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Press release

Minister Patrick O’Donovan announces legislative proposal to give consumers more rights in relation to mobile and broadband price increases

Minister for Culture, Communications and Sport, Patrick O’Donovan TD, today received Government approval to introduce legislation to give consumers more rights when faced with price increases for mobile and broadband services.

Announcing the Government’s approval, Minister O’Donovan said:

The proposed legislation will help rebalance the scales in favour of consumers by providing more protection and certainty for them. It will force mobile and broadband providers to provide advance notice and a right of exit to consumers when certain clauses are used, thereby allowing consumers shop around for the offer that best suits their needs.

Many providers of mobile and broadband services are using in-contract price increase (ICPI) clauses to increase prices of electronic communication services. Typically, those increases are announced in spring each year, as has become the practice in recent years.

Currently, because of a judgment of the European Court of Justice, the use of these clauses to increase prices does not afford a right of exit without penalty from contracts.

This means that at present, consumers may be subject to at least one price increase without the right of exit without penalty during their contract. For 24-month contracts, which is the maximum contract duration allowed under the regulatory framework and the typical duration of many contracts, there may be two price increases without a right of exit without penalty.

The proposed legislation will create a statutory right of exit without penalty where the mechanism used to increase the price is an ICPI clause. Amid ongoing cost-of-living pressures, the measure aims to help consumers have more control over their spending on mobile and broadband services.

The Minister said:

At a time when many are feeling the impact of higher living costs, we want to give consumers greater control, helping them manage their mobile and broadband costs with confidence.

ENDS

Notes for Editors

An ICPI clause is a contractual clause that allows a provider to raise the price a consumer pays for their service(s) during the course of their contract.

When first introduced by providers, these price increases were generally made by reference to changes in the consumer price index (CPI) or, by reference to such CPI changes plus an additional percentage (“CPI+X%”). Recently, however, a new trend has emerged whereby the ICPI clause is used to increase the price a consumer pays by fixed amounts (per month) during the course of the contract.

The use of these clauses materialised following a ruling by the Court of Justice of the European Union in 2015, that stated that a price adjustment clause based on a clear, comprehensive and easily accessible method of indexation, resulting from State decisions and mechanisms, did not amount to a modification of the contract that would allow a customer to withdraw from it without penalty under the specific right provided in relation to contract changes by the regulatory framework.

The proposed legislation will not prohibit the inclusion of ICPI in electronic communications service contracts; rather, it will afford consumers the right to exit without penalty if these clauses are used to increase the contract price. A change in price via an ICPI clause will trigger the affording of exit rights, not the clause itself.

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