BT faces £600 million competition damages action as court rejects strike-out application and certifies class claim

The UK Competition Appeal Tribunal (the Tribunal) has allowed a claim on behalf of over two million customers against BT Group for alleged abuse of dominance to proceed. The claim becomes the second in quick succession to be certified under the UK’s new US-style ‘opt-out’ class regime for competition claims, following the Tribunal’s decision in the case of Merricks v Mastercard last month, which in turn followed the landmark Supreme Court decision in the same case.

Background 

The claim is brought by Justin Le Patourel, a telecoms consultant, on behalf of purchasers of ‘Standalone Fixed Voice’ services (SFVs) from BT since October 2015. It arises from a 2017 review (the Review) by the UK’s communications regulator, Ofcom, which found that BT had significant market power in the SFVs market and set its prices for SFVs above a competitive level.  

Ofcom subsequently accepted commitments from BT to cut its prices for SFV customers who did not also have broadband (Voice Only Customers) and to make further cost information available to SFV customers who did also have broadband as part of a separate package (Split Purchase Customers).

BT applied for strike-out and/or summary judgment on the basis that the claim was groundless and had no real prospect of success. Failing that, BT opposed certification of Mr Le Patourel’s class on an opt-out (where any eligible person who does not expressly opt out by a certain date will fall within the class) rather than opt-in basis (where class members are actively required to opt into the proceedings). BT was unsuccessful on both counts.

Tribunal refuses BT’s strike-out application…

The Tribunal dismissed each of the merits arguments raised by BT. Notably, it found that the Review was an appropriate and significant piece of evidence as to liability on which Mr Le Patourel was entitled to rely in order to bring a standalone claim, as opposed to a follow-on claim relying on a binding prior finding of anti-competitive conduct (a Liability Decision). It also found that Mr Le Patourel had demonstrated that he has a real prospect of proving that:

1. BT not only occupied a dominant position but abused it; and 
2. BT’s abuse applied to Split Purchase Customers as well as Voice Only Customers.

… and allows the claim to be brought on an opt-out basis

The Tribunal accepted, as a preliminary matter, that it was incumbent on Mr Le Patourel to satisfy it that his claim was more suitable for an opt-out claim than an opt-in one.

BT sought to persuade the Tribunal that Mr Le Patourel had failed to clear this hurdle, including on the bases that:

1. the class was easily identifiable and contactable;
2. an opt-out action would render it impossible for BT to run an aspect of its ‘failure to mitigate’ defence, namely that ‘business’ class members may have passed on any losses through their own business charges; and 
3. the claim was very weak, and therefore unsuitable for certification on an opt-out basis.

The Tribunal disagreed on all counts.

Comment

Prior to this judgment, there had been no clear guidance on the merits threshold which applicants need to clear in order to demonstrate that opt-out, as opposed to opt-in, is the appropriate basis for their claim. The judgment suggests that this threshold is higher than that to surmount a strike-out/summary judgment application. But exactly how much higher remains unclear.

The judgment is also interesting in indicating that the Tribunal is fully prepared to entertain class claims which are founded not on a Liability Decision but on non-binding prior regulatory findings relating to the conduct alleged to have caused loss.

The opt-out regime for competition claims has spent much of the first six years of its life lying inactive. With two class certification judgments in the last two months, it is now seeing significant activity. Further judgments are expected in several other opt-out claims, in markets ranging from train fares to Forex trading, later this year.

Judgment (CPO Application) | Competition Appeal Tribunal (catribunal.org.uk)