Smart Telecom has taken a High Court action against Eircom, accusing the former State company of abusing its dominant position in the telephone market.
It served a notice of motion and a plenary summons under the Competition Act 2002 in which it asked the court to impose an injunction on Eircom to remove alleged restrictions on its broadband service.
These include a notice of termination that Eircom served on Smart on May 20th over its refusal to provide a €4.9 million deposit as a form of security for future trading.
Eircom's demand for such a deposit follows a credit assessment on Smart by Dun & Bradstreet, which Smart claims to be hopelessly flawed.
Smart claims Eircom is mis-using the Dun assessment by seeking to impose unfair and completely onerous commercial conditions on it.
Smart also claims that the demand for a deposit bears no relation to the alleged financial risk that Eircom claims it faces as a result of the assessment. Smart offered a €2 million rolling security which was rejected by Eircom.
Smart employs 330 people. It had revenues last year of €25 million and made a loss of €8 million before interest, tax, depreciation and amortisation.
Its backers include businessmen Lochlann Quinn, formerly of Glen Dimplex, and Kingspan's Brendan Murtagh.
Smart said it paid revenues of €10 million to Eircom last year and has paid €14 million to Eircom so far this year.
While the case has yet to be aired in public before the court, Smart is seeking compensation from Eircom for the alleged "commercial damage" it has suffered as a result of the restrictions.
Smart has some 70,000 customers for its voice service. However, the company says its new broadband customers cannot retain their phone number when they transfer from Eircom.
Smart says that customers who have switched from Eircom through wholesale line rental cannot move directly to Smart but must revert first to Eircom. It also says that customers who want to switch from an Eircom broadband service to a rival offering must have their connection switched off before moving.
Smart argues that such conditions make it difficult for it to activate accounts and maintains that Eircom is using such tactics to retain its dominant position in the broadband market.
It says the objective of the restrictions it faces are a result of Eircom's intention to create logistical difficulties for its customers.
