EC to scrap mobile price probe

A FOUR-year inquiry into prices charged by mobile phone firms to customers using their phones abroad is likely to be dropped by European Competition Commissioner Mario Monti.

The inquiry was launched with great fanfare in 1999 after businesses complained they were being charged many times the usual rate to 'borrow' other company's networks - known as roaming - when overseas.

But analysts and industry observers say Monti will probably drop the inquiry by the end of the year.

Brian Coleman, an analyst at investment bank JP Morgan, told Financial Mail that the European Commission had informally indicated the inquiry was all but over.

'The Commission found the subject far more complicated than it expected and is worried that any action to force cuts could be overturned by the courts,' he said.

'Responsibility will be pushed back to national regulators, who are unlikely to take action to harm their local firms and benefit only foreign visitors.'

A source close to one of the UK's big four mobile companies said that competition had already made the inquiry largely worthless.

'Prices for roaming have fallen dramatically. Phone companies do not sit in dark rooms thinking of ways to clobber their customers. Roaming competes with hotel phones and the impact has been huge there, with prices dropping like a stone,' the source said.

A Commission spokesman said no decision had been taken. 'When we have something to say, Mario Monti will communicate it.'

Scrapping the inquiry will benefit Vodafone, T-Mobile and Orange as they have large numbers of corporate customers. As much as 10% of their revenue comes from roaming charges.

Coleman said scrapping the probe could save the firms billions of euros. 'In the worst case scenario they could be fined 10% of global sales and there would be pressure to cut prices, though the Commission has no power to directly regulate prices.'