29 November 2006

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No fair hearing from MCA on predatory pricing allegations

Court of Appeal upholds appeals board’s decision that MCA failed to give operators a fair hearing

Matthew Vella

A Court of Appeal has upheld a decision by an appeals board which found the Malta Communications Authority guilty of failing to give service providers a fair hearing in a complaint they instituted with the authority against Maltacom.
Euroweb, Nextgen, Waldonet, Keyworld and Telemail accused telco giant Maltacom of predatory pricing on its TEN21 service – the cheap international calling system – for selling its VoIP service at a very low price that did not cover the cost of providing the service.
The MCA had claimed there was no solid evidence of any anti-competitive behaviour because Maltacom’s price appeared to cover the wholesale elements together with a reasonable margin of profit.
But the communications appeals board said the regulator had accepted Maltacom’s pricing justification without asking for a reaction from the other ISPs and VoIP providers.
In fact the authority produced a Maltacom representative as its witness during the appeals board hearing to rebut the operators’ allegations of predatory pricing. “It results that the authority rested upon this same testimony to decide upon the complaint. It is relevant to note that the authority did not present any information or calculations of its own but rested solely on the witness,” the board said.
The communications appeals board said the MCA had neglected its fundamental duty as national regulator to observe the legal principle of audi alteram partem – the principle of fairness that every side of a dispute should be given the opportunity to respond to any allegations or accusations.
In an appeal of the board’s decision, the MCA told the Court of Appeal that the decision had been taken by a board which had no jurisdiction to decide on the original complaint, which had in fact been addressed against the accused company, Maltacom.
The Court of Appeal noted that it was necessary to mitigate “excess formalities” and that the communications appeals board had not failed to note that it could not uphold the complaint itself against Maltacom. But the board also proceeded to assess the way the authority had considered the complaint, which the court found was clearly within the board’s remit.
The court also noted that the communications authority had failed to understand the board’s central concern, which was that the violation of a the principle for a fair hearing consisted in the fact that the MCA had rested solely on the information provided to it by Maltacom, and that it had not forwarded this information to the plaintiffs for their reaction before taking a decision.
The court in fact said the board’s motivation had been logically valid and justified, and that the rights of all parties to a dispute should be adequately considered before a decision is taken.

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