Meridian Communications Ltd & Cellular Three Telecommunications Ltd v Eircell Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judge: MISS JUSTICE MELLACARROLL
• Judgment Date: 20 July 1999
• Neutral Citation: [1999] IEHC 240
• Date: 20 July 1999

[1999] IEHC 240

THE HIGH COURT

No.5306P/1999

MERIDIAN COMMUNICATIONS LTD v. EIRCELL LTD

BETWEEN

MERIDIAN COMMUNICATIONS LIMITED AND CELLULAR THREETELECOMMUNICATIONS LIMITED

Plaintiffs

AND

EIRCELL LIMITED

Defendant

TRANSCRIPT OF JUDGMENT

Citations:

POSTAL & TELECOMMUNICATIONS SERVICES ACT 1983 S111

EUROPEAN COMMUNITIES (TELECOMMUNICATIONS LICENCES) REGS 1998 SI 96/1998 SCHED 1

EUROPEAN COMMUNITIES (TELECOMMUNICATIONS LICENCES) REGS 1998 SI 96/1998 SCHED 1 S111(2)(iii)

EUROPEAN COMMUNITIES (TELECOMMUNICATIONS LICENCES) REGS 1998 SI 96/1998 SCHED 1 S111(2)(iv)

EUROPEAN COMMUNITIES (TELECOMMUNICATIONS LICENCES) REGS 1998 SI 96/1998 SCHED 1 S111(12)

PESCA VALENTIA LTD V MIN FOR FISHERIES & FORESTRY 1985 IR 193

CARRIGALINE COMMUNITY TELEVISION V MIN FOR TRANSPORT 1994 2 IR 359

Synopsis

Contract

Contract; interlocutory injunction; plaintiff seeks an interlocutory injunction to require the defendant to observe its agreement with the plaintiff and an interlocutory injunction to require the defendant to continue to supply air time at a volume discount after its current agreement runs out; whether there is a serious issue to be tried; whether damages would be an adequate remedy for the plaintiff; whether the balance of convenience favours the granting of the interlocutory injunction.

Held: First interlocutory injunction refused as defendant gave undertaking to observe the current agreement with the plaintiff; balance of convenience favours refusal of second interlocutory injunction as Court cannot oblige defendant to breach the conditions of its statutory licence.

Meridian Communications Ltd v. Eircell Ltd - High Court: Carroll J. (ex tempore) - 20/07/1999

The first named plaintiff, and its subsidiary the second named plaintiff, sought a interlocutory injunction compelling the defendant to continue to supply airtime, at a volume distribution discount agreement after the existing agreement expires at the end of December 1999, and also to honour the existing agreement. There was a conflict of evidence as to whether the parties understood that the first named plaintiff would pass on the discount to its customers. The plaintiffs allege abuse of a dominant position. The first named plaintiff claimed that irreparable damage to its ability to attract investment would be caused to it unless the injunction was granted. The defendants questioned the legality of the operations carried out by the plaintiffs. There was a possibility of the defendant losing his licence through breaching its terms by continuing the volume distribution agreement to an unlicensed undertaking. The plaintiffs alleged a number of breaches of the agreement. The court was not willing to grant an injunction forcing the defendant to continue the agreement after its expiry. The court required the defendants to provide an undertaking to serve the existing contract until the end of December 1999.

1 DELIVERED EXTEMPORE BY THE HONOURABLE MISS JUSTICE MELLACARROLLON 20TH JULY 1999

APPEARANCES

For the Plaintiffs:

John Gordon SC

Richard Law Nesbitt SC

Brian Cregan BL

Instructed by

Dominic Dowling

For the Defendant:

Paul Sreenan SC

Michael Collins BL

Instructed by

Arthur Cox

2 Meridian Communications Limited (Meridian) and its subsidiary Cellular Three Communications Limited have applied for an interlocutory injunction to require the Defendant Eircell to continue to supply air time at a volume discount after its current volume discount agreement (VDA) runs out, and also to observe its current agreement. Eircell has no contract with Cellular Three. Meridian negotiated a VDA with Eircell in 1997.

3 The standard VDA in clause 4(i) and (ii) restricted the discount to the subscriber and its employees. At that stage Meridian operated, or intended to operate, a mobile phone rental fleet which, of course, would not be used by its employees. Eircell agreed to the deletion of clause 4. In November 1998 Meridian negotiated a renewal of the contract for 12months.

4 There is a conflict of evidence on whether Meridian informed Eircell that it intended to expand into a different market, that is, passing on its discount to customers as well as giving advice on the most economic way to utilise its mobile phones. If these customers were already direct customers of Eircell but not enjoying the benefit of the VDA, Meridian would get their mobile line transferred to it, become responsible for payment at a discount for the use of that line and then bill its customer, passing on a portion of the discount it enjoyed. If the customer was a customer of Esat Digifone they would transfer via Meridian to the Eircell mobile phone network.

5 While Meridian describes itself as purchasing air time and reselling it on, this does not accurately describe its business. Meridiandoes not purchase air time up front which it resells. It has the benefit of a discount agreement, portion of which it passes on.

6 Eircell claims it was unaware of this change in business until January 1999 when 15 of its direct customers transferred to Meridian. Eircell took objection which culminated in informing people that it would not renew the VDA. Meridian claims that there was deliberate obstruction to its business by Eircell after January 1999.

7 The Plaintiff submits that the issues to be tried are:(1) Whether the Plaintiff has a contractual right to renew the agreement. It is common case that the earliest termination date will be 31st December 1999. (2) Whether Eircell is estopped from refusing to renew the agreement. (3) Whether the actions of Eircell amount to an abuse of a dominant position in the market, the product market being either (a) the market in wholesale air time for resale or (b) the market for mobile telephony services. (4) Inducement to breach of contract, injurious falsehood and intentional interference with economic interest.

8 Meridian claims that Eircell is in a dominant position and has significant power in the mobile telephony market. While there was considerable case law opened, it is not for me to decide whether Eircell is in a dominant position or not. That is an issue to be tried. The abuse of a dominant position is identified as failure to supply air time if the VDA is not renewed.

9 Meridian claims that damages are not an adequate remedy for it but would be for Eircell because all Eircell would lose is the discountwhich Meridian passes on. Meridian says it has a once-off opportunity in the emerging deregulated telecommunications market for mobile telephony services and to position itself to attract investment and form strategic alliances....