Re-determination of disputes relating to BT’s charges for Ethernet services (remitted by the CAT)

24 August 2015

Disputes between: British Telecommunications plc (“BT”) and each of British Sky Broadcasting Limited ("Sky"), TalkTalk Telecom Group plc ("TalkTalk"), Virgin Media Limited ("Virgin"), Cable and Wireless Worldwide plc group (“CWW”), and Verizon UK Limited (“Verizon”) (together “the Parties")

Case opened: 3 February 2015

Case closed: 4 May 2017

Issue: Ofcom will issue a determination to give effect to the Competition Appeal Tribunal’s (“the CAT”) Orders dated 10 December 2014 and made in respect of case numbers 1205/3/3/13,(-1-) 1206/3/3/13(-2-) and 1207/3/3/13.(-3-)

Relevant instrument: Ofcom will give effect to the CAT’s Orders pursuant to section 195(6) of the Communications Act 2003 (“the Act”), which requires Ofcom to comply with every direction given by the CAT under section 195(4) of the Act.

Relevant instrument: Ofcom will give effect to the CAT’s Orders pursuant to section 195(6) of the Communications Act 2003 (“the Act”), which requires Ofcom to comply with every direction given by the CAT under section 195(4) of the Act.

Update note – 4 May 2017

On 4 May 2017 the Court of Appeal handed down judgment on BT’s appeal against the CAT’s Judgment on the Ethernet Appeals. The Court of Appeal upheld the CAT’s Judgment, finding that Ofcom has power to award interest in resolving a dispute under section 190 of the Act and that the CAT was correct to conclude that interest should be awarded in this case. We have therefore issued our Final Determinations in this case, which are consistent with the conclusions on the remitted matters contained in the document notified to the parties on 24 August 2015.

A version of our Final Determinations in this case can be found under related items.

Update note – 24 August 2015

On 20 August 2015, Ofcom was notified that the Court of Appeal has granted BT permission to appeal the CAT’s Judgment on the Ethernet Appeals. BT’s appeal to the Court of Appeal will consider whether Ofcom has power to award interest in resolving a dispute under section 190 of the Act.  In light of that position we therefore do not consider that it is appropriate for Ofcom to proceed to issue our Final Determinations in this case until such time as the Court of Appeal has decided BT’s appeal.

However, in view of the fact that we have completed our assessment of the remitted matters, we have today issued to the Parties a document setting out Ofcom’s conclusions on the remitted matters. In the event that BT is unsuccessful in its appeal, Ofcom will issue Final Determinations consistent with those conclusions.

Update note – 2 July 2015

Following a request from a number of the parties to this case, Ofcom has extended the deadline for responses to our Provisional Conclusions. The period for comments on the consultation will now close at 5pm on Friday 17 July 2015.

Update note – 22 June 2015

On 22 June 2015, Ofcom published its Provisional Conclusions regarding this case (please see related item).

The period for comments on the consultation will close at 5 pm on Monday 6 July 2015.

Please send responses to:

Samuel Hinkley
Ofcom
Riverside House
2A Southwark Bridge Road
London
SE1 9HA

Or by e-mail to samuel.hinkley@ofcom.org.uk

End of update note

On 20 December 2012, Ofcom made five determinations (“the Determinations”) resolving disputes (“the Ethernet disputes”) between BT and each of CWW,(-4-) Sky, TalkTalk, Virgin,(-5-) and Verizon(-6-)

concerning BT’s charges for certain Ethernet services. The Determinations found that BT had overcharged CWW, Sky, TalkTalk, Virgin, and Verizon for certain Ethernet services for varying periods from 24 June 2004 to 31 March 2011.

BT, Sky and TalkTalk (jointly) and CWW, Virgin and Verizon (jointly) lodged appeals with the CAT against the Determinations (the “Appeals”).

On 1 August 2014, the CAT handed down its judgment (“the Judgment”) on the Appeals. On 4 December 2014 the CAT handed down a supplementary judgment (“the Supplementary Judgment”), which, among other things, set out the directions to be made to give effect to the Judgment. On 10 December 2014, the CAT issued three orders (“the Orders”) which set out the actions required of Ofcom and the parties consequent upon the Supplementary Judgment.

The Orders remitted to Ofcom the following matters pursuant to section 195(4) of the Communications Act 2003 for it to determine in accordance with the Supplementary Judgment:

(a) the rate of interest payable in respect of BT’s overcharge for Ethernet services;
(b) the repayments to which BT is entitled in respect of the exclusion of excess construction costs from its rental costs;
(c) BT’s claim for interest in respect of the repayment referred to at (b); and
(d) the total amount payable as between BT and Sky, TalkTalk, CWW, Virgin and Verizon.

Section 195(6) of the Act requires Ofcom to comply with every direction given by the CAT under section 195(4) of the Act. We have therefore opened this case in order to determine the matters remitted to us by the CAT.

To the extent possible, Ofcom will conduct our determination of these matters in accordance with our Dispute Resolution Guidelines.

Scope of the re-determination:

Ofcom will issue its determination in accordance with the terms of the Orders.

Procedural matters:

Stakeholders interested in the outcome of this case should notify Ofcom by 24 February 2015, describing the relevance of the outcome of this case to their business. Stakeholders with relevant information and evidence in respect of this case should submit this to Ofcom by 24 February 2015.

Case Leader: Samuel Hinkley (e-mail: samuel.hinkley@ofcom.org.uk)

Case Reference: CW/01149/02/15

Footnotes:

1. See http://www.catribunal.org.uk/239-7889/1205-3-3-13-British-Telecommunications-PLC.html
2. See http://www.catribunal.org.uk/239-7924/1206-3-3-13--1-Cable--Wireless-Worldwide-plc-2-Virgin-Media-Limited-and-3-Verizon-UK-Limited-.html
3. See http://www.catribunal.org.uk/239-7925/1207-3-3-13-1-British-Sky-Broadcasting-Limited-and-2-TalkTalk-Telecommunications-Group-plc-.html
4. See http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/closed-cases/all-closed-cases/cw_01078/
5. See http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/closed-cases/all-closed-cases/cw_01052/
6. See http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/closed-cases/all-closed-cases/cw_01087/