In a closely watched legal battle, telecommunications giant BT emerged victorious in a 1.3-billion-pound class action before the Competition Appeal Tribunal (CAT). The case, led by class representative Justin Le Patourel and supported by litigation funders, ended on 19 December 2024 in a lengthy 1,428-paragraph ruling dismissing the claim.

Presided over by Chair Mr. Justice Waksman, the tribunal concluded that while BT dominated the market and charged “persistently excessive” prices, these prices were not unfair.

Le Patourel, represented by Mishcon de Reya, argued that BT abused its dominant market position to charge unfair prices to two specific groups of customers: (1) Voice-only landline customers: Individuals who relied on landline telephone services without broadband internet and (2) Split-purchase customers: Those who purchased landline and broadband services separately rather than as part of a bundled package.

The claim alleged that BT’s pricing for these services was excessive and unfair, impacting over three million consumers. The case marked a milestone as the first collective action to reach trial under the CAT’s regime, drawing significant attention from competition lawyers and litigation funders alike.

The CAT’s ruling emphasized the nuanced distinction between excessive and unfair pricing. It found that BT provided “distinctive value” to its customers, justifying the prices it charged. The Tribunal stated that BT’s pricing bore a reasonable relationship to the value delivered to customers.

The ruling considered evidence indicating high customer satisfaction ratings and considerable loyalty towards BT from clients who had the option to switch providers. This included findings that customers were not trapped, generally passive, or indifferent to pricing.

Additionally, the Tribunal determined that BT’s pricing was not unjust in relation to competing offerings. It observed that BT’s prices were frequently comparable to, if not lower than, those of its competitors.

The ruling has sparked concern among litigation funders and insurers. Tim West, disputes partner at Ashurst, noted that the decision might “dampen enthusiasm” for backing collective actions in the CAT, especially those reliant on novel legal arguments. He highlighted that cases like the BT action, which arose from regulatory findings, often lack conclusive evidence of liability.

The CAT’s dismissal of Ofcom’s findings against BT added to the challenges faced by the claimants. The Tribunal reasoned that its decision was based on a comprehensive body of expert evidence, surpassing the data available to the regulator.

Mohsin Patel, co-founder of Factor Risk Management, described the verdict as “a bitter pill to swallow” for claimants, funders, and lawyers. He acknowledged, however, that the potential for an appeal offered “some light at the end of the tunnel.”

While the case may have dampened enthusiasm among funders, it is unlikely to halt collective actions entirely. The evolving legal landscape and recent successful settlements indicate that collective proceedings will continue to play a crucial role in holding corporations accountable.