BT class action case to test new ground in English courts

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The first trial in the English courts stemming from a wave of class action antitrust lawsuits starts on Monday, as telecoms operator BT faces a £1.3bn claim that it overcharged about 3mn landline customers.

Harbour Litigation Funding is financing a case fronted by former Ofcom official Justin Le Patourel that alleges the telecoms group abused a dominant market position to charge “excessive” prices for landline customers, many of them elderly. BT is contesting the allegations.

The case is being closely watched, as it is the first of its kind to reach trial since the Consumer Rights Act in 2015 allowed collective legal actions to be brought over alleged breaches of competition law.

It also comes as the financing of such cases is in the spotlight, particularly after a Supreme Court ruling last summer made it more difficult for litigation funders to be paid by taking a cut of any damages awarded.

“It will be instructive to see how any damages awarded are distributed to the class members — and how much ends up in the pockets of the lawyers and funders,” said Anna Morfey, antitrust partner at law firm Ashurst.

Momentum behind such lawsuits only took off after a Supreme Court ruling in late 2020 that allowed a class action claim against Mastercard to go ahead, paving the way for other cases.

Claims have been filed against other large companies including Apple and Sony, although several have been subject to hold ups and disputes over process. A trial date for the Mastercard case has not yet been set.

The BT case is to be heard over eight weeks in London’s Competition Appeal Tribunal. It is being brought on an “opt out” basis, under which potentially affected individuals are automatically included unless they choose not to be.

The legal claim follows a review by communications regulator Ofcom in 2017 that provisionally concluded BT held “significant market power” — a dominant position — in the standalone landline market and proposed price controls.

In response, BT voluntarily committed to cut landline prices by £7 per month from April 2018.

However, the claimants argue the price cut failed to compensate customers for previous overcharging, and also that so-called “split purchase” customers — those who separately purchased landline and broadband services — received no compensation.

Sarah Houghton, partner at Mishcon de Reya who is acting on behalf of the claimants, said BT “systemically overcharged” customers by “very substantial amounts”.

BT said the claim related to a “technical” landline pricing issue that was “resolved by Ofcom in 2017”.

“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 company said in a statement.

Harbour said it had “committed an eight-figure amount to cover the costs associated with bringing the claim”. Only in the event of a successful claim would it “receive a multiple of that investment as approved by the court”.

Ellora MacPherson, chief investment officer at Harbour, said the case was a “reminder of the important role that litigation funders can play in ensuring consumer claims can be pursued to conclusion”.

The case is being heard by Mr Justice Waksman of the High Court, alongside economist Derek Ridyard and competition law specialist Eamonn Doran.