ESAT BT and some other competing telecoms operators are gathering evidence for a legal suit for damages against Eircom worth up to €170 million following a ruling that the firm has offered illegal discounts to customers for years.
The operators are also questioning the validity of a €100 million Government contract recently signed with Eircom for the supply of voice and data services to Government departments and public agencies throughout the State.
Esat BT has asked the telecoms regulator to investigate the State contract to determine if it was won using the type of "off-book pricing" that Eircom was found to have engaged in last week.
The Association of Licensed Telecommunications Operators in Ireland (ALTO), an umbrella group of telecoms firms other than Eircom, will raise the issue with the Minister for Finance, Mr McCreevy, next week.
The queries follow a decision by the telecoms regulator, Ms Etain Doyle, that Eircom was non-compliant with legal obligations in relation to the prices it offered potential customers for voice telecoms services. Following an investigation, Ms Doyle ruled Eircom was not conforming to legal obligations to offer prices at rates set by the regulator. She also said "non compliance was more extensive than initially considered".
The prices charged by Eircom are agreed and monitored by Ms Doyle because Eircom is a dominant company in the sector.
Eircom has blamed the pricing on an accidental systems error and claims it was not a malicious attempt to undermine competitors.
An Eircom spokesman said yesterday that the company was dealing with the issue in a pro-active manner. He also said the Government contract had already been investigated and no difficulty had been found with it.
But Esat, Worldcom and ALTO said yesterday they had suspected Eircom had been engaged in anti-competitive action for several years. ALTO chairman Mr Iarla Flynn said Eircom had been engaged in a systematic destruction of competition in the Republic and it explained why new entrants market share had stagnated at 20 per cent, while in other European markets it stood at about 30 per cent. "We estimated that operators have suffered losses of more than €170 million in the last two years," he said.
Esat BT is conducting an audit of the tenders it has lost over the past few years to determine the level of damages it could seek in a legal action. Initial results show that more than 2,000 contracts were affected worth about €60 million per year. An Esat BT spokeswoman said the firm was deeply concerned about the implications of the Eircom action.
"If we had had a level playing field all along, perhaps we could have retained some of the jobs that were lost earlier this year and pumped more money into our infrastructure. Anti-competitive behaviour cheats the marketplace on many levels and destroys opportunity for growth," she added.
Ms Doyle has set out strict compliance measures for Eircom and has asked the firm to provide a detailed compliance plan from next week. She has reserved the right to take further action against Eircom, including imposing fines on a legal indictment, but it is believed Ms Doyle will not do this unless Eircom continues to offer "off-book pricing".
Under legislation, Ms Doyle must take a criminal case against Eircom to impose penalties against it. Currently, the penalties are a paltry €1,900 fine, although legislation due to be enacted shortly will increase this to 10 per cent of a firm's turnover.
Eircom's admission that it has offered illegal discounts to customers and the regulator's investigation could help facilitate a damages suit by the company's rivals, according to legal sources.
