BT in-house team beats KWM and Herbies in Supreme Court battle
9 July 2014 | By Kate Beioley
British Telecommuncations’ (BT) in-house team has triumphed against King & Wood Mallesons SJ Berwin (KWMSJB) and Herbert Smith Freehills (HSF) in a Supreme Court battle over BT’s call charges to mobile operators.
The Supreme Court today upheld BT’s ability to charge mobile operators different amounts for putting through calls to its fixed-line “08” numbers.
President of the court Lord Neuberger and Supreme Court justices, Lords Mance, Sumption, Toulson and Hodge unanimously overturned a 2012 Court of Appeal judgment to reinstate the 2010 Competition Appeal Tribunal (CAT) ruling.
The long-running battle between BT, Ofcom and the four mobile operators followed BT’s introduction of a new pricing structure for “08” calls made from mobiles in 2009. The company is allowed to charge mobile network operators for putting calls through to its fixed lines with associated 08 numbers and planned to charge more dependent on how much mobile operators charged their customers.
Ofcom originally rejected BT’s new scheme on the basis that it could “not positively demonstrate that the proposed tariff changes would be beneficial to customers” according to the judgment.
The scheme was rejected by Ofcom in 2010 but that decision was overturned by the CAT later the same year. Two years later the CoA sided with Ofcom and disallowed BT’s new pricing structure but was overturned today at the Supreme Court.
Leading today’s ruling, Lord Sumption said: “In my opinion there was no justification for the Court of Appeal to set aside the careful analysis of the CAT on a matter lying very much within its expertise. I would accordingly allow this appeal.”
BT in-house lawyers Frederic Dupas and Stuart Murray triumphed against legacy SJ Berwin partner Elaine Gibson-Bolton, instructed for Telefonica O2 UK and Herbert Smith Freehills partner Stephen Wisking for Vodafone.
Former Baker & McKenzie partner Richard Pike also lost to the BT team for Hutchinson 3G. He brought the case with him to new firm Constantine Cannon following the CoA judgment. EE fielded head of competition Kim Hilton-Kowie for its battle with the phone giant.
Monckton set mates Jon Turner QC and Philip Woolfe were instructed to lead the advocacy for EE, 3G and Vodafone team.
Gibson-Bolton instructed 4 Stone Buildings’ Jonathan Crow QC and Brick Court Chambers’ Robert O’Donoghue for Telefonica.
According to the judgment Ofcom claimed: “BT should not be allowed to make the changes because it was not possible to forecast how far mobile network operators would be able to compensate themselves by increasing other charges.”
The CAT rejected Ofcom’s decision ruling that restricting BT’s ability to set prices could have anti-competitive effects. However the CoA overturned that decision in 2012.
In the Supreme Court ruling, Lord Sumption said: “In my opinion, it is not consistent with either the contract or the scheme of the Directives for Ofcom to reject charges simply because they might have adverse consequences for consumers, in the absence of any reason to think that they would.”
The Supreme Court also found that Ofcom’s approach involved applying an extreme form of precautionary principle at odds with the Directives’ market-oriented and essentially permissive approach. It held that the whole scheme of the Directives is to leave the arrangements for interconnection to the parties unless there are grounds for regulatory intervention.
The legal line-up
For the appellant, British Telecommunications Plc
Monckton Chambers’ Daniel Beard QC and Ligia Osepciu and Brick Court Chambers’ Sarah lee instructed by BT in-house lawyer Frederic Dupas and Stuart Murray
For the first respondent Telefonica O2 UK Ltd
4 Stone Buildings’ Jonathan Crow QC and Brick Court Chambers’ Robert O’Donoghue instructed by King & Wood Mallesons SJ Berwin partner Elaine Gibson-Bolton and managing associate Rahul Saha (legacy SJ Berwin case)
For the second respondent EE Ltd
Monckton Chambers’ Jon Turner QC and Philip Woolfe, instructed by EE head of regulatory and competition Kim Hilton-Kowie
For the third respondent Vodafone Ltd
Monckton Chambers’ Jon Turner QC and Philip Woolfe, instructed by Herbert Smith Freehills partner Stephen Wisking and associate Andrew North
For the fourth respondent Hutchinson 3G UK Ltd
Monckton Chambers’ Jon Turner QC and Philip Woolfe, instructed by Constantine Cannon partner Richard Pike (was previously at Baker McKenzie)
For the interested party, the Office of Communications (Ofcom)
Blackstone Chambers’ Javan Herberg QC and Mark Vinall instructed by Ofcom in-house counsel in-house lawyer Polly Weitzman and Martin Ballantyne
For the intervener Gamma Telecom Holdings Ltd
Brick Court Chambers’ Sarah Love instructed by Charles Russell partner Paul Stone