BT 0845 and 0870 retail price change

No. 20/08/2004

BT 0845 and  0870 retail price change - suspected internet service provider margin squeeze

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 in relation to price changes for 0845 and 0870 services introduced on 1 June 2003 and 18 July 2003.

On the information in Ofcom's possession, Ofcom has concluded that 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.

Ofcom's decision follows an own-initiative investigation, which was opened in response to representations from a number of competing internet service providers (ISPs) that BT's 1 June 2003 retail price changes for 0845 and 0870, which included a reduction in price of evening calls to 0845 number ranges and weekend calls to 0870 number ranges, was likely to result in the exclusion of competitors from relevant markets in the provision of narrowband metered internet access.

The Office of Telecommunications (Oftel) opened its own-initiative investigation on 18 July 2003 and investigated whether the impact of the 1 June 2003 price changes and subsequent action on 18 July 2003 via BT's downstream termination business, namely passing on the effects of these retail price changes in the out-payments it makes to ISP customers purchasing internet termination services from BT, had the effect of imposing a margin squeeze on its competitors in downstream markets. Oftel ceased to exist as of 29 December 2003 and its powers under the Act have now been assumed by Ofcom.

Following its investigation, Ofcom has considered the available evidence and concluded that 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.

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