R (BT3G Ltd and One 2 One Personal Communications Ltd) v Secretary of State for Trade and Industry

JurisdictionEngland & Wales
JudgeLORD PHILLIPS MR
Judgment Date17 October 2001
Neutral Citation[2001] EWCA Civ 1448
Docket NumberCase No: 2001/0404
CourtCourt of Appeal (Civil Division)
Date17 October 2001

[2001] EWCA Civ 1448

IN THE SUPREME COURT OF JUDICATURE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

The Hon. Mr Justice Silber

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before:

Lord Phillips Mr

Lord Justice Henry and

Lord Justice Brooke

Case No: 2001/0404

The Queen On The Application Of

(1)BT3G Limited
Appellants
and
(2) One 2 One Personal Communications Limited
(3) One 2 One Personal Communications (a Firm Trading As 'one 2 One')
and
The Secretary Of State For Trade And Industry
Respondent

David Vaughan, QC and Mark Brealey (instructed by Simmons & Simmons for the Second and Third _Appellants)

Richard Gordon, QC, Alan Maclean and Ms Kelyn Bacon (instructed by Ashurst Morris Crisp for the First Appellant)

Richard Fowler, QC, Jonathan Crow and Clive Lewis (instructed by the Treasury Solicitor for the_Respondents)

Nicholas Green, QC and Andrew Henshaw (instructed by Linklaters for Vodafone an Interested Party)

LORD PHILLIPS MR

This is the judgment of the court.

Introduction

1

This is an appeal against a judgment of Silber J. dated 21 December 2000 [2001] EuLR 325. The judgment runs to 70 pages in the report and the Judge has devoted immense energy to a meticulous account of the material facts and issues. We shall gratefully incorporate in this judgment, with appropriate adaptation, portions of his judgment which are not in dispute.

2

The Judge had before him applications for permission to seek judicial review of decisions of the Secretary of State. The Judge granted permission but refused the substantive applications for judicial review.

The Facts

3

The first application was by One 2 One Personal Communications ("One 2 One"). The second was by BT3G Limited ("BT"). There were also before the Court statutory appeals under Section 1F of the Wireless Telegraphy Act 1949 ("the 1949 Act"). It was accepted by all parties that these raised identical issues to the applications for judicial review and they were not pursued.

4

The applications concerned the consequence of an auction conducted by the UK Government of licences for the so-called third generation of mobile phones, sometimes known as the "Universal Mobile Telecommunications System" but more commonly described by its acronym "UMTS". The third generation networks will provide mobile phone users with access for the first time to multi-media services, such as video-conferencing, mobile office services, virtual banking, home shopping, internet access and on-line entertainment.

5

The auction took place in March-April 2000 under rules contained in the Wireless Telegraphy (Third Generation Licences) Notice 1999 promulgated by the Secretary of State on 22 December 1999 ("the Auction Rules"). Following a lengthy consultation process, the Auction Rules had been issued pursuant to the Wireless Telegraphy Act (Third Generation Licences) Regulations 1999 ("the 1999 Regulations"), which themselves were made pursuant to the Wireless Telegraphy Act 1998 ("the 1998 Act").

6

One 2 One and BT (collectively "the appellants") complain that the operation of those rules has proved to be unfair to them. Their particular grievance relates to the rules which governed when licences were granted and which provided that licences had to be paid for when they were granted. The appellants were successful bidders for two of the five licences offered in the auction and were granted and had to pay for these licences shortly after the end of the auction, in mid-May 2000.

7

Vodafone Limited and Orange Personal Communications Services Limited (which, together with other relevant companies in the Orange group, we shall call "Orange"), were also successful bidders for one licence each. They were associated companies and were not granted their licences immediately because a pre-condition of obtaining them was that they had to cease to be associated and this meant that Vodafone's parent company, Vodafone AirTouch plc had to divest itself of Orange. That divestment was completed on 22 August 2000. Vodafone and Orange were granted and paid for their licences on 1 September 2000. This difference of between fifteen and sixteen weeks, from the time at which the appellants received and, more importantly, paid for their licences and the time at which Vodafone and Orange received and paid for theirs, gave the latter the advantage of a holiday before they had to start to meet the financing costs of paying for the licences. The saving for each company, compared to the position of One 2 One and BT, is said to be in the region of £85 million. The appellants contend that the Secretary of State could and should have avoided this result and that his failure to do so was, and the ensuing increased interest cost that they have had to bear is, irrational, unfair, disproportionate, discriminatory and in breach of EC laws relating to state aid. The appellants contend that all successful bidders should have been required to pay for their licences at the same time.

