Cyprus Supreme Court rules against phone price cuts

The Cyprus Supreme Court on Friday issued a ruling on that will force the dominant state-owned telecoms provider CyTA to reverse price-cuts for mobile telepony calls that have been effective since April, after CyTA refused to comply with an earlier interim order.

In response to a complaint filed by CyTA’s rival, areeba, the Competition Commission issued an interim order ordering CyTA to reverse its price reduction on mobile telephony rates and to revert to the prices prevailing on March 31, 2005.

However, CyTA decided to ignore the interim order after obtaining a legal opinion, which said that the Competition Commission does not have the competence to impose such an order.

The interim order was then annulled but the Supreme Court revived it on Friday.

Cyprus has the lowest telephony rates in the EU, but since CyTA holds 96% of the telephony market, the Cypriot authorities are under pressure to break open the competition to areeba, the mobile rival which started operations in 2004, and which before April was offering lower mobile rates on some services.

CyTA argued that its wholesale and retail pricing was not made in view of its dominant position but took account of the competitive environment in the market. It said that the price cuts would have given it a gross profit margin in excess of the minimum 14%, including cost of capital.