The Telecommunications Regulatory Commission’s power to penalise telecom companies for past misconduct has been limited after High Court Justice Nicola Byer overturned a $493,665 fine the TRC levied against Cable & Wireless in June 2012 for allegedly engaging in “anti-competitive” behaviour some two years earlier.
Because the legislation governing the TRC only gives the regulator power to take action against companies “carrying on” or “likely to carry on” wrongdoing, the TRC exceeded its powers by imposing a fine for past actions by C&W, Ms. Byer stated in her judgment.
The justice acknowledged that not having the power to punish past misconduct might hamstring the TRC’s ability to regulate the industry, but she said that the court is bound by the specific wording of the legislation even if it is illogical.
“The court can certainly understand the difficulty of the regulator in this position, as it does leave the [TRC] in a somewhat weakened position with regard to the reach of its enforcement powers,” Ms. Byer wrote in her July decision. “However, the remedy for this is legislative amendment, and not excessive statutory provision.”
Two fines
The case stems from a pair of fines the TRC imposed against Digicel and C&W in June 2012 for an alleged “market squeeze” against their smaller rival CCT Global Communications between January 2009 and August 2010.
According to the TRC, the market squeeze related to the “termination rates” that the companies charge each other to connect calls on their networks.
For example, when a CCT mobile phone user in the Virgin Islands calls someone on C&W’s network in Jamaica, C&W charges CCT a termination rate per minute to connect the call. Unlike CCT, Digicel and C&W have affiliates across the region.
In this case, the TRC alleged that C&W’s “All Talk” plan, which offered a flat rate for a bundle of minutes to make inter-Caribbean calls, was priced to VI consumers at a lower rate than the termination rate C&W charged CCT.
This “margin-squeezing” practice, according to the TRC’s 2012 investigation, is “unfair competition” that would cause “long-term harm to the welfare of consumers” if it continued.
“Over time, it is realistic to suppose that CCT would be forced to exit the market or would be absorbed into a competitor’s operations, leaving two mobile network operators in the VI market,” the TRC report stated.
Digicel case
Neither Digicel nor C&W disputed in court the accusation that they offered their customers lower inter-Caribbean rates than the termination rates charged to CCT, but they both argued that the TRC acted unreasonably and beyond the scope of the law in levying the penalties against them.
C&W’s challenge to the TRC fine, however, rested on grounds slightly different than the ones on which Digicel successfully challenged its fine in 2014.
In the Digicel case, Ms. Byer found that the TRC “breached the rules of natural justice” by failing to afford the company a fair hearing. According to Ms. Byer’s 2014 decision, the TRC made certain findings based on CCT’s confidential information that it did not provide to Digicel.
“These financial statements were of paramount importance to the investigative and ultimately decision-making process of the [TRC],” Ms. Byer stated in her decision to quash the TRC fine. “There can therefore also be no doubt that the claimant was entitled to the said financial information in their entirety.”
C&W case
C&W, on the other hand, argued that the TRC violated the Telecommunications Act 2006: The telecom company’s attorney, Kassie Smith, said at the trial last December that the law gives the TRC power to engage in ex-ante regulations but not ex-post regulations.
In other words, she said at the time, the TRC has the power to find a public supplier dominant in the market and then prescribe certain regulations. It does not, however, have the power to investigate behaviour that has already taken place by a company and deem it unlawful when there isn’t any strict prohibition against it.
“If you’re saying to companies, ‘We can come along and look at what you did in the past, say it is unlawful, and impose on you a fine of three percent of your turnover for having engaged in that conduct,’ then you need to know before doing anything what that unlawful conduct is,” she said at the trial, contending that the TRC did exactly that when it made its findings against C&W.
The TRC, for its part, stated that C&W’s arguments would lead to “absurd consequences” because telecom companies could avoid punishment simply by ceasing any potential wrongdoing before the TRC has the chance to issue a penalty.
“This, [C&W] argued, would make a mockery of the entire system if past conduct that had already amounted to driving competitors from the market could not be adequately punished,” Ms. Byer wrote in her judgment.
However, the judge said that the court is bound by the wording of the Telecommunications Act, and not by what conclusions may derive from that wording.
“The court has nothing to do with whether the legislature by the use of its words has committed an absurdity,” she stated. “The provisions of the act have to be read in their clear meaning. It is not open for the [TRC] to read into the statute as a matter of convenience what is not there.”
C&W and TRC officials did not respond to requests for comment for this story.
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