Freeserve.com plc – BT’s residential broadband pricing

02 November 2010

Complainant: Freeserve.com plc (now called Everything Everywhere Limited)
Complaint against: BT Group plc (BT)
Case opened: 16 April 2003
Case closed: 2 November 2010
Issue: BTs residential broadband pricing
Relevant instrument: Chapter II of the Competition Act 1998 and Article 82 of the EC Treaty (abuse of a dominant position)

Ofcom has concluded that BTs conduct did not constitute an abuse of its dominant position and that there are therefore no grounds for action.

A non-confidential version of Ofcom's decision is available, see related items.

Update note: 30 October 2006

Ofcom sent BT a supplementary Statement of Objections (SO) on 25 October 2006 which states that Ofcom remains of the view that BT Group plc has infringed the prohibition in Chapter II of the Competition Act 1998 and/or Article 82 of the EC Treaty and proposes to decide accordingly.

The supplementary SO replaces parts of the second SO sent to BT on 27 June 2005 and has been issued to allow BT to make representations on material further analysis undertaken by Ofcom since that date.

BT now has the opportunity to make written and oral representations in response to the supplementary SO.

End of update note

Update note: 28 June 2005

Ofcom sent BT a second Statement of Objections (SO) on 27 June 2005 stating that it proposes to make a decision that BT Group plc has infringed Section 18 of the Competition Act 1998 (the Chapter II prohibition) and Article 82 of the EC Treaty (Article 82) in relation to the company's residential broadband pricing.

The second SO expands on the first SO sent to BT on 31 August 2004 and restates the facts of the case, the matters to which Ofcom has taken objection, the action Ofcom proposes and the reasons for this. Ofcom has issued a second SO following BT's representations on the first SO and to take account of updated analysis.

BT now has the opportunity to make written and oral representations in response to the second SO. These will be taken fully into account before any final decision is made.

Freeserve (now Wanadoo UK plc) made the original complaint to Ofcom's predecessor Oftel in March 2002. Ofcom is taking the investigation of BT's current residential broadband pricing policies forward.

Ofcom is investigating whether BT has abused a dominant position in relation to its residential broadband pricing policies contrary to the Chapter II prohibition and Article 82. In particular, Ofcom is assessing whether BT has operated a margin squeeze through the pricing of its residential broadband services from June 2002. The period of March to May 2002 was previously investigated by Oftel.

End of update note

Update note: 16 December 2004

Ofcom has incorporated BTs latest consumer broadband product, BT Broadband Basic, launched on 1 March 2004, into the ongoing investigation.

The investigation therefore now covers an assessment of BTs pricing policies for its range of residential products, namely BT Openworld, BT Broadband, BT Yahoo! Broadband and BT Broadband Basic.

End of update note

Update note: 1 September 2004

Ofcom proposes to make a decision that BT Group plc has infringed Section 18 of the Competition Act 1998 and Article 82 of the EC Treaty in relation to the company's residential broadband pricing.

Ofcom has therefore sent to BT a Statement of Objections stating the facts of the case, the matters to which it has taken objection, the action it proposes and the reasons for this.

BT now has the opportunity to make written and oral representations in response to Ofcom's proposed decision. These will be taken fully into account before any final decision is made.

End of update note

Update note: 4 May 2004

The Competition Act 1998 has been amended as of 1 May 2004 in order to implement EC Regulation 1/2003 (the Modernisation Regulation) into UK law. Ofcom now has the power under the Act to apply Article 81 and Article 82 of the EC Treaty in full, in addition to the Chapter I and Chapter II prohibitions.

As of 1 May 2004, Ofcom is conducting this investigation under Article 82 of the EC Treaty, in addition to under the Chapter II prohibition.

End of update note

Update note: 18 February 2004

For a copy of the original Oftel Competition Bulletin entry see:
http://www.ofcom.org.uk/static/archive/oftel/publications/comp_bull/cases/cw_613.htm

The Director General of Telecommunications (the Director) reassessment of certain pricing issues raised by Freeserve in a letter to the Director of 26 March 2002 was concluded by way of a non-infringement decision on 20 November 2003 and published this as a closure entry on the Ofcom Competition Bulletin. For a copy see: http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/closed-cases/all-closed-cases/cw_613/. The Directors decision has since been appealed by Freeserve to the Competition Appeal Tribunal (the Tribunal).

At the time the Director announced his above reassessment of Freeserves March 2002 complaint, the Director also declared that he would investigate BT's post-May 2002 residential broadband pricing policies in the context of the same investigation. However, following the Tribunals decisions as to the length of time the Director had to conclude his reassessment, the Director decided to split the investigations, focussing on concluding the reassessment of Freeserves March 2002 complaint by the deadline set by the Tribunal, i.e. 20 November 2003. Ofcom is now taking the investigation of BT's current residential broadband pricing policies forward.

Ofcom is investigating whether BT has abused a dominant position in relation to its residential broadband pricing policies contrary to section 18 of the Competition Act 1998 (the Act) (the Chapter II prohibition). In particular, Ofcom is assessing whether BT has operated a margin squeeze through the pricing of its residential broadband services in breach of the Chapter II prohibition since May 2002 (given that the period of March to May 2002 has already been investigated).

The investigation will include an assessment of BT's pricing policies of its residential BT Openworld and BT Broadband services and may also consider the pricing of other BT residential broadband services over the period under investigation.

Case Leader: Martin Hill ( e-mail: martin.hill@ofcom.org.uk)
Case Reference: CW/00613/04/03