BRG Expert’s Evidence Preferred in Dismissal of Competition Claim against Gibtelecom and Rockolo

In the first-ever claim for breach of competition law heard before the Supreme Court of Gibraltar, Gibfibre Ltd v Gibtelecom Ltd & Rockolo Ltd, the Hon. Mr. Justice Restano found in favour of the defendants (“Gibtelecom”) on all material points. Gibfibre’s claim related to Gibtelecom’s commercial refusal to permit Gibfibre to offer connectivity services to Gibtelecom’s colocation services customers at one its data centres in Gibraltar. Gibfibre alleged that the refusal was a breach of Article 102 of the Treaty on the Functioning of the European Union and that, as a consequence, Gibtelecom was liable for damages.

Greg Harman was appointed as the expert economist on behalf of Gibtelecom. In relation to Mr Harman’s evidence, Mr Justice Restano stated:

“I found that Mr Harman was a careful and conscientious witness, who provided clear, authoritative, and balanced evidence. Mr Harman was fully briefed as he had considered all the material in the case together with his team, and he applied himself carefully and thoroughly to the issues in the case. His expert evidence seemed to me to be analytically rigorous and in keeping with principle, and I found his opinions as far more authoritative and persuasive than those of [the opposing expert]. Overall, I found Mr Harman’s evidence most helpful in resolving the issues in this case”.

Mr Harman was supported by Mark Bosley, Phil Alves and a team from BRG’s London and Brussels offices.

The Analysis 

The claim was brought on a standalone basis, which meant Gibfibre had to establish liability without the benefit of a prior finding by any competition authority. Establishing liability in an abuse of dominance case generally requires an economic analysis of the relevant markets (both those in which dominance is alleged and those affected the conduct), an analysis of whether the defendant undertakings are dominant and an economic analysis of abuse.

1. Market definition

Justice Restano agreed with Mr Harman that the market in which the defendants competed was broader than pleaded by Gibfibre, on both product and geographic dimensions. In particular, he found that:

• Cloud services formed part of the same market as colocation services from 2018 onwards and hence the product market was broader than argued by Gibfibre.

• Colocation services providers in other remote gambling jurisdictions compete in the same market as providers in Gibraltar, and even including one of these jurisdictions in the analysis would show that Gibtelecom was not dominant.

2. Dominance

Having agreed with Mr Harman on market definition, Mr Justice Restano found that Gibtelecom was not dominant on any properly defined market and that Gibfibre’s claim therefore failed.

Justice Restano also found that, even if the market was narrower as pleaded by Gibfibre, Gibtelecom would not have been dominant. Firstly, Justice Restano agreed with Mr Harman that the evidence on market shares was not sufficiently robust to support a presumption of dominance and that the assessment should consider a range of different measures and take into account the reliability of the data.

Secondly, Mr Justice Restano agreed that Gibtelecom faces significant competitive constraints within the putative narrower market, including:

• Cloud services and colocation providers in other jurisdictions provide a significant out-of-market constraint, if they were found not in the same market.

• Barriers to entry and expansion exist but are unexceptional.

• Barriers to customer switching exist but are not insurmountable. 

• There is evidence of significant countervailing customer buyer power in the colocation market.

3. Abuse 

Mr Justice Restano found that, even if the defendants had been dominant in a relevant market, their conduct did not constitute an abuse within the meaning of Article 102. He concluded that Mr Harman’s economic analysis was “in accordance with principle” and agreed that customers make choices regarding colocation and connectivity together, rejecting Gibfibre’s claim that connectivity should be analysed as a product which is “downstream” of connectivity, or alternatively as an “aftermarket”.

Result 

The judgment, handed down on 22 July 2024, preferred the defendants’ evidence on all material points, including market definition, dominance and abuse. As a result, Gibfibre’s claim failed on liability and no damages were awarded. Mr Justice Restano also found that, even if Gibtelecom had been liable for damages, the quantum of loss would have been around 1 percent of the amount originally claimed.

Read the full judgment.