Bandwidth deal ruling 'exposes competition laws ambiguity'

A recent decision by the Commissioner for Fair Trading, which deemed a bandwidth agreement to be in breach of competition rules, has served to expose the ambiguity of competition laws in Malta, according to the company bearing the brunt of the ruling.

Datastream underlined the importance of having a stable regulatory market after an agreement it struck with internet service providers for the purchase of international bandwidth was considered to go against competition rules and was declared null and void.

A final decision on the matter will be taken by the Office for Fair Competition.

The OFC admitted there was certain overlap over issues of competition to the extent that the OFC and the Malta Communications Authority would be drawing up a memorandum of understanding to try and streamline the process.

The bone of contention is an agreement between Datastream and a consortium of eight ISPs drawn up last August, that together negotiated and bought a substantial amount of bandwidth.

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. It accused Datastream of abusing of its dominant position and was foreclosing the market.

Vodafone had just acquired a licence to sell international bandwidth and it considered Datastream's agreement to have severely limited the bandwidth market, thus hindering liberalisation.

Datastream's chief executive officer Godfrey Vella insisted that his company played by the rules because the MCA was fully aware of the agreement in question.

"The agreement with the ISPs was done in good faith. We didn't coerce anyone into signing anything. We have to remember that it is ultimately the consumer that will benefit when good deals are struck.

"We thought the telecoms market was regulated by a law which is steered by the MCA. The MCA is ultimately the specialised body," Mr Vella said.

Highlighting the importance that decisions are not taken before the real implications and repercussions are weighed, Mr Vella said such a decision would now cast doubts over the legitimacy of several agreements, such as the permission to draw up duration contracts.

Marcel Pizzuto, OFC director general, said it was his office's intention to take a final decision on the case until interim measures decided by the commissioner expire in May.

Mr Pizzuto explained that the decision by the commissioner would mean that the agreement is temporarily declared null and void, meaning that the ISPs would not, for example, be penalised if they opted out.

Still, he admitted that more streamlining was needed to ensure that all companies have clearer competition guidelines.

When contacted, a spokesman for the MCA said it was not party to the proceedings in the case before the Commission for Fair Trading and does not have any powers to intervene in such proceedings under the Competition Act.

"It's up to the parties concerned to decide what steps to take following the decision taken by the commission," the spokesman said.