BT's pricing of digital cordless phones

No. 7/08/2006

The Office of Communications (Ofcom) has concluded that BT Group plc has not infringed Section 18 (the Chapter II prohibition) of the Competition Act 1998 or Article 82 of the EC Treaty (Article 82) in relation to the pricing of its digital cordless telephones.

Ofcom's decision is made following an investigation which was opened on 26 April 2005 following the submission of a complaint on 29 March 2005. The complaint alleged that BT was dominant in the supply of cordless telephones in the UK and that BT had abused its dominant position by predatory pricing behaviour in its supply of digital cordless telephones.  The complaint was submitted by Herbert Smith on behalf of Binatone Telecom plc and a co-complainant who wishes to remain anonymous.

Ofcom has issued draft non-infringement decisions to the parties in respect of this matter on 20 October 2005 (first draft decision) and 9 May 2006 (second draft decision). Ofcom has considered the comments that were made to it in response to those drafts.

During its investigation, Ofcom has considered the available evidence and concluded that the relevant market is for the wholesale distribution of all consumer fixed-line telephone equipment in the UK and that BT is not dominant in the relevant market.  Consequently, BT's conduct is not caught by the Chapter II prohibition or the prohibition in Article 82 and, therefore, there are no grounds for action.

In the course of the investigation, Ofcom also considered evidence from BT in relation to its pricing to assess whether, in the event that Ofcom had found BT to be dominant in that market, its conduct could have been considered to be predatory pricing prohibited by Chapter II and Article 82. Ofcom has concluded that even if Ofcom had found BT to have been dominant in that market, it would have then gone on to find that BT was not abusing its dominant position by engaging in predatory pricing. This reinforces Ofcom's conclusions on dominance since part of the basis of the complainants' submissions in relation to BT's alleged dominance was that BT's adoption of a predatory strategy had raised barriers to entry.

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