On 19 December 2024, the Competition Appeal Tribunal ("CAT") handed down its judgment in the first opt-out class action to proceed through to a full trial under the UK antitrust class action regime1. This stand-alone, opt-out claim was filed in January 2021 by Class Representative ("CR") Justin Le Patourel against BT on behalf of a class of approximately 3.7 million UK domiciled individuals and businesses seeking damages of £1.1 billion. The CAT found that BT was not liable for these damages as BT's charges for the provision of residential landline telephone services were not unfair. The CAT has subsequently refused the CR's application for permission to appeal and ordered the CR to pay 85% of BT's costs.
In this update, we set out the key takeaways from the judgment, which are likely to be applicable to the determination of the other opt-out class actions currently proceeding before the CAT.
Liability
- The CAT performed a detailed analysis of the applicable market to determine that BT was not liable for the damages sought by the claimant class, applying the two-limbed United Brands2 test. The CAT found that a price 20% above the competitive benchmark would be excessive, and BT's prices were consistently above that threshold. However, excessive prices do not automatically equate to unfair prices. The CAT found that the CR had failed toadduce the evidence of further exploitative behaviour or harm in order to prove unfairness in breach of competition law. The CAT found that the economic value of a product can justify a price above the competitive benchmark price (e.g., in this case BT's brand value and value-added services) but this will require fact-specific analysis.
- Ease of certification is no guarantee of a successful claim. In a post-Merricks world, where the CAT no-longer conducts mini-trials at the certification stage, claimants have achieved certification of their class action claims with relative ease. However, the CAT applied a significantly higher threshold for the assessment of merits during this trial, which the CR ultimately failed to meet.
- The CAT may place limited evidential weight on regulatory findings which are not a binding finding of infringement of competition law. The CR sought to rely heavily on Ofcom's Provisional Conclusions in respect of BT's services, which had proved persuasive at the certification stage. However, at trial the CAT found that in comparison to more detailed expert evidence that had been produced at trial, Ofcom's findings did not have material weight.
- The CAT may take its own approach to expert evidence, rather than siding with one party over the other. In this case the CAT formulated its own blended approach, incorporating aspects of the significantly different economic methodologies and outcomes produced by each party's expert. This is a distinct feature of the CAT as a specialist tribunal – it will use its own expertise to determine its conclusions.
Quantum
- Notwithstanding its decision on liability, the CAT gave detailed consideration to various arguments regarding the quantum of damages that would have been awarded. Aside from the detailed fact-specific analysis in the judgment, the following points are likely to be applicable to other cases.
- The CAT found that it is not an option for a business to argue for a reduction in quantum by claiming that it would have charged whatever the highest lawful price would have been in the counterfactual. Drawing such a sharp line between lawful and unlawful pricing is not consistent with the necessary flexibility that exists in the test for unlawful pricing in competition law. Further, the CAT found that a defendant seeking to argue that it would have charged different prices in a counterfactual scenario would have to adduce evidence of what those prices would have been and the basis on which it would have charged them.
- The CAT gave relatively short shrift to the CR's claim that inflation should be factored in to the quantum assessment, finding that there is no legal authority to suggest this is permissible. In the alternative, the CR argued that compound interest should be applied to any damages awarded. While the CAT also rejected this argument as the legal test for awarding compound interest had not been made out, it stated that this position was somewhat unsatisfactory given the prominence of compound interest in the wider-world.
- With respect to deceased individuals, the CAT assessed the likelihood that a class member who died prior to distribution of damages would do so without having appointed a personal representative to accept an award of damages on behalf of their estate. This group's share of damages would be deducted from the overall quantum. The parties' experts differed in their assessments of survey data on will-writing rates. The CAT favoured the position taken by BT's expert, that there while there was (as both parties contended) a positive correlation between age and likelihood of having a will, that likelihood plateaued 83% for those aged 75 or older (contrary to the CR who argued for 90% plateau at age 90 and above).
Footnotes
1 Justin Le Patourel v BT Group PLC [2024] CAT 76
2 The seminal CJEU judgment on abuse of dominance - United Brands v European Commission [1978] 1 C.M.L.R. 429
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