The operator is accused of overcharging 3 million landline customers, many of them elderly
The first class action to reach an English courts begins today against the UK’s largest operator and former incumbent, BT. It is accused of abusing market power to charge “excessive” prices for landlines. BT says will robustly defend itself against the charges.
The case is under scrutiny as the first to take advantage of the Consumer Rights Act passed in 2015 which permits collective action against apparent breaches in competition law. Others in the pipeline include against Mastercard.
BT’s case will be heard over the next eight weeks in the Competition Appeal Tribunal in London. Affected individual are automatically represented unless they opt out. The case follows an Ofcom review, held in 2017.
The background
IT concluded, provisionally, that BT had a “significant market power” in the landline segment and was considering price controls. Instead BT dropped its prices by £7 a month from April 2018.
Critics said this did not compensate for previous overcharging and nor was compensation offered to those who bought broadband and landline services separately. The 3 million consumers concerned stand to gain up to £400 each.
BT has said the issue was a technical one resolved by Ofcom in 2017.
Harbour Litigation Fund has committed “an eight-figure amount” to bringing the case which is led by Justin Le Patourel, who formerly worked at regulator Ofcom on projects aimed at empowering and protecting consumers.
Test case in more ways than one
It is also in the spotlight after a TV drama, Mr Bates vs the Post Office, caused national outrage. It revealed that hundreds of people who ran Post Offices had been prosecuted for theft and fraud when in fact faulty Fujitsu software was responsible for the errors. It was known that the system was not fit for purpose back in the 1990s.
A cover-up by the Post Office – which runs its own investigations – and Fujitsu allowed this situation to continue for more than two decades. Innocent people were jailed and forced to repay money they did not owe. This led to some bankruptcies and suicides, and left hundreds of people with their lives and reputations in tatters.
The hero of this sad story is Alan Bates, who fought the Post Office for years almost single-handedly despite multiple attempts to obstruct and discredit him, and an ocean of detail. And that most commonly wielded weapon by corporations against individuals, non-disclosure agreements (NDAs). Bates was backed by litigation funders.
The chances of success in future David-and Goliath-fights for justice through the courts was dealt a blow by a Supreme Court ruling last summer. A truck haulage company PACCAR brought a technical challenge which exploited a loophole in badly drafted legislation.
The Supreme Court’s decision in the PACCAR case means that in future, it will be more difficult for those funding such actions to recoup their costs from the damages awarded. The UK Government has promised to change the law to overturn this situation as a matter of urgency.