The Curia dismissed the appeal of Digi’s parent company, and in line with the first-instance judgment of the Regional Court it found that the NMHH adopted a well-founded decision based on legitimate grounds and by correctly interpreting the law when it excluded the Dutch parent company of DIGI from the procedure selling 5G frequencies. No further appeal may be lodged against the decision dated 4 February.

The Curia explained in the oral delivery of the judgment that the parent company intended to mislead the authority with its application, and its participation would have violated the fairness of the auction procedure. In the Curia’s view, it is clear that the reason Digi Kft. did not apply for the frequency auction directly was that it noticed there were grounds for its exclusion, and this is why the parent company applied instead. The Curia also agreed that the authority had the right and obligation to examine the underlying intention of the applicant, and when excluding DIGI Kft.’s parent company the NMHH was justified in concluding that the true intention of the company was not to utilise the frequency usage rights for its own benefit, but to transfer the rights to DIGI Kft. if awarded them. In the opinion of the Curia, the fraudulent conduct of the service provider was assessed and judged correctly and lawfully by the NMHH, and in this context the Curia pointed out that the NMHH needs to pay particular attention to preserving the fairness of the procedure, which includes examining and assessing any conduct that the service providers intend to conceal. This is because the fairness of the procedure and the transparency of conduct of the organisations participating in the auction are prerequisites for the NMHH granting exclusive use of frequencies to businesses that will exercise such rights in a responsible and lawful manner.

Furthermore, by dismissing the arguments of DIGI Communications N.V., the court established that the condition for participation setting out that only companies against which no infringement of competition law was determined in the 24 months before the launch of the procedure can participate in the auction was legitimate, objective, and non-discriminatory. In the view of the Curia, when selling public assets of outstanding value and significance such as frequencies, it is deemed a proportionate expectation and requirement of the NMHH to only allow market players acting in accordance with the rules of fair market competition to acquire such assets. And DIGI Communications N.V clearly violated these rules.

In line with the judgment of the Regional Court and the decision of the NMHH, the Curia also highlighted that both the NMHH’s procedure and the auction documentation created by the authority comply with the specific EU laws that regulate communications. The question of whether any law or action by the authority contravened them was not even raised.

Background

The NMHH launched the procedure to sell the usage rights to the 700 MHz, 2100 MHz, 2600 MHz and 3600 MHz frequency bands in the summer of 2019. Four mobile service providers applied for the auction on 8 August 2019, but following the formal examination the authority did not register the Dutch parent company of DIGI for the auction. The company subsequently lodged an appeal against the decision of the NMHH, and the second-instance authority upheld the result of the formal examination in its ruling published on 27 November. The communications provider then turned to the court, which established that its claim was unfounded.