BT fails in appeal against £41M bill

Posted: 1st August 2012

British Telecommunications Plc. (BT) has failed in an appeal against a finding by the Office of Communications (Ofcom) that it over-charged other communication providers for the use of certain partial private circuits (PPCs).

Five communications providers (CPs) had complained that BT had, over a period of several years, over-charged them for the provision of PPC ‘trunk segments’, which are sets of network components that a CP can purchase from BT in order to provide a private circuit to a third party, typically a customer of the CP concerned.

After reviewing the PPC market in 2003 and 2004, Ofcom found that trunk segments were being priced ‘significantly above cost’ and that that there was a risk that BT might ‘fix or maintain some or all of its prices at an excessively high level or impose a price squeeze, with adverse consequences for end-users.’

Ofcom imposed certain conditions on BT as a result of that review but, in 2008, five CPs submitted disputes to Ofcom, alleging that BT had breached its cost orientation obligations and had over-charged them in respect of certain PPCs since June 24 2004. The CPs sought reimbursement for the amount of the alleged over-charging.

In the exercise of its powers under section 192 of the Communications Act 2003, Ofcom in October 2009 found that there had been over-charging by BT and ordered it to pay £41.688 million, plus interest, to the affected CPs.

BT’s appeal against that determination was dismissed by the Competition Appeal Tribunal and BT has now also failed to convince the Court of Appeal that the decision was wrong.

Ruling on the case, Lord Justice Etherton said that it was not ‘seriously arguable’ that Ofcom exceeded its jurisdiction or wrongly exercised its discretion when it accepted and determined the dispute.

The judge, sitting with Lords Justice Rix and Lewison, added that it was not necessary for Ofcom to find that the charges levied by BT had had ‘specific adverse economic consequences’ in order to decide that the company had breached one of the conditions placed upon it.

Dismissing BT’s appeal, he concluded that there was also ‘no basis’ on which the company could challenge the remedy directed by Ofcom or the tribunal.