn raids' by officials who swoop into the offices in search of damning information about price-fixing behaviour or, less dramatically, a formal request for information to be provided by letter. If evidence of wrong-doing is found, either option could result in a 'statement of objections', which sets out allegations, and ultimately fines of up to 10% of annual sales for companies that are unable to refute them.

Tscherny refused to say which firms would be targeted, adding that member states may also conduct their own investigations.

High roaming charges caught the eye of consumer groups when the mobile market took off in the late 1990s. While increased domestic competition saw most national call prices plummet, wholesale roaming charges for most operators rose by 166% for peak and 227% for off-peak calls between 1997 and 2000.

Sky-high wholesale rates translate into far higher phone bills for business executives and tourists using their phones abroad - with roaming retail charges accounting for a staggering €3.3 billion in 1999. The Commission's initial probe, launched in January 2000, revealed potential problems in a number of EU states and suspicion that some operators may be illegally abusing their dominant positions in local mobile markets to levy "excessive" wholesale prices.

For example, powerful operators in Belgium, the Netherlands, the UK and Norway (covered by the probe because it is a member of the European Economic Area) were charging more than 100% above the l0.46 per minute average tariff for peak and off-peak international calls from a visited country.

For calls made within a visited country on a mobile, operators in Germany, Austria, Denmark, Belgium, The Netherlands, Norway, Spain and Sweden all charged over 100% more than the l0.29 per minute average.

There were also fears, that groups of operators may have illegally colluded to set prices.

For example, some operating groups in Denmark, France, Spain and the UK all charged almost identical off-peak prices when their respective customers visited each others' networks and made international calls.

Europe is set to intensify its investigation into the high prices mobile (or GSM) phone companies charge when their users travel abroad.