Competition trial seeking compensation of up to £400 each for 3.7m BT customers continues

BT accused of ‘abusive’ pricing practices after a fiery first week of the £1.3 billion compensation trial

The competition court last week heard allegations that BT carried out ‘abusive’ pricing practices against landline customers in a class action seeking £1.3 billion in compensation.

Customers could be in line for between £300 and £400 depending on the length of their contract with BT if the claim from Collective Action on Land Lines (Call) founder Justin Le Patourel is successful.

Ronit Kreisberger KC, acting for Mr Le Patourel, told the Competition Appeal Tribunal that the claim was that BT had been charging these customers ‘excessive and unfair’ prices for standalone landlines and calls in violation of its ‘special responsibility’ as a dominant firm under section 18 of the Competition Act.

Daniel Beard KC, acting for BT, has said in documents that it was legitimate for companies to ‘seek to maximise their profits and that they price accordingly’.

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Could BT owe me compensation?

Around 1.5 million BT landline-only customers from October 2015 to April 2018 could be in line for a compensation payout if this claim is won. Around 2 million BT customers who had separate landline and broadband contracts between October 2015 and December 2023 are also said to have been affected. 

More than half a million of BT’s landline customers affected by this claim were said to have died without receiving compensation. If the case is successful, the estates of BT customers who have died will be able to apply for compensation.

BT’s monopoly past puts it in a unique position

The tribunal has heard that BT was the statutory incumbent monopolist in telecoms for many years, which it accepted in its evidence put it in a unique position, and with that unique history comes a special responsibility to its customers.

BT was subject to regulatory constraints on its conduct as incumbent, which included price control, but was freed from these ‘regulatory shackles’ between 2006 and 2009, the hearing heard.

This allowed BT to set the prices which its landline customers had to pay for their standalone fixed voice (SPV) services, and also allowed it to enter the bundles market and offer prices which were unconstrained by the prices it was charging for the fixed voice and broadband component parts.

Ms Kreisberger said: ‘Operating in the bundles market meant pricing low. BT wouldn’t have got very far if it priced its bundles by adding together the standalone prices for line rental and broadband. It had to price by reference to the lively conditions of competition in the bundles market.

‘The stage was then set for BT’s abusive pricing practices which are the subject matter of the claim.’

Ofcom investigation found customers’ loyalty led to higher prices

As far back as 2006, the communications regulator Ofcom ‘sounded the warning’ that certain consumer groups could be vulnerable to price rises by BT in the future, in particular in retail telephony markets.

The hearing heard that Ofcom’s main concern was that BT could use its market power to push prices above competitive levels. In 2017, the regulator found that BT had been overcharging millions of landline customers since at least 2009.

In April 2018, BT agreed to drop prices by £7 per month but no compensation was paid to customers.

Le Patourel is also claiming that some BT customers who bought landline and broadband services but not as part of a bundle were excluded from the April 2018 price reductions and are still being overcharged today.

BT to ‘robustly defend’ the claim

Daniel Beard KC, acting for BT, has told the tribunal: ‘I’m going to deal with what is by any measure quite a remarkable claim. It’s a claim for excessive pricing unlike any that we’ve seen by regulators exercising their regulatory powers, let alone in any standalone determination.’

He said Le Patourel had to prove market dominance, that prices charged by BT were excessive in regards to costs, and that those prices were unfair.

BT has said the claim related to a ‘technical’ landline pricing issue which was ‘resolved by Ofcom in 2017’. The company has said: ‘We do not accept that our pricing was anti-competitive back then, and as such are committed to robustly defending our position at trial.’

The trial is set to last up to 21 March 2024.