Telecommunications Regulatory Commission v Cable & Wireless (BVI) Ltd

• Jurisdiction: British Virgin Islands
• Judge: Carrington JA
• Judgment Date: 30 May 2018
• Neutral Citation: VG 2018 CA 11
• Court: Court of Appeal (British Virgin Islands)
• Docket Number: BVIHCVAP2016/0013
• Date: 30 May 2018

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Mde. Louise Esther Blenman Justice of Appeal

The Hon. Mr. John Carrington, QC Justice of Appeal [Ag.]

The Hon. Mr. Eamon Courtenay, SC Justice of Appeal [Ag.]

BVIHCVAP2016/0013

Between:

Telecommunications Regulatory Commission

Appellant

and

Cable & Wireless (BVI) Limited

Respondent

Appearances:

Mrs. Arabella di Iorio with her Mr. Simon Hall for the Appellant

Ms Kassie Smith, QC with her Mr. Callum McNeil for the Respondent

Civil appeal — Judicial review — Telecommunications Act of the Territory of the Virgin Islands — Interpretation of section 75 of Telecommunications Act — Application of the rule of informed interpretation of legislation — Whether section 75(1)(a)(iii) permits TRC to take enforcement action with respect to conduct that is past or only conduct that is present or future — The relevant point in time in relation to TRC's exercise of its enforcement powers — Whether TRC is empowered under the Telecommunications Act to do ex post regulation or is limited to ex ante regulation — Whether TRC is able to take enforcement action under section 75(1)(a)(iii) without having made a finding of dominance in the market under section 26(3) — Whether TRC acted ultra vires by proceeding with enforcement action under section 75(1)(a)(iii) of the Act rather than by proceeding with regulatory action under sections 26 or 29 of the Act — The effect of taking into account irrelevant factors in coming to a decision

Cable & Wireless (BVI) Limited (“LIME BVI”), the respondent, sought judicial review of the decision of the Telecommunications Regulatory Commission (“TRC”), the appellant, dated 1 ^st June 2012 (“Decision”) which followed its investigation of a complaint made on 14 ^th July 2009 by one of the respondent's competing providers of mobile services in the BVI concerning the respondent's All Talk Calling Plan which had been offered to consumers since November 2008. The appellant made the finding that contrary to section 75(1)(a)(iii) of the Telecommunications Act, 2006 (“the Act”) the respondent had participated in a form of margin squeeze by setting retail rates below the level of wholesale charges applied by its affiliates.

In reaching the Decision, the appellant applied the definition of margin squeeze used by the Organisation of Economic Co-operation and Development (“OECD”), namely that a margin squeeze occurs “when there is such a narrow margin between an integrated provider's price for selling essential inputs to a rival and its downstream price that the rival cannot survive or effectively compete. A margin squeeze can arise only when (a) an upstream firm produces an input for which there are no good economic substitutes, (b) the upstream firm sells that input to one or more downstream firms and (c) the upstream firm also directly competes in that downstream market against those firms”. The appellant found that there had been a form of market squeeze by the respondent which, had it continued, would have likely had anti-competitive effects contrary to public interest.

The appellant, acting pursuant to section 75(2)(b) and (g) of the Act, ordered the respondent to cease and desist from re-offering the said plan, and imposed a substantial fine on the respondent

The respondent was granted leave by the High Court to seek judicial review of the Decision on the specific grounds of “illegality and irrationality, taking into account irrelevant considerations and failing to take into account relevant considerations”.

After trial of the matter, the High Court ordered the Decision to be quashed on the ground that section 75(1)(a)(iii) of the Act only permitted the appellant to take enforcement action against existing conduct whereas the appellant had made a finding in the Decision that the impugned conduct had ceased by August 2010. The appellant appealed this decision and the respondent cross appealed against the dismissal of the other grounds raised in its claim for judicial review.

Held: allowing the appeal and the cross appeal in part and ordering that the appellant pay the costs of the appeal and cross appeal to the respondent at the rate of one half of the costs in the court below, as opposed to the usual two thirds under CPR Part 65.13, to reflect the success of the appellant on the appeal, that:

• 1. The correct interpretation of the Act section 75(1)(a)(iii) is that the relevant point in time at which it should be determined whether a licensee is carrying on or is likely to carry on business in a detrimental manner contrary to section 75(1)(a)(iii) is when the investigation into the impugned conduct commences.

  R v Secretary of State for the Environment, Transportation and Regions ex parte Spath Holme [2001] 2 AC 349 referred to; Douglas v The Police (1992) 43 WIR 175 referred to.

