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On 9 August 2017, the Supreme Court of Mauritius awarded Emtel, a mobile phone operator in Mauritius, £13 million damages in respect of loss suffered as a result of cross-subsidies granted by Mauritius Telecom (“MT”), the monopoly fixed line operator, to its mobile phone subsidiary, Cellplus.
The Claimant, Emtel, was the first mobile phone operator in Mauritius. Several years after Emtel started operation, MT established Cellplus as a second mobile phone operator. The Court found that it was a condition of Cellplus’ licence that it would not benefit from any cross-subsidy from its parent. On its launch Cellplus significantly undercut Emtel’s tarrifs. Emtel was forced to reduce its tariffs match to avoid losing market share. The Court found that Cellplus’ loss-making tariffs were funded by financial assistance from MT in the form of interest free inter-company debt and lease finance at non-commercial rates.
The Court concluded that the cross-subsidisation constituted unfair competition (concurrence deloyale) and amounted to a “faute” within the meaning of article 1382 of the Civil Code. The Court awarded damages to Emtel to compensate it for the difference between the reduced tariff actually charged and the tariff that would have emerged in a counterfactual where Cellplus competed without benefiting from cross-subsidies.
The Court further held that the regulator was jointly and severally liable for the loss suffered by the subsidised low tariff, on the basis that it had committed a “faute lourde”. Emtel had complained to the regulator about Celllplus’ non-compliance, but the regulator had wilfully taken no action.
Mark Brealey QC appeared for Emtel (having been granted special dispensation by the Lord Chief Justice of Mauritius to appear in the Supreme Court). The trial lasted 8 weeks.
To read the judgment please click here.