Court of Appeal overturns CAT judgment on dispute resolution

26/07/12

On 25 July the Court of Appeal (Lloyd, Etherton, and Elias LJJ) overturned a judgment of the Competition Appeal Tribunal (CAT) of 1 August 2011 that had upheld wholesale charges imposed by BT on the UK mobile operators in respect of calls to certain 08 numbers. The Court of Appeal judgment is of note in three principal respects. First, it held that the fact that BT had a unilateral contractual right to vary its charges under the Standard Interconnect Agreement was not a material consideration in favour of OFCOM's approving the charges under OFCOM's dispute resolution functions. The Court of Appeal reasoned that by the time the matter comes before OFCOM the contractual source of the dispute (or any anterior right under the contract) is not a factor which supports the approval of the charges. Second, the Court held that the fact that a dispute arises in the context of a charges in a market in which BT was not subject to ex ante price controls was not relevant to the question of whether the charges should be approved by OFCOM. Finally, the Court held that there was an internal error in the CAT's judgment in that the CAT had relied on a risk of harm to competition and innovation to justify the approval of the charges, despite the CAT also finding that the assessment of whether consumer benefit in relation to introduction of the charges was inconclusive. The Court of Appeal reasoned that the general findings of the virtues of "competition" and "innovation" could not override the specific findings about consumer benefit in the particular case.

The judgment is here.

Judgment