LONDON--(BUSINESS WIRE)--Today, Fideres released new research uncovering potential anticompetitive and discriminatory overcharge by UK landline providers - which Ofcom has overlooked since 2018. In 2017, Ofcom investigated BT, leading BT to reduce landline prices. Simultaneously, Ofcom allowed other landline providers to maintain the same prices it scrutinized BT for. This meant that consumers have continued to overpay for their voice-only landline services. Further, most voice-only landline customers are over the age of 65 – levying excessive fees on this group may also therefore violate equality laws.
Starting in 2009, voice-only landline providers have consistently increased consumer prices, despite falling wholesale costs. This prompted Ofcom’s 2017 investigation into the standalone landline services market, which found that BT was overcharging voice-only landlines customers.
Following Ofcom’s 2017 investigation, BT voluntarily agreed to reduce consumer prices by 37%. However, Ofcom allowed other voice-only landline providers, such as Talk Talk and Virgin Media, to maintain the same high prices that prevailed before the investigation and before BT’s price reduction.
By allowing Talk Talk, Virgin, and other voice-only landline providers to maintain prices approximately 60% above the fair-rate shown by BT’s reduction, Ofcom may have tacitly allowed them to overcharge consumers. Chris Pike, Managing Director at Fideres, said, “Normally, a 37% price reduction by a leading firm would force firms providing the same product to lower prices, but here high barriers to substitution and low consumer engagement seem to have allowed providers to maintain high prices without losing customers. In other words, Talk Talk and Virgin appear to also hold market power over their customers, allowing them to set excessive prices.”
Moreover, these prices disproportionately affect elderly consumers – more than 40% of voice-only landline customers are over 75, and two-thirds are over 65. These prices may therefore also constitute indirect discrimination under the Equality Act.
Fideres’s economists find that these excessive prices amounted to nearly £200m in consumer overcharge since 2009, even excluding the existing claims against BT. Fideres has notified Ofcom of this potential breach and asked them to take action.
The full research is available at: https://fideres.com/our-research/
About Fideres
Fideres is an international economics consulting firm, specialized in investigating corporate misconduct, market manipulation and abuses since 2009. Fideres has developed a unique expertise in identifying breaches of competition laws and our proprietary work has led to the filing of over 15 class actions. More about the firm and its work at www.fideres.com. Follow the firm for updates and news at @Fideres.
