Le Patourel v BT: Key lessons from the CAT’s landmark judgment on excessive pricing and collective actions

On 19 December 2024, the Competition Appeal Tribunal (CAT) handed down its judgment in Justin Le Patourel v BT Group PLC [2024] CAT 76. This first collective action to proceed to trial under the UK’s competition law regime provides vital insights into excessive pricing claims and the hurdles faced in collective proceedings. Despite finding BT’s prices for standalone fixed voice (SFV) services to be excessive, the CAT concluded they were not unfair and dismissed the claim. Below, we summarise the key findings and learnings from this decision.

Background and context

The claim, filed by Justin Le Patourel in January 2021, was brought on behalf of approximately 3.7 million BT customers who used SFV services. These services, comprising line rental and call charges, were aimed primarily at Voice Only Customers (VOCs) and Split Purchase Customers (SPCs), neither of whom purchased bundled telephone and broadband packages.

The claim sought damages of £1.1 billion (before interest) based on allegations that BT abused its dominant position by charging unfairly high prices. Notably, the case relied on Ofcom’s 2017 provisional findings, which had flagged BT’s pricing concerns. However, Ofcom had not made formal findings of abuse or imposed regulatory measures beyond voluntary commitments by BT. The CAT certified the proceedings in October 2021, and the trial, held in early 2024, addressed both liability and quantum issues.

Key findings of the CAT

First, there was excessive but not unfair pricing. The CAT applied the United Brands framework to assess excessive pricing claims, distinguishing between prices that are excessive (Limb 1) and those that are unfair (Limb 2):

Excessiveness: BT’s prices exceeded the competitive benchmark, which was calculated by allocating 40% of its common costs to SFV services and applying a 13.5% reasonable margin. These prices were found to exceed the benchmark by 25% - 49.9% - a significant and persistent margin
Unfairness: Despite this excess, the CAT determined that BT's prices were not unfair. The judgment considered (i) the economic value provided by BT's services, including reliability and specific customer benefits; (ii) evidence of significant customer switching (approximately 15% annually), contradicting the assumption that SFV customers were inert; (iii) price dispersion in adjacent markets and BT's cost efficiencies, which aligned with "workable competition" standards.

The CAT reiterated that excessive prices do not automatically equate to unfair prices. Factors pointing to exploitative behaviour or harm beyond excessiveness are essential.

Secondly, limited weight was given to Ofcom's 2017 Review. The proposed class representative relied on Ofcom’s 2017 conclusions to establish BT’s dominance and alleged unfair pricing. However, the CAT afforded these findings minimal weight. It noted that (i) Ofcom’s analysis relied on limited data and focused on regulatory objectives, not the legal tests under the Competition Act 1998; and (ii) the CAT’s review was based on more robust evidence, including extensive economic expert testimony and updated data on switching rates and customer behaviour.

Thirdly, the CAT’s judgment underscored the critical role of rigorous, evidence-based economic analysis in excessive pricing cases. Experts for both sides proposed markedly different benchmarks, driven by contrasting approaches to cost allocation and profit margin assumptions. The CAT carefully scrutinised these methodologies, ultimately adopting a balanced framework that reflected reasonable margins and fair cost allocations. While BT argued that its pricing strategy was necessitated by a declining market and broader investment requirements, the Tribunal found this rationale insufficient to justify the significant and persistent pricing excesses.

Key learnings

Proving "unfairness" remains a high bar.
The judgment underscores that claimants must bridge the gap between demonstrating excessive prices and proving unfairness. Merely showing significant pricing deviations from a competitive benchmark is insufficient.
The role of regulatory findings in collective proceedings.
Regulatory findings, while useful contextually, do not automatically translate into evidence of abuse under competition law. Class representatives must complement such findings with strong primary evidence.
The importance of economic evidence.
The CAT’s reliance on detailed economic models to determine benchmarks, costs, and margins highlights the essential role of expert evidence in excessive pricing cases. Both claimants and defendants must prioritise high-quality, data-driven analysis to substantiate their positions effectively. Importantly, the CAT cautioned against an overreliance on econometric modelling or regression analysis, stressing that such approaches must demonstrate statistical significance and contextual reliability. The judgment emphasised that theoretical models, however sophisticated, must be grounded in robust empirical evidence to be persuasive in complex economic disputes.
Certification is just the beginning.
Although the CAT certified the claim relatively easily, the trial phase proved significantly more challenging. This serves as a reminder that meeting the certification threshold does not ensure success on the merits.
The future of the collective proceedings framework.
While the claim was ultimately dismissed, the Le Patourel case highlights the collective proceedings framework's value in promoting corporate accountability. By advancing to trial, the proceedings required BT to justify its pricing practices under rigorous scrutiny, fostering greater transparency in market behaviour. This demonstrates that the regime serves as a meaningful check on dominant firms, even when claims are not upheld, and signals to businesses that their practices can and will be challenged in a structured and credible forum. Such outcomes reinforce the framework’s utility in addressing systemic issues and upholding competition law principles.

The judgment also provides a salutary lesson to all class representatives and their legal and economic teams that obtaining certification does not necessarily point towards an ultimately successful claim – and should result in those teams spending more time pre-certification conducting detailed analysis of the available evidence.