Court Dismiss BT Appeal Against UK Landline Overcharging Ruling UPDATE

The Collective Action on Land Lines (CALL) has announced that the Court of Appeal (CoA) have dismissed BT’s appeal against an earlier ruling by the Competition Appeals Tribunal (CAT), which last year rejected the ISP’s attempt to stop a £600m class action claim related to the alleged overcharging of 2.3 million landline-only phone customers.

Just to recap. The class action claim – see previous article for details – relates to the retrospective allegation that BT overcharged their landline-only customers between 2015 and 2018 (the rules prevent this being backdated even further). The case is also seeking compensation for customers who took both a broadband service and a BT landline, albeit not together as a bundle (i.e. customers paid more for the individual services).

Ofcom’s original 2016/17 review of the associated market (here and here) found that landline-only customers (i.e. those who didn’t take a cheaper broadband bundle) had been “getting poor value for money compared to those who buy bundles of landline, broadband and/or pay-TV services.”

The review also found that customer bills for line rental had risen significantly since 2009, while at the same time BT’s costs (wholesale) for providing it had fallen. One catch here is that this largely reflected monthly line rental, but not so much the fall in calling volumes that hit related revenues (a key weighting factor for operators when setting retail prices).

Nevertheless, Ofcom put pressure on BT to respond, and the operator did so in 2018 by voluntarily cutting the line rental charge for c.900,000 vulnerable landline-only customers (reduction of £7 per month), while at the same time capping any subsequent overall increases to line rental and call charges to inflation (here) – this was again extended at the end of 2020 (here). CALL’s campaign uses much of this as the basis for their wider claim.

Case Update

The CAT initially chose to unanimously reject BT’s opposition to the overcharging case, thus allowing it to proceed to trial. The decision also allowed all affected customers – each of which could receive up to £500 in compensation if BT were to lose at trial – to be automatically represented. BT initially requested permission to appeal the CAT’s judgement, but was rejected.

However, the operator was later (18th November 2021) successful in seeking permission from the CoA to pursue an appeal – the case cannot proceed to trial until this stage is settled. The hearing was held on 15th March 2022, and The CoA has today dismissed that appeal.

In its appeal, BT argued that the claim should have been brought on an “opt-in” basis, meaning that any person wishing to join the claim would have had to take active steps to become members of the class being represented by Mr Le Patourel (Class Members). Mr Le Patourel disputed the necessity of this, “highlighting the low levels of likely engagement with such a process, and the cost and time of signing each individual Class Member up to the claim” and, it seems, the court agreed.

Mr Le Patourel said:

“I am grateful that the Court of Appeal has found in our favour and we can now proceed to a full trial. Asking people to sign up to legal process which they don’t understand, and which has an uncertain outcome, would almost certainly have led to low levels of engagement. This would have made it impossible to secure redress for those affected.

Our case, that BT overcharged landline customers, many of whom were elderly and vulnerable, over the course of several years, is very strong. I look forward to progressing this claim as quickly as possible.”

Under the Competition Act, Justin’s team will now need to prove that there is a market for Standalone Fixed Voice (SFV) services (Ofcom said there is), that BT was dominant in this market (it does have a sizeable share), and that it abused this dominance by pricing excessively (Ofcom’s review said it priced “above the competitive level,” but that will be for the court to decide).

Retail broadband ISPs and phone providers ultimately have the freedom to set retail pricing however they so choose, albeit often restricted by the realities of natural competition (i.e. making your service too expensive or too cheap can be counter-productive). But this may be less relevant where cases involving the Competition Act and dominant players are concerned.

One possible risk here, should the case succeed, is that it might discourage operators that hold a dominant market position from making similarly pro-consumer voluntary commitments on pricing in the future, for fear of leaving themselves exposed to such claims. The outcome of that might then be a rise in the number of protracted legal cases that Ofcom have to fight in order to reach the desired solution.

At the time of writing, we haven’t yet been able to see the full judgement or get BT’s response to it, but we will update accordingly when that arrives.

UPDATE 7th May 2022 @ 6:37am

BT has given its response.

A BT Spokesperson said:

“We strongly disagree with the speculative claim being brought against us. We take our responsibilities to customers very seriously and will defend ourselves against any claim that suggests otherwise.

We take pride in our work on the Customer Fairness agenda. For many years we’ve offered a discounted social tariff in what is a competitive market with competing options available, and, last year we extended that to help a potential four million households on low incomes save on bills and stay connected to vital services now available to access online, on the phone or via our nationwide retail stores.

We assure our customers that we will not let this claim disrupt the relationship BT has with them.”