The European Commission has endorsed a move by the Republic's telecoms watchdog to introduce more competition into the Irish mobile phone market. Honor Mahony in Brussels

The Brussels executive said it "does not object" to a ruling sent by the Commission for Communications Regulation (ComReg) last month which concluded that O2 and Vodafone have "joint dominance" in the market.

Both companies have said they would appeal any such ruling.

"I expect the measures proposed by the Irish regulator will increase competition and will lead to lower prices for consumers in Ireland," the Information Society Commissioner, Ms Viviane Reding, said.

ComReg wants to force O2 and Vodafone to offer new entrants access to their networks - allowing so-called virtual operators to enter the Irish market.

Such operators - Tesco and Carphone Warehouse are thought to be among those interested - would then be able to lease mobile minutes from the network operators and resell them, at a cheaper price, to customers.

Opening the market to competitors should be done by commercial negotiations, the Commission said. But if there are no substantial changes after a year or two, ComReg may then step in to break up the market, although it will have to ask the European Commission for approval for any specific measures it takes.

Yesterday's decision by the Commission is the first time that "tacit collusion" between mobile phone companies has been found in Europe.

A European Commission expert said there was "no evidence" of agreement between the two companies but that "the structure of the market means there is an incentive to collude".

Between them, Vodafone and O2 have cornered 94 per cent of the Irish mobile market - 54 per cent and 40 per cent respectively.

The European Commission said the figure could even be as high as 97 per cent in terms of revenue.

Meteor, the third mobile network operator in the market, only has about 1 per cent share in the post-paid market, which is financially much more important to telecoms companies than the pre-paid market.

Commission expert Mr Bernd Langeheine characterised Meteor's share as "still very weak".

Mr Langeheine also said that, while Irish mobile phone users do not pay the most in Europe, "tariffs are still relatively high".

A Commission report shows that for high, medium and low mobile usage, the Republic was within the top five most expensive member-states in 2004. In the medium usage bracket, it is beaten only by the Netherlands.

In a letter sent to ComReg yesterday, the Commission asked it to "monitor market developments very closely in the near future".

The Commission also stressed that, if competitors "prove capable of gaining market share", then regulatory measures imposed by ComReg would have to be reviewed.

ComReg said it "welcomed" Brussels' decision and that it would "proceed to implement its remedies in order to bring more competition into the Irish mobile market".

Before today's decision, both O2 and Vodafone, which lobbied against ComReg's ruling, had indicated that they may appeal.

ComReg is expected to announce formally that the two companies have joint dominance next week. O2 and Vodafone then have 28 days to take their case to the appeal panel. An appeal could last up to four months, a ComReg spokeswoman said.