Competition watchdog examines price forecasts from telephone providers

The country’s competition authorities are to check whether warnings of price increases from telecom providers Eir, Vodafone and Three Mobile are endangering competition.

The move comes after all three said they will now increase their prices by a set percentage plus the rate of inflation each year.

Consumer advocates have claimed this amounts to price signalling, which is prohibited under Irish competition law.

Price signaling is an anti-competitive practice whereby companies alert their competitors that they intend to raise prices.

The Competition and Consumer Protection Commission, which oversees competition law, has in the past cracked down heavily on companies that have publicly commented on price increases.

Recently, the state’s six auto insurance companies were forced to sign legally binding agreements to reform their internal competition compliance programs after five years of investigations into alleged “price signaling” by insurers.

That Irish Independent announced last week that starting in April next year, Eir will increase the cost of its plans annually by January’s inflation rate plus 3 percent.

The state’s largest telecom company, of which Oliver Loomes is CEO, said those price increases will be applied to the full monthly pricing plan before discounts.

The CPI inflation reading is currently 7.8 percent, which would mean a 10.8 percent rise in the price of Eir if inflation is that high in January.

This is a similar move to Vodafone and Three Mobile, which have announced they are planning steady increases.

Vodafone Ireland has introduced a minimum annual price increase of at least 3 per cent for new mobile bill payment customers and bill payment customers who are upgrading or renewing their subscription.

Three Ireland is increasing the monthly fee for its Bill Pay pricing plans by 4.5 percent annually.

Price comparison site Bonkers.ie’s Daragh Cassidy has asked the Competition and Consumer Protection Commission whether the move to inflation plus annual price increases isn’t tantamount to price signalling.

Mr Cassidy said there are now fears that Virgin Media, which offers fixed-line and broadband services, and Sky TV, which also offers fixed-line and broadband services in that market, will introduce similar inflation-plus-annual price increases.

The leader of the Irish Consumers’ Association, Michael Kilcoyne, said it was not in the best interest of consumers to get companies to set annual price increases.

“It distorts competition. If they’re all going to have annual increases made up of a fixed percentage plus the rate of inflation, then who’s going to provide value to the consumer?’ Mr Kilcoyne said.

“What’s the competitive point if they make automatic annual increases?”

The Competition and Consumer Protection Commission (CCPC) said it actively works with retailers and trade associations who make public statements about price increases.

Under certain circumstances, this could amount to anti-competitive price signalling.

When asked about the move to annual inflation-plus-price hikes, it said it and telecoms regulator ComReg have simultaneous competition powers in the telecoms sector.

“CCPC will be contacting ComReg regarding conduct that may be of concern,” the competition watchdog said.