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MEMO/10/242

Brussels, 8 June 2010

Digital Agenda: Commission welcomes Court of Justice ruling on the legal validity of EU Roaming rules

The European Commission welcomes the European Court of Justice ruling today (Case C-58/08) confirming the legal validity of the Roaming Regulation (N° 717/2007). The Court has confirmed that the Regulation, which sets price caps on the costs of using a mobile phone while in another EU Member State, has a correct legal basis (the Treaty's rules to ensure the correct functioning of the EU's Internal Market), is proportionate essentially to the objective of protecting consumers against high charges and is justified on grounds of subsidiarity (the same objective could not have been reached without a common approach at EU level). Today's Court ruling is significant because it confirms the Commission's view that legislation of this type was necessary and that the EU was entitled to impose limits on the prices charged by mobile operators for roaming calls in the interest of the EU's Single Market. The Commission will take account of the Court's ruling in its review of the Roaming Regulation that must be completed by 30 June 2011.

The Court of Justice ruled that the Roaming Regulation was effectively aimed at improving the conditions of the functioning of the EU's internal market and so could be adopted on the basis of Article 95 of the EC Treaty.

On the issue whether the Roaming Regulation is proportionate, in the sense that it does not only fixes the ceilings for wholesale prices but also for retail prices, the Court held that setting maximum retail prices could be considered as suitable and necessary to protect consumers against high prices. The Court noted that, before proposing the Regulation, the Commission had undertaken an exhaustive study of alternatives and had evaluated the economic impact of various types of regulation. The Court also notes that the measures adopted were exceptional and justified by the unique characteristics of the roaming markets. In those circumstances, the Court concluded that an intervention limited in time in a market that is subject to competition, such as that at issue, which makes it possible, in the immediate future, to protect consumers against excessive prices, is proportionate to the aim pursued, even if it might have negative economic consequences for certain operators.

On the issue of subsidiarity, the Court ruled that given the interdependence between wholesale and retail prices, the Community legislator was legally entitled to consider that an EU level approach was necessary to guarantee the harmonious functioning of the internal market, thereby allowing operators to act in a single coherent regulatory framework.

In 2006, the European Commission had tried to avoid the need for regulation by calling on operators to voluntarily reduce prices to a reasonable level. However, prices still remained unjustifiably high resulting in the Commission’s decision to propose a Regulation. The Commission therefore proposed legislation at EU level (see IP/06/978) later in 2006 at the request of national telecoms regulators who were unable to tackle the problem on their own.The European Parliament and the EU's Council of Ministers adopted the first Roaming Regulation in June 2007 (IP/07/870).

The first EU Roaming Regulation which entered into force on 30 June 2007 introduced limits to the wholesale and retail charges for roaming voice calls in the EU. These limits were foreseen until 30 June 2009 €0.46 for all calls made abroad and €0.22 for all calls received abroad and then further reduced to €0.43 for calls made abroad and €0.19 for calls received abroad (IP/08/1276).

New EU rules on roaming rules adopted by the EU's Council of Ministers and European Parliament in June 2009 (see IP/09/1064 and MEMO/09/309 ) entered into force on 1st July 2009 and extended the validity of the Regulation as well as its scope to include text messages and mobile data services. It introduced a 'Euro-SMS tariff' limiting the price that consumers can be charged for sending a text message while abroad to €0.11 excluding VAT and introduced a wholesale cap of €1 per MegaByte down or uploaded.

From March 2010, operators had to offer customers the possibility to set their own cut-off price limit per month for downloading date reaches to protect them from 'bill shocks' for surfing the Internet with their mobile phones and laptops while travelling in other EU countries (see IP/10/215). From 1 July 2010, operators will have to impose a €50 cut off limit for those customers that have not yet set their own limit. Also from 1st July, the prices for roaming calls made will fall further to €0.39 cents and for received calls to €0.15 cents (per minute and excluding VAT). The amended Regulation will expire on 30 June 2012.

Since the adoption of the Roaming Regulation in June 2007, prices for mobile phone calls abroad have fallen by up to 70% compared to the prices in 2005, the cost of sending a text message while abroad has been reduced by 60% on average and transparency has been increased. Consumers can now move around Europe without being afraid to turn on their mobile phones.

The differences in national mobile charges and roaming charges illustrate the lack of a Single Market in telecoms services. Since the costs of providing roaming services should not be substantially different from those incurred when providing domestic mobile services, there is no justification in a competitive market for charging customers considerably higher prices for roaming services. Consumers need to benefit from the Single Market. This is why the European Digital Agenda envisages that the difference in tariffs between roaming and home-country mobile-phone calls should approach zero by 2015 (see IP/10/581, MEMO/10/199 and MEMO/10/200).

The Commission is now preparing an interim report on the functioning of the Roaming Regulation to be delivered before 30th June 2010. The full review of the Roaming Regulation must be completed by 30 June 2011. This will enable the Commission to assess whether or not the objectives of the Regulation have been achieved. If further measures prove necessary, the Commission will assess all approaches which can be used to create a competitive Single Market for roaming.

Background

Legal action to challenge the UK legal provisions for the implementation of the Roaming Regulation was initiated before the High Court of England and Wales in September 2007 by a number of UK mobile network operators on the basis of the Regulation's alleged incorrect choice of legal basis (Article 95 of the EC Treaty) and lack of proportionality. The UK Court referred a number of questions concerning the Regulation's legal validity to the European Court of Justice under Article 234 of the EC Treaty for a preliminary ruling. The UK High Court will now make a ruling taking into account the preliminary ruling of the Court of Justice on the questions it had submitted.


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