Court Dismisses Class Action Claim Over BT’s Alleged UK Landline Overcharging UPDATE

The Competition Appeal Tribunal (CAT) has today dismissed a £1.3bn class action claim by the Collective Action on Land Lines (CALL) campaign against national broadband ISP and phone provider BT, which alleged that the UK telecoms giant had overcharged 2.3 million of its landline-only phone customers between 2015 and 2018.

Just to recap. The original claim was first raised at the start of 2021 through UK law firm Mishcon de Reya, which was acting on behalf of a former Ofcom telecoms consultant – Justin Le Patourel. At issue was Ofcom’s 2016/17 review of the narrowband market (here and here), which 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 the service had fallen. But this did seem to ignore the fall in calling volumes that hit related revenues (other linked costs may have also been excluded) – 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 extended again in 2020 for another 5 years (here).

The Collective Action on Land Lines (CALL) campaign used much of this as the basis for their wider claim, which finally went to trial at the start of 2024.  In theory, a victory for Justin Le Patourel might have forced BT to pay out up to £1.3bn in compensation to consumers (largely because CALL had won approval to represent all of BT’s allegedly affected customers, unless they decide to opt out), although such headline figures are often optimistic.

The Verdict

After nearly four years of battling, the CAT today handed down their judgement and dismissed the claim. Naturally, retail broadband ISPs and phone providers ultimately have the freedom to set 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 is less relevant where cases involving the Competition Act and dominant players are concerned. The CAT “found that BT was dominant” in the SFV market, but the judge ruled that their pricing was “not unfair“.

CAT’s Judgement

Overall, we considered that, whether taken by itself or in comparison with other prices, BT’s prices were not unfair, and therefore there was no abuse of dominant position. This meant that the CR’s claim failed.

BT’s Statement

Today the Competition Appeal Tribunal (“CAT”) handed down its judgment in the case of Justin Le Patourel v BT Group plc (“BT Group”) in which the CAT has dismissed the claim and found that BT Group’s conduct did not breach competition law. We take our responsibilities to all of our customers very seriously and welcome today’s ruling.

The judge stressed that “just because a price is excessive does not mean that it was also unfair“. The CAT took into account, first, that while BT’s prices were excessive, they were also “radically less than the excess relied upon by [Justin Le Patourel]. This meant that the weight of the excess going forward into the unfairness analysis reduced.”

The CAT also considered that BT provided “distinctive value” to its Standalone Fixed Voice (SFV) customers such that its price “bore a reasonable relation to value“. Value here was found, not just in terms of particular features or “Gives” provided to the customers, but also in BT’s brand value as a whole.

The outcome of all this could potentially also have some impact on a series of other cases in the UK telecoms space. For example, last year saw economic consultancy firm Fideres accuse Ofcom (here) of “tacitly allowing” TalkTalk, Virgin Media (VMO2) and other voice-only landline providers of overcharging consumers by up to £200m since 2009 (£100m by TT, £50m by VMO2, and a further £50m by smaller providers).

At the same time, mobile operators including EE (BT), Vodafone, Three UK and O2 (VMO2) are facing a class action claim worth “at least” £3.285bn from consumer rights champion Justin Gutmann and the law firm Charles Lyndon, which accuses them of historically overcharging for mobile handsets beyond the end of their contractual term (here). But this is obviously a bit different from CALL’s case against BT.

UPDATE 1:58pm

The CALL campaign has now issued its response.

Justin Le Patourel said:

“While I am pleased that the Tribunal has recognised BT’s dominant position in the market, and the significant and persistent nature of its excessive pricing, I am disappointed that it did not agree that these prices were unfair. This means we cannot now compensate many of BT’s most loyal but mistreated landline customers for the overcharging that took place.

However, we are carefully considering the Tribunal’s decision and whether the next step will be an appeal to the Court of Appeal to challenge this verdict.”

Sarah Houghton, Partner at Mishcon de Reya, said:

“As the first collective proceedings tried since the Consumer Rights Act 2015 introduced the regime in the UK, this is a watershed moment in the development of the collective proceeding regime in that it is the first judgment of its kind.

We are grateful to the Tribunal for the time spent hearing and considering the evidence. However, we are disappointed that the Tribunal did not agree that the excessive prices charged by BT were unfair in terms of amounting to a breach of competition law.

Mr Le Patourel is a passionate advocate for BT’s loyal customers and is carefully considering with his team of advisers what the next steps should be.”