8

The effect of the difference in payment dates reflects the gargantuan sums that the successful bidders agreed to pay for their licences. Thus, by way of example, One 2 One agreed to pay £4,003,600,000 for theirs.

9

The appellants argue that the Secretary of State should have invoked a power, open to him under the Auction Rules, to ignore the Vodafone/Orange association and grant licences to both companies immediately with the result that they would have had to pay for them at the same time as the appellants rather than wait until the association was terminated. Alternatively, the appellants argue that all bidders' payments should have been delayed until such time as Vodafone and Orange were required to make payment. These contentions are disputed by the Secretary of State, whose case is that he properly applied Auction Rules that had been agreed by all concerned and that he acted reasonably in so doing.

10

Vodafone was given permission to intervene in the proceedings, and have supported the Secretary of State. Neither of the other two successful applicants of the five who were granted licences have adduced evidence or made representations.

The background to the UMTS Auction

11

This is described in greater detail in Appendix I to our judgment, but can be briefly summarised as follows:

12

By Directive 97/13/EC of the European Parliament and Council of 10 April 1997 ("the Directive") a framework was provided for telecommunications licensing which was intended to harmonise licensing procedures throughout the European Union. It enabled licences to be granted on an individual basis in certain circumstances and it set out the conditions which could be attached to the authorisation or licence. The second significant piece of European Community legislation was the so-called "UMTS Decision" which was Council Decision number 128/1999 EC and its purpose was stated in Article 1 to be to "facilitate the rapid and co-ordinated introduction of compatible UMTS networks and services in the Community". Member States were required to take all action necessary to allow the co-ordinated and progressive introduction of UMTS by 1 January 2002 in accordance with the Directive.

13

The British Government decided to hold an auction at which bidders would compete for the UMTS licences which would enable them to use a particular part of the spectrum to transmit the signals by which they could provide third generation mobile services. In other words, the bidders were attempting to purchase the right to transmit information in a specified technical manner on specified radio frequencies. The Department of Trade and Industry published a consultation document "Multimedia Communications on the Move" which made it clear that the policy of the Government would be that if one company controlled more than one licence, this would constitute a failure to exploit the available spectrum in the best interests of the community and the economy.

14

In early 1998, the Government convened a group to facilitate consultation between industry and Government on third generation mobile licence issues. The purpose of this group, known as UMTS Auction Consultative Group ("UACG"), was to enable there to be continuing consultation between the Government, industry and other interested parties on matters relating to the proposed auction. Both BT and One 2 One had representatives as members of UACG, which held nine meetings between March 1998 and 14 May 1999. Further papers were issued to members and comments were considered until the United Kingdom Spectrum Auction Information Memorandum ("the Information Memorandum") was published on 1 November 1999.

15

The mode of operation of UACG was that the consultation papers on various topics were published through the Radiocommunications Agency ("the Agency"), which is an executive agency of the Department of Trade and Industry responsible for the management of most non-military radio spectrum in the United Kingdom and, in particular, the auction of the UMTS Rights. The Agency, acting for the Secretary of State, in fact dealt with many of the matters in respect of which complaint is made by the appellants. The UACG meetings included a presentation of the consultation papers by the Agency and a discussion on them by the committee. At the conclusion of each meeting, a further period was given for members to provide written responses to the consultation paper, which were then considered.

16

On 10 May 1999, following a year of negotiation with UACG, a paper entitled "Putting the Policy into Practice: Regulations and Notice" was published and was discussed at a UACG meeting on 14 May 1999. It consisted of draft regulations under the...

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