Brussels price probe deals new blow to beleaguered mobile phone sector

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The Independent Online

Shares in Vodafone and British Telecom fell sharply yesterday after the European Commission carried out dawn raids on the premises of nine UK and German mobile phone operators as part of an investigation into price-fixing.

The investigation is seeking "evidence of collective fixing of consumer prices by mobile operators in both countries" in respect of roaming – using another operator's network to make and receive calls when abroad.

Mario Monti, the European competition commissioner, said that all four of the UK's mobile operators – Vodafone, BT Cellnet, Orange and One2One – were raided along with five mobile operators in Germany. These include D2, which is owned by Vodafone, D1, which is operated by Deutsche Telekom, and Viag Interkom, which is controlled by BT Cellnet's parent company, BT Wireless.

Vodafone shares fell 6 per cent while BT shares dipped 4 per cent. The share prices in France Telecom, the owner of Orange, and Deutsche Telekom, owner of One2One, also ended down slightly.

The investigators from the Commission's competition directorate DG4 were accompanied by officials from the Office of Fair Trading although the UK authorities are not directly involved in the inquiry.

Mr Monti has been investigating roaming charges across Europe since January last year. Yesterday his department said there were "serious competition concerns" about the level of charges which warranted further investigation. The Commission also said roaming charges were rigid, lacking in transparency and unrelated to the actual cost of carrying overseas calls.

The dawn raids were also conducted to verify whether German mobile operators have illegally fixed the wholesale prices they charge to other operators and whether these prices are excessive and discriminatory, it said.

Since 1990, roaming charges have been based on guidelines set down by the GSM Association, a body representing mobile operators. These recommend a mark up of between 15 and 35 per cent on the local network operator's most popular tariff to cover additional billing and administrative charges and the increased risk of bad debts.

Mobile operators justified the mark-up on the grounds that it was a fraction of the charge levied to make a telephone call from a hotel room. They also argued that mobile call charges for domestic calls would be higher if it were not for the roaming charges.

Vodafone said that investigators arrived at its Newbury headquarters in Berkshire at around 9am and were still there by early evening. BT Cellnet's headquarters at Stockley Park near Heathrow were also raided as were the London headquarters of Orange and One2One.

The Commission said that the investigation in the UK and Germany – Europe's two biggest mobile markets – was still at a preliminary stage and no conclusions had yet been reached concerning the companies involved. If they were found guilty of price-fixing, then the companies could face fines of up to 10 per cent of turnover. Vodafone, the world's largest mobile operator, had sales last year of £21.5bn following it successful acquisition of Germany's Mannesmann.

Orange, Vodafone, BT Cellnet and One2One all said that they had co-operated fully with the Commission's officials but refused to comment further.

One executive said the dawn raids were designed to "add a bit of drama to an otherwise dull day". He said they appeared to have taken place because one or two operators had failed to give as much information as Brussels had requested when it sent out questionnaires asking for details of their costings and charges.

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