Justin Le Patourel v BT Group PLC & Anor (II)

In an excessive-pricing claim under section 18 of the Competition Act 1998, a Cost-Plus comparison is only the first limb. A significant excess does not automatically make a price unfair. The decision-maker must assess whether the excess is justified and bears a reasonable relation to cumulative economic value. Evidence from comparable workably competitive markets and evidence of switching may inform that assessment. Payment of a dominant price alone does not prove value, but non-switching may support an inference of freely chosen value where customers could switch. These are fact-sensitive evaluative judgments. On an appeal under section 49(1), the Court of Appeal should respect the CAT’s expertise and intervene only for an error of law, such as irrationality or failure to address relevant matters. Broad-brush estimates from imperfect expert evidence may suffice without a final arithmetical tally.

The Class Representative brought an opt-out collective claim under section 47A of the Competition Act 1998 for aggregate damages, alleging that BT had abused a dominant position by charging excessive and unfair prices for standalone fixed voice services. The claim concerned voice-only customers and customers who purchased broadband separately.

The Competition Appeal Tribunal dismissed the claim in [2024] CAT 76. It found that BT was dominant and that its prices materially exceeded Cost-Plus, but concluded that the differential was justified by the value of the services and was therefore fair. The CAT refused permission to appeal. The application to the Court of Appeal raised four proposed grounds concerning expert evidence and adverse inferences, allocation of common costs, the assessment of economic value, and compound interest. The central issue was whether any proposed ground disclosed an appealable error of law.

Permission refused. Green LJ held that the proposed grounds challenged the CAT’s factual and evaluative conclusions rather than disclosing errors of law. Newey LJ agreed.

1. Under section 49(1) of the Competition Act 1998, the Court of Appeal’s jurisdiction is confined to points of law. Evaluative findings may be challenged where, for example, the CAT acted irrationally or failed to address relevant considerations. The Court must nevertheless respect the CAT’s legitimate discretion, particularly where the evidence is complex, incomplete and expert-sensitive and the CAT has institutional legal, economic and business expertise.
2. The drawing of an adverse inference is a matter of rationality, common sense and context. The tribunal must identify the particular fact said to follow from the omission and weigh the omission alongside the evidence as a whole. A party controlling relevant evidence may bear a heavy evidential burden, but failure to produce the evidence does not require rejection of all remaining expert evidence or compel a particular inference. The CAT was entitled to criticise BT’s failure to generate common-cost data, give Dr Jenkins’s evidence reduced and residual weight, and reach its own estimate.
3. The CAT’s allocation of about 40% of common costs to SFV services was an informed, broad-brush estimate. Its limited use of the SAC Combi analysis as a marker did not amount to endorsement of that analysis and was not inconsistent with [2011] CAT 5.
4. For excessive pricing, Cost-Plus may identify the competitive benchmark and a significant and persistent excess at Limb 1. Limb 2 asks whether the excess is justified and bears a reasonable relation to cumulative economic value. Prices in a workably competitive market need not centre on Cost-Plus or yield zero excess profit; price and cost dispersion may be relevant.
5. The willingness-to-pay fallacy prevents payment of a dominant price, by itself, from proving economic value. Where customers could switch, non-switching could support an inference of freely chosen incremental value, subject to the evidence concerning engagement, inertia and context. The CAT was entitled to find that the Gives and brand value collectively justified the differential without precise quantification or a final arithmetic tally.
6. The compound-interest issue was academic once permission was refused and was not considered.

• Court of Appeal (Civil Division): The application for permission to appeal from [2024] CAT 76 was refused. The compound-interest issue was not considered.
• Competition Appeal Tribunal: In [2024] CAT 76, the CAT dismissed the aggregate-damages claim and refused permission to appeal.
• Court of Appeal (Civil Division): The earlier certification of the claim as an opt-out collective action was upheld in [2022] EWCA Civ 593.