EU raids mobile phone firms

European Commission investigators have raided offices of UK and German mobile phone operators as part of a price-fixing probe.

EC competition officials said they were investigating "all" German and UK operators over claims of collusion in prices charged to customers who use their mobile phones abroad.

Charges for so-called roaming calls, those involving the sharing of operators' networks, "are not transparent and do not seem related to the costs", EC competition spokesman Michael Tscherny said.

"We want to verify if the companies have colluded in illegal price fixing."

The raids follow a two-year exploratory inquiry, and a warning in April competition from EC competition commissioner Mario Monti that "competitive dynamics are not at work" in the market.

Initial probe

Five UK companies and four German operators were targeted in Wednesday's raids, Mr Tscherny confirmed.

Mario Monti: competition problems

But the initial inquiry had highlighted "significant problems" over a far wider area, he added.

The exploratory probe revealed pricing problems in 10 of 15 EU states, and prompted Mr Monti to call on operators to implement "demonstrable benefits up front".

'Routine inspection'

Among operators, a spokesman for Orange in London confirmed that an EC team had made a "routine inspection".

BT said it was co-operating with the probe, but would not give further details.

In Frankfurt, a Deutsche Telekom spokesman said: "We feel calm about the searches."

E-Plus, owned by Dutch telecoms operator KPN, also said its offices had been searched.

Vodafone and One2One were among other companies targeted.

Office of Fair Trading officials accompanied the EC investigators during Wednesday's raids, a spokeswoman confirmed.

"That is normal procedure," she told BBC News Online.

'Exorbitant' prices

The significance of targeting UK and German firms is that they are "really global companies", rather than just local operators, Perdita Patterson, editor of What Mobile magazine, told BBC News 24.

The international spread of firms such as Vodafone allows them to offer customers discounts for calls made on foreign visits.

"[Callers] get a better price if they use a German network that Vodafone owns,"

Nonetheless, users are charged "exorbitant" prices, Ms Patterson said, advising holidaymakers to replace their mobile phone sim card, or control chip, with a local unit when travelling abroad.

"That way you can cut your bill from £1 a minute to 10p a minute," she said.

'Cash cow'

Declan Lonergan, European mobile director at research firm Yankee Group, pointed to the higher prices charged within Europe than in the US.

"It is an area that was always ripe for some kind of an investigation if the operators were not seen to be making enough progress," he said.

"It is the last bastion of high margin charges for some operators. They are a bit of a cash cow."

While US operators had used a roaming agreement similar to that used by European firms, its abolition some years ago had helped keep call prices low, analysts said.

City reaction

In the City, news of the probe prompted a slide in the price of shares in telecom firms.

BT shares closed 17.5p lower at 441.5p, while Vodafone stock ended 8.75p lower at 145p.

Shares in Orange, which is also listed in Paris, closed 9.5p lower at 561.5p.