• 2. There is no requirement that TRC must make a finding of dominance under section 26 of the Act in order to determine whether there is anti-competitive conduct by a licensee under section 75(1)(a)(iii) of the Act. Where there is a finding of anti-competitive conduct that involves anti-competitive pricing or acts of unfair competition, TRC has the discretion to act either under section 29 or under section 75 of the Act. TRC therefore did not act ultra vires the Act by proceeding under section 75 where it was of the view that there was a form of margin squeeze.

• 3. Section 75(1)(a)(iii) of the Act is to be interpreted as permitting both ex ante and ex post competition investigation and regulation and that no matter which classification is employed with respect to the statutory provision, TRC had the statutory authority to regulate the impugned conduct and so acted intra vires the Act in the exercise of its enforcement powers against LIME BVI.

• 4. Notwithstanding that TRC had jurisdiction under the Act to investigate the impugned conduct and to take enforcement action under section 75(1)(a)(iii), TRC, however, took into account irrelevant factors in determining that LIME BVI was engaged in anti-competitive conduct, namely the conduct of LIME BVI's affiliates outside the jurisdiction which were not regulated by TRC. TRC failed to discharge the onus that laid on it to satisfy the court that the consideration of these irrelevant matters was not significant to the Decision and that the Decision would inevitably have been the same had they not been considered. On this basis, the cross appeal should be allowed and the Decision should be set aside.

  Smith v North East Derbyshire PCT [2006] 1 WLR 3315 applied; R v Broadcasting Complaints Commission ex p Owen [1985] 1 QB 1153 applied; R v Secretary of State for Work and Pensions [2012] EWCA (Civ) 332 applied; Associated Provincial Picture House Ltd v Wednesbury Corporation [1947] 2 AER 680 applied.

1 Carrington JA [AG.]: The Telecommunications Regulatory Commission (“TRC”) is a statutory body established under the Telecommunications Act, 2006(“Act”). 1 Its role, according to the long title to that Act, is to “license, regulate and develop the telecommunication services industry in the Virgin Islands and to provide for other matters connected therewith”.

2 Cable & Wireless (BVI) Limited (hereinafter “LIME BVI”) is one of three providers of mobile telephone services in the territory. LIME BVI is wholly owned by Cable & Wireless plc, which, through other associated companies, provides mobile and other telecommunication services in most of the other English speaking islands of the Caribbean. In these jurisdictions, the “LIME” brand is used by the respective Cable & Wireless group companies for telecommunication services.

3 This appeal arises from the fixed date claim brought by LIME BVI in the High Court for judicial review of a decision of TRC dated 1 ^st June 2012 (“Decision”). LIME BVI was successful on one of the six grounds on which it sought to review that decision. TRC appeals to this Court to overturn the decision made by the court below (Byer J) quashing the Decision made by TRC on this ground. LIME BVI cross appeals against the learned judge's refusal to quash the Decision on four of the other five grounds on which it had unsuccessfully sought review of the Decision. LIME BVI has abandoned the sixth and remaining ground which it had advanced in the court below.

4 The Decision arose from a complaint made to TRC by Caribbean Cellular Telephone Limited (“CCT”) on 14 ^th July 2009 about the “All Talk Calling Plans” (“Plan”) being then offered by LIME BVI to its customers in the territory. LIME BVI's customers who subscribed to the Plan, which was in existence from November 2008 to August 2010, paid a fixed monthly fee of $50 which entitled them to 6000 minutes of calls to other LIME Caribbean destinations (i.e. calls that were terminated on networks operated by the respective LIME mobile network operators (“MNOs”) in these jurisdictions).

5 CCT's complaint was that the average retail price per minute for calls being charged under the Plan was significantly below the wholesale price being charged by the LIME affiliates to CCT, for calls being terminated by its customers on those networks. CCT also claimed that LIME BVI would not be able to offer the Plan if it were subject to the same termination rates as CCT, which was effectively paying a wholesale price that was approximately five times the average retail price being charged to LIME BVI's customers under the Plan.

6 The Decision recites that following the receipt of CCT's complaint TRC opened an investigation into LIME BVI's conduct and on 17 ^th June 2011 made its recommendations to the board of TRC that enforcement action should be taken against LIME BVI. TRC then issued a notice to LIME BVI setting out its provisional findings and intention to take enforcement action against LIME BVI on 17 ^th June 2011 (the “Sanction Notice”). LIME BVI responded to the Sanction Notice and thereafter written...