BT Wins Class Action Over Alleged Overcharging of Landline Customers, Avoids £1.3 Billion Payout

BT has successfully defended itself in a class action lawsuit over alleged overcharging of landline customers, avoiding a potential payout of around £1.3 billion in compensation.

The Competition Appeal Tribunal (CAT) ruled in BT’s favor after an eight-week trial of a class action brought by Justin Le Patourel, founder of CALL (Collective Action on Landlines). Le Patourel accused BT of overcharging millions of its landline customers over several years.

Le Patourel worked at Ofcom for 13 years from 2003 to 2016.  He held senior roles, including Head of Market Intelligence, and Consumer Policy and Protection Principal, a role focused on protecting telecoms consumers.

This was the first collective action to be tried under the Consumer Rights Act 2015. The claim alleged that BT leveraged its dominance in the standalone fixed voice market to impose excessive charges. While the Tribunal acknowledged BT’s dominant position and recognized the excessive nature of its pricing, it ruled that these prices were not unfair, citing the value provided to customers.

Background

In 2017, an Ofcom investigation revealed that BT had continued to increase landline prices even as the cost of providing such services had declined since 2009. In response, BT agreed to reduce future bills for certain customers, but no compensation was offered for past overcharging.

Le Patourel launched a £1.3 billion claim, representing approximately three million BT customers, seeking damages of £300 to £400 per customer for historical overcharging.

The claim addressed more than 1.5 million customers who held a BT landline without broadband services. Ofcom estimated these customers were overcharged by up to £84 annually. It also included two million customers who were charged for BT landline and broadband services under separate contracts, paying significantly more than bundled-package customers.

The Tribunal found BT’s pricing to be excessive but did not consider it unfair under the Competition Act 1998. The Act mandates that dominant market players avoid pricing practices that lack a reasonable relation to the value of the services provided.

“This case has set an important precedent for collective proceedings,” said Sarah Houghton, a partner at Mishcon de Reya and adviser to Le Patourel.

“While we are grateful to the Tribunal for its thorough examination of the evidence, we are disappointed that it did not find BT’s excessive pricing to constitute a breach of competition law.”

Next Steps

While BT avoided a potential payout of £1.3 billion in compensation, the decision may not be the final word. Le Patourel said

“We will carefully review the Tribunal’s reasoning and assess the prospects for appealing this decision to the Court of Appeal. While the Tribunal recognized the significant and persistent overcharging, this decision leaves BT’s most loyal customers without the compensation they deserve.”

At the time of writing, BT had not commented.

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