The MCA seeks improved certainty and transparency for consumers, as well as a shorter contract term on plans featuring inflation-linked increases
Concerns about certainty and transparency for consumers
The Malta Communications Authority (MCA) has launched a consultation – open until 29 September 2023 – on price adjustment clauses in telecoms contracts, outlining a suite of measures aimed at providers of internet, TV, mobile and fixed telephony services. The regulator’s proposals are designed to strengthen protections for end users when subscribing to contracts that allow price increases based on the consumer price index (CPI). The MCA states that in recent months, some operators have introduced inflation-linked price rises into some customers' contracts, which prevent early termination without incurring a fee. The regulator is concerned that this can have a negative impact primarily by not giving consumers sufficient certainty about what they may be required to pay throughout the duration of their contract.
Operators told to obtain consent for price rises
The MCA’s consultation has proposed a number of measures to mitigate its concerns, including requiring that before entering into a contract with a customer, operators obtain their explicit consent (in the form of a signature) to indicate that they are aware that the contract allows for CPI-linked price rises. The regulator is proposing a shorter contract term for such contracts, limiting them to a maximum period of six months. The MCA’s draft measures would also require that operators make clear on their websites any tariffs that include provisions for inflation-linked price rises, and give customers 30 days’ notice of planned increases under such clauses.
An issue for regulators elsewhere in Europe
The MCA accepts a 2015 Court of Justice of the European Union (CJEU) ruling, which determined that price adjustment clauses do not constitute a modification to contractual conditions which grants end users to withdraw from the contract without incurring early termination fees. However, the MCA is concerned that consumers may not have enough awareness or understanding of indexed pricing, and that this may risk distorting competition – and it is not the only regulator to have these considerations. AGCOM in Italy has moved to limit the scale of price rises in Italy, while in the UK, Ofcom is currently investigating whether operators have been fully transparent about recent inflation-linked increases.
