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Complaint from Thus Plc and Gamma Telecom Limited against BT about alleged margin squeeze in wholesale call pricing

19 Mehefin 2013

Complainants: Thus plc (“Thus”) and Gamma Telecom Limited (“Gamma”)
Complaint against: BT
Case opened: 1 August 2008
Case closed: 20 June 2013
Issue: Alleged margin squeeze in wholesale end to end voice calls
Relevant instrument: Chapter II of the Competition Act 1998 (‘the Act’) and Article 102 of the Treaty on the Functioning of the European Union (abuse of a dominant position).

Ofcom has concluded that BT’s 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: 21 December 2010

Ofcom has announced today that it has sent a Statement of Objections to BT setting out the view that BT may have engaged in a margin squeeze in the market for wholesale end-to-end calls between July 2008 to April 2009. 

BT now has the opportunity to make written and oral representations in response to the Statement of Objections. A redacted version of the Statement of Objections will also be sent to complainants to provide them with the opportunity to make written and oral representations. These representations will be taken fully into account before any final decision is made.

End of update note

Ofcom has received complaints from Thus and Gamma alleging that BT’s pricing of wholesale end-to-end voice calls to resellers since April 2005 amounts to an abusive margin squeeze and breaches the Chapter II provisions of the Competition Act 1998 and Article 82 of the EC Treaty. Specifically, the complainants allege that BT’s pricing:

  • may be below cost;
  • is aimed at eliminating or weakening competition in the provision of wholesale end-to-end voice calls to resellers by reducing the margin available to Carrier Pre-Selection Operators (CPSOs) when they sell their services to resellers.
  • Will result in CPSOs no longer being able to compete in the market profitably and that a number can be expected to exit the market.

BT has previously been found to have significant market power in a number of network access markets.

As set out in section 25 of the Competition Act 1998, Ofcom may conduct an investigation if there are reasonable grounds for suspecting that the Chapter II prohibition has been infringed. In addition to the Chapter II prohibition, Ofcom has the power to apply Article 82 of the EC Treaty in full.

Ofcom has now opened an investigation into the matters raised by Thus and Gamma’s complaints and will consider whether BT has abused a dominant position under UK and/or EC competition law.

Cable & Wireless has indicated support for Thus’s complaint.

Case Leader: Martin Hill ( e-mail: Martin.Hill@ofcom.org.uk)
Case Reference: CW/00988/06/08

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