In a decision that could see BT forced to increase its broadband prices, the Competition Appeals Tribunal (CAT) — the UK's highest appeals court for competitive action lawsuits — yesterday found that Freeserve was right to challenge Oftel's investigation into claims of predatory pricing by BT.
ISP Freeserve filed the complaint with the Competition Commission back in October, claiming BT had an unfair competitive advantage over other ISPs.
Its four allegations were:
1. cross-marketing campaigns between BT and BT Openworld;
2. BT Openworld having advance notification of BT Wholesale price reductions;
3. BT using its telephone census to the benefit of BT Openworld (Blue Billing);
4. predatory pricing by BT in the broadband sector.
The CAT dismissed the first three points but said a new investigation should be carried out into the final complaint. Freeserve immediately claimed victory, not least because it was awarded costs against Oftel for part of the decision.
Back in March — when the complaint was originally filed with Oftel — BT's Blue Billing system and marketing activities seemed to be Freeserve's main complaints. Today, however, Freeserve said the three points that were rejected were "minor" and that they were "always secondary to pricing".
"We know from our own prices that BT is operating at a loss, which has forced all other ISPs to do the same just to compete," said Freeserve's spokeswoman. "BT has been trying to squeeze out the competition; hopefully now it will be forced to increase prices."
Telco watchdog Oftel has been ordered to reinvestigate Freeserve's claims of predatory pricing because it "did not apply the law in the proper manner" throughout the investigation.
But despite this, Oftel claimed victory as although the CAT ordered a new investigation "they did not question our decision, simply the way the process was carried out", said an Oftel spokeswoman. "This does not mean our final decision will necessarily change, plus the three other points were dismissed".
ISP Tiscali has welcomed the new inquiry, claiming "BT has prospered at everyone else's expense".
Freeserve's spokeswoman accused Oftel of colluding with BT throughout the investigation. Oftel denies the charges and now has until July to conclude its second investigation.