Bandwidth deal ruled null and void

An agreement between Datastream and internet service providers for the purchase of international bandwidth was deemed by the Commissioner for Fair Trading to be in breach of competition rules.

The commissioner gave his ruling following a request by Vodafone Malta Ltd for "interim measures". He declared the agreement null and void.

Last year, Datastream had entered into an agreement with a consortium of eight ISPs which together bought a substantial amount of bandwidth. Vodafone Malta had acquired a licence to sell international bandwidth but Datastream's agreement with the ISPs was considered to have severely limited the bandwidth market, thus hindering liberalisation due to its foreclosure effect.

Vodafone Malta was granted an international gateway licence in October 2002 and the market for international gateway services was liberalised in January 2003. A year later Datastream reached the agreement with eight ISPs to form a consortium and together they bought a substantial amount of bandwidth. The agreement was signed last July but was backdated to January of the same year.

In July 2004 Vodafone took its case before the Office for Fair Competition (OFC), complaining about Datastream's behaviour and claiming that the company was abusing of its dominant position, thus foreclosing the market. Datastream submitted a jurisdiction plea, arguing that the OFC did not have jurisdiction to hear the case and that only the Malta Communications Authority did.

In October last year, Vodafone lodged a request with the Commission for Fair Trading asking it to order interim measures with the aim of suspending the agreement until such time that the investigation by the OFC is concluded. Vodafone did this referring to a "delay in proceedings" and to the "serious immediate and irreparable prejudice" the Datastream consortium was causing to it and to the general economic interest.

The Commissioner for Fair Trading decided last November that the OFC had jurisdiction to hear and investigate the complaint and in January 2005, the OFC drew up a report in which it rejected Vodafone's request for interim measures. This report was submitted to the Commissioner for Fair Trading who, according to law, is empowered to give the final decision on whether interim measures were appropriate in the circumstances.

The Commissioner for Fair Trading upheld Vodafone's request for interim measures and declared null and void the agreement between Datastream and the ISPs for purchasing of bandwidth, as this was found to be in breach of competition rules.

The interim measures are effective for a period of three months from the date of the decision, that is February 11.