Updated 2.45pm with reaction by Epic below.
MEP Alex Agius Saliba has requested the Malta Competition and Consumer Affairs Authority director to investigate whether a contractual obligation imposed by Epic Communications Ltd is compliant with EU legislation.
Agius Saliba noted that a clause in Epic’s general terms and conditions for mobile phones contracts obliges clients to pay more than the agreed contractual fees based on the rate of inflation.
The same clause exempts Epic from the provisions of an EU directive which, in such cases, allows clients to request an early termination of their contract at no extra cost.
The Labour MEP said: “I am aware that that settled case law determined that such increases are allowed, however, I have requested an administrative review about a possible breach of EU legislation, particularly due to changes in circumstances.
"If it transpires that the adopted practices are legally sound, I have requested the MCCAA to consider other options to protect consumers from sharp increases in prices.”
Agius Saliba said the European Electronic Communications Code specifically protects consumers and directive 2018/1972, Article 105(4) stipulates that subscribers to telecommunication services are entitled to a contract indicating the terms of their services including the payments due, and that subscribers are entitled to withdraw from the contract without penalty whenever the terms of service are modified.
But it appeared, Agius Saliba said, that EPIC is taking advantage of EU case law, specifically the case Verein fur Konsumenteninformatioin vs A1 Telekom Austria AG (ECLI:EU:C:2015:782) where the EU Court of Justice held that increases in tariffs in-line with an official inflation mechanism do not constitute a modification of the contract.
This meant consumers are not entitled for early contract termination.
Agius Saliba's research shows that Epic is not the only company to impose such clause.
He said local communication companies have recently been introducing similar clauses in an attempt to shield their profit margins from the impact of inflation.
Tariff increases in accordance with the inflation index should ostensibly encompass any supplementary operational expenditures and infrastructural development for the service being provided to the end-user, he said.
He noted there are concerns around the apparent misalignment between the quality of service advertised and promised by these telecommunications providers, and the tangible service delivery experienced by end-users.
This includes, but is not limited to, the bandwidth and throughput, network congestion, customer data security, downtime and service interruption etc, Agius Saliba said.
He said it raises questions about whether the tariff adjustments driven by the inflation index genuinely translate into tangible improvements in service provision or if there are other factors at play.
Agius Saliba said the material impact on the value of the contract and the consumers involved is much greater now than when the court judgement was given as the inflation rate has recently increased, creating more hardship for low-income consumers.
The two-year life span of most mobile phone, TV and internet service contracts is meant to give both parties greater stability. The equilibrium enables the service provider to maintain a stable revenue stream, thereby facilitating an improved level of service provision, while simultaneously empowering consumers with better visibility and control over their expenditure, expecting value-for-money return for the service paid for.
"To undermine either side's entitlement in this equation is unquestionably inequitable," he said.
Epic reacts: No price increase
In a reaction, telecoms provider Epic said it appreciated that Agius Saliba's interests are those of ensuring consumer protection and it supported such initiatives.
It pointed out, however, that with respect to the contractual clause he had mentioned, there had been no price increase, and this practice tied to inflation rates, was fully transparent, widely applied locally and across the EU and in line with regulatory obligations.
"Epic has continuously put customers first, and has done so since its launch, when it introduced no lock-in contracts in the Maltese market," the company said.