Vtesse loses appeal over state aid for broadband in Cornwall

Court rejects Vtesse’ appeal against the European Commission’s decision that state aid for BT was legal

Fibre network owner Vtesse has lost a final appeal in the European Union General Court against the European Commission’s 2010 decision to declare state aid for superfast broadband rollout legal under European law.

Vtesse had argued that the awarding of state aid to incumbent telecoms operator BT to provide superfast broadband in Cornwall was unfair.

After losing its original appeal, Vtesse returned to the court to argue that, as a competitor of BT, the awarding of state aid to BT instead of to itself – the only other party tendering – meant its competitive position in the market was “substantially adversely affected” on the grounds that tendering for Superfast Cornwall was “a very substantial project for it”.

It also claimed the original decision to approve the aid without initiating the formal investigation procedure under Article 108(2) TFEU breached its procedural rights.

However, in the latest judgment, which was handed down on 5 November 2014, the General Court said Vtesse had failed to pass the “individual concern” test and had failed to show evidence of a significant negative impact on its business.

It also said that, because Vtesse had tendered as a member of a competing consortium – including telco Surf Telecoms and wireless supplier Motorola – it was not, in reality, the only other party in the tender.

Vtesse, which was acquired by Interoute in October 2014, was also ordered to pay its own and BT’s costs, although the British government, supported in the action by the government of Poland, will have to bear its own costs.

A BT spokesperson said: “We are delighted that the EU General Court has upheld the Commission’s 2010 decision approving public funding for the superfast broadband project in Cornwall and the Isles of Scilly.

“The project is proving to be a resounding success for local residents and businesses. Ninety-two percent of homes and businesses in the jointly funded intervention area can now access fibre broadband and there are 53 different ISPs with connected customers on the new network keeping competition intense and prices low.

“Meanwhile, some 55,000 customers have already connected, including an estimated 6,500 local businesses, and all of them have access to speeds of up to 80Mbps, rising to 330Mbps in some areas.  Monthly rentals for local households and businesses start from £5.00, comparable with the best rates in the UK”.

Vtesse’s new owners had not responded to a request for comment at the time of going to press.

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