The High Court today begun hearing an action by Smart Telecom aimed at overturning the decision of the Commission for Communciations Regulation (ComReg) not to grant it the third mobile phone licence.
It is claimed Comreg acted unfairly towards Smart. The action follows the decision last February not to award the licence to Smart Mobile Limited because of what the Commission claimed was a failure to provide, in an acceptable form and within the specified deadline, a €100 million performance-guarantee bond.
Smart Telecom was the successful tenderer for the lucrative 3G mobile telecommunications B Licences which was awarded after a public tendering process in November 2005.
ComReg said it would grant the licence to Smart Mobile Limited if the company fulfilled certain conditions. Smart began legal poceedings after ComReg stated on February 13th, 2006 it was not granting the licence to Smart because of its alleged failure to meet the terms of the tender process.
Smart was told on November 16th, 2005 it had won the bid for the licence. It was then required to provide a cheque or bank draft for €44 million; the first annual spectrum fee of €1.1 million for the 3G spectrum; a guarantee payable on demand of €7.6 million and a performance guarantee bond for €100 million.
These payments were sought as financial guarantees to underpin the rollout and coverage obligations.
A further €12 million was sought for the GSM spectrum fee Smart says it complied with the conditions and furnished three separate performance guarantee bonds for €100 million for consideration and approval by ComReg.
On that basis, it claimed ComReg was obliged from January 30th 2006 to grant the 3G licence to Smart. However, Smart claims it was informed by ComReg that the draft performance guarantee bonds were not acceptable and the deadline of 5pm on January 30th, 2006 was absolute.
Smart contends that, in emails, ComReg raised a number of amendments on January 28th and January 29th, 2006 in relation to the draft bonds and sought to impose significant additional requirements.
ComReg denies this and says it did not act unfairly or disproportionately.
Opening the case before Mr Justice Peter Kelly today, Mr Michael Cush SC, for Smart, said one of the objectives of the competition for the licence was to promote competition in the mobile telephone market.
Smart Telecom was the winner of the competition and ComReg had an obligation to negotiate with Smart with a view to issuing the licence, he said.
However, ComReg failed to fulfull its obligations and interfered with the company's rights in an unfair and disproportionate manner, counsel argued.
Mr Cush said ComReg had stipulated that in the event of the licensee failing to meet performance targets, an amount in performance guarantee bond would be payable to the regulator.
A programme to measure performance targets and compliance was to be put in place and this had to be negotiated and concluded prior to the issue of the licence. The licence could not be issued until that negotiation had concluded and it had not concluded, Mr Cush said.
In the action, expected to last six days, Smart Mobile Limited is seeking a declaration that there exists a "concluded contract" between Smart and ComReg for the awarding of the licence.
Alternatively, Smart wants a declaration that, having selected Smart as the successful tenderer for the 3G licence, ComReg was and is obliged to give Smart a reasonable period of time to comply with the terms and conditions additional to those set out in the tender document.
It is also seeking an order restraining Comreg awarding of the licence to any other party or treating its negotiations with Smart for the award of the licence as being at an end.