Communications regulator ComReg was right to withdraw the offer of a mobile licence to Smart Telecom because the company failed to meet key conditions by an agreed deadline, the High Court heard yesterday.

Smart successfully tendered for a third-generation (3G) mobile licence last November, but ComReg withdrew the offer in February because it says the company failed to provide it with acceptable performance guarantees by an agreed deadline of January 30th.

The guarantees, or bonds, required Smart to pay penalties of up to €100 million if it failed to meet agreed milestones in building the network.

The company says that it provided ComReg with draft bonds on January 27th. It wants the High Court to order that the regulator is contractually obliged to issue the licence to the company.

Summing up ComReg's defence yesterday, senior counsel Paul Sreenan, said that the "big lie" at the heart of Smart's case was that it had provided the regulator with acceptable bonds within the deadline.

Mr Sreenan said that Smart did not in fact provide any bonds, but instead provided draft bonds that had not been approved by the banks which were supposed to underwrite them, and which, by the company's own admission, contained a number of errors.

He argued that all business people are aware that if they are obliged to fulfil agreed contractual conditions by a particular deadline, then there is no contract.

"Unless the conditions were varied in some way, the consequences were automatic," he said. "The result was that Smart was not going to be awarded the licence."

However, Mr Justice Peter Kelly pointed out that ComReg did not do this. He referred to a meeting on February 2nd, between involved ComReg commissioners Isolde Goggin and John Doherty, and Smart chief Oisín Fanning and executives Iarla Flynn and Ciarán Casey.

Mr Sreenan argued that ComReg decided to meet Smart because the company had sent it a letter initiating legal action. "They decided to meet Smart and give it the opportunity to explain if could provide bonds acceptable to the commission," he said.

He said that if Smart had handed over the bonds at that point, then the commissioners would have had to have decided whether or not they should extend the deadline.

"But those are only hypotheses as these things did not happen," he said.

Mr Sreenan also accused Smart of displaying a "lack of candour" from the point it began proceedings, in its sworn documents and in its dealings with ComReg after January 27th. "This lack of candour on its own is enough to deprive Smart of the order it is seeking," he said.

He argued that in seeking to add conditions to the bonds that were not included in its licence bid, Smart was seeking a special indulgence from ComReg that would have discriminated against the other original bidders. Mr Sreenan pointed out that if ComReg had agreed to this, it would have given the losing bidders grounds for suing it.