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O2 versus the EC

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The European Ombudsman has initiated an inquiry into complaints levied by mobile operator O2 against the European Commission.

Ombusdman Nikiforos Diamandouros said the aim of the inquiry will be to ascertain whether there has been any maladministration by the commission when it handled an investigation into mobile phone roaming services two years ago.

The Ombudsman, who has powers to investigate complaints against all European Union institutions and bodies, will look into O2's assertion that the commission did not allow it to properly defend itself against allegations that it was abusing a dominant market position by charging excessive fees for international roaming services.

O2, which is a wholly owned subsidiary of Spanish telecoms giant Telefonica, claims the commission did not allow it proper rights of defence, including enough time to respond to any allegation of wrongdoing and appropriate access to relevant files.

Further allegations by the complainant include the infringement of O2's right to a supplementary statement of objections and of the right to be heard properly, according to a statement from the Ombudsman, who pointed out that the opening of an inquiry doesn't necessarily mean he considers the complainant's allegations of maladministration are justified.

Diamandouros has asked the commission to respond to O2's complaint by the end of December.

In 2000, the European Commission began a sector inquiry into the market for roaming services, and in March 2001 the commission decided to open proceedings against British and German mobile phone operators, which included inspections and consultations with the operators and external experts. In July 2004, the commission sent a statement to O2, alleging that it had been abusing a dominant market position by charging excessive fees for roaming services.

O2 is complaining that it was not given a chance to defend itself properly from this allegation. The timing of O2's complaint is significant as the commission is in the advanced stages of considering legislation to reduce mobile phone charges throughout the 25 states of the European Union.

Under the proposed legislation, wholesale costs - the fees mobile operators pay one another for processing roaming calls - will be capped. The EU will annually review an average of this cost in order to set the cap. Then, the mark-up at retail level will be limited to 30 per cent. The caps will apply to calls both made and received while abroad.

The proposal has come under attack from mobile operators who could reportedly lose up to €4bn in revenues should the legislation be approved.

Meanwhile, consumer lobby groups have criticised the proposals because they only relate to voice calls when roaming, not text messages or other emerging forms of data exchange such as video messages or music files.

EU Information Society Commissioner Viviane Reding, who drafted the proposed European legislation on roaming rates, in July said that mobile phone roaming charges were "one of the last borders within Europe's internal market."

At the time it was reported that the commission was considering scrapping roaming charges altogether, but intense lobbying from the mobile industry watered down the plans.

Copyright © 2006, ENN

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