The Guernsey Competition and Regulatory Authority (GCRA) has decided that JT and Sure have broken competition law by attempting to illegally control the provision of mobile networks in Guernsey, including the future introduction of 5G.
While businesses like Sure and JT will have valid reasons for communicating and exchanging information, the nature and purpose of the exchanges uncovered by the Competition Authority were found to go well beyond legitimate purposes. The GCRA will now consider whether it would be appropriate to impose a financial penalty on JT and Sure.
The GCRA opened an investigation into a suspected anti-competitive agreement between JT and Sure in relation to their mobile networks in Guernsey, where each of them operates their own network. The GCRA’s investigation initially focused on a suspected agreement in relation to 5G but as further evidence was uncovered it was expanded to include all mobile networks operated by Sure and JT.
The GCRA’s investigation found that over a period of approximately a year, through repeated contacts and exchanges of information between them, JT and Sure privately developed a joint plan without disclosing it to their regulator or the States that would mutually benefit each in their home markets.
They also exchanged information on their commercial strategy for introducing next generation mobile networks at a slower pace than that sought by the States of Guernsey and on a common ‘line to take’ that they were working to achieve the objective of introducing that technology to Guernsey in line with, or ahead of, the UK while privately agreeing not to do so.
Airtel, the second largest mobile provider in Guernsey, was not party to the arrangements.
Guernsey competition law requires competitors to ‘compete not collude’ – making independent decisions about how they plan to behave in the market. Competitors are not allowed to exchange information with each other on their commercial strategy, which includes the matters on which JT and Sure repeatedly exchanged information. This behaviour risked damaging fair competition in Guernsey and, ultimately, Guernsey consumers’ interests.
Alistair Beak, CEO of the Sure Group, said: “We are extremely disappointed by the GCRA’s Final Decision and continue to absolutely refute the allegation that we entered into an anti-competitive agreement with any operator.
“Sure absolutely disagrees with the Final Decision and will now be appealing it through the Royal Court. At all times Sure has acted in accordance with the spirit and letter of the law. We are very confident that this will be confirmed in due course following the appeal which will now be filed against this decision.
“Earlier this year we submitted a thorough and detailed rebuttal to the GCRA’s Draft Decision, which we supplemented with a presentation to the GCRA in September. These representations clearly demonstrated that Sure had not contravened competition law when it engaged in the discussions with JT to explore the idea of a single 5G mobile network for Guernsey. This was done in response to what was then the latest iteration of the GCRA’s allegations.
“We are disturbed to see that, yet again, there is now another iteration of the allegations and one which was not put to us before. It is clear that the GCRA is determined to justify its lengthy and expensive investigation by portraying Sure as having acted wrongfully in some way, shape or form and to do so regardless of the evidence provided to it.
“Their approach is unfair and deeply flawed. It demonstrates a lack of ownership on the part of the GCRA for their conduct and role in these discussions, and a lack of regard for the instructions issued by the Government at the time. The fact is that discussions with JT only took place after Sure was instructed in clear and unequivocal terms by the regulator and Government to have those discussions.
“We therefore find it astonishing that the GCRA should seek to criticise Sure. Their approach to this matter throughout has lacked principle, fairness and reason.
“This case began more than two years ago; from the outset we have cooperated fully, at enormous cost in money and time. Our focus is on connecting our island communities for a better future. If left unchallenged, the GCRA’s approach will be deeply damaging to the Guernsey business community.”
What is the essential concern with the conduct?
Guernsey has historically benefitted from high quality mobile services through promoting choice between mobile network providers who took part in a competitive process to win the right to do so. Whether the existing approach continues with next generation mobile or a single mobile network provider approach is adopted in future, achieving that position should be on its merits and not arranged between competitors.
The GCRA has found that, in the context of the States of Guernsey exploring ways in which 5G in Guernsey could be implemented more quickly than, or in line with, the UK, the Parties exchanged information between them and held discussions over an extended period of time about:
- JT removing its mobile network infrastructure from Guernsey (in return for Sure doing the same in Jersey).
- Their commercial plans for a slower speed of implementation of 5G (which did not align with the States of Guernsey’s aspirations).
- Development of a shared ‘line to take’ with Government, which did not reflect the Parties’ actual intentions with respect to the speed of implementation of 5G.
The Parties say they have been discussing network sharing. What is wrong with that?
At a senior level JT and Sure were aware that their behaviour was likely to raise concerns but used phrases like ‘network sharing’ and ‘infrastructure sharing’ to describe their objectives.
Network sharing of mobile mast infrastructure is positive as it reduces mobile mast density and can be more efficient because it avoids unnecessary duplication of infrastructure. It is encouraged by governments and regulators around the world, including in Guernsey. However, JT and Sure were not engaged in ‘network sharing’ but rather in an agreement and a concerted practice pursuant to which JT would remove its mobile network infrastructure from Guernsey in exchange for Sure reciprocating in Jersey.
Airtel, the second largest mobile provider in Guernsey, was potentially affected as its shares masts with these operators but was not included in the arrangement.
Can competitors ever cooperate?
Yes they can, but if the competition law applies to them, they have to do so accountably and transparently.
Businesses will at times want to enter into agreements that on the face of it could contravene competition law where they substitute competition for cooperation. There are circumstances when some forms of cooperation are directly linked to benefits to the consumer and can take a variety of forms. Parties therefore have a facility available to them in the competition law that enables a case to be made to the GCRA for assessment; where the case is persuasive the parties are given an exemption under the law.
However, serious restrictions of competition, such as those found in this case, are unlikely to benefit from exemption and in any event the Parties did not make an application in this case.
How does this relate to the Jersey Competition Regulatory Authority investigation?
The JCRA investigation related to the arrangements between JT and Sure for sharing network elements in connection with the roll-out of 5G services in Jersey.
The GCRA investigation extended to all mobile network provision. On 30th March 2021 the JCRA announced that its Investigation would be closed without a decision, in the light of certain steps JT and Sure had each made in relation to ensuring that any future sharing of network elements would be in compliance with the Jersey Competition Law.
A Memorandum of Understanding between the two Authorities provides a framework for the working relationship between the JCRA and GCRA. It governs the basis for information sharing between the two Authorities on matters of mutual interest. If the JCRA has new evidence it can choose to reopen an investigation.
What happens now?
The GCRA may make an order imposing a financial penalty on an undertaking which is found to have broken competition law.
The GCRA will be minded to impose a financial penalty where it finds a restriction of competition by object. It will therefore now consider whether it would be appropriate to issue a draft penalty statement to the Parties in respect of the by object infringement described in this Decision. In carrying out this assessment, the GCRA will follow the approach set out in its Guideline on Financial Penalties.
