Court of Appeal makes a call on landline class action

The Court of Appeal has today handed down its judgment on Justin Le Patourel's application to appeal against the Competition Appeal Tribunal's (the CAT's) judgment of 19 December 2024 dismissing his £1.3bn opt-out collective action for excessive pricing against BT.  This case marked the first opt-out competition collective action to go to trial in the UK, and the first substantive judgment under the UK's collective action regime. Simmons & Simmons acted for BT.

In an important judgment upholding the CAT's ruling, the Court of Appeal clarified the scope of its jurisdiction in hearing appeals against CAT judgments.  The case also sets out some clear ground rules of wider significance on the circumstances in which Courts should draw "adverse inferences", the remit of the "broad axe" in collective proceedings, and how to assess economic value in excessive pricing cases.

Summary of outcome

The Class Representative (the CR) advanced four grounds of appeal: two concerned the CAT's assessment of Limb 1 of the United Brands test for excessive pricing (i.e. the comparison of  costs and price); one concerned the CAT's assessment of Limb 2 of the United Brands test (i.e. whether the prices were 'unfair'); and the final ground concerned compound interest.  

Following an oral hearing on 16 July 2025, the Court of Appeal has now handed down its judgment refusing the CR's application for permission to appeal. The Court found that the arguments advanced by the CR were in substance challenges to the factual and evaluative assessment of the CAT, and did not constitute valid grounds of appeal.

Court of Appeal's remit

The judgment provides authoritative guidance on the Court of Appeal's remit in appeals against CAT judgments, which extends to points of law only. While an issue of evaluation of evidence is in principle capable of amounting to an error of law, the bar is high, the classic example being irrationality. Appellate courts should not, without good reason, interfere in the CAT's exercise of its legitimate discretion to find facts, and draw inferences from those facts, in reaching its conclusion. This is particularly so given:

• The nature of the evidence before the CAT:  The CAT has to form conclusions based on data exhibiting varying degrees of accuracy and completeness, and which may be based on assumptions of uncertain precision and authenticity. In doing so, it appropriately uses its powers of informed, skilled "guesstimation" or, put differently, it wields the broad axe.

• The institutional composition of the CAT: The CAT melds legal, financial, business and economic experience - a range of skills which are important in a case such as Le Patourel given the nature of the evidence,and which are not replicated in the Court of Appeal. 

When it is proper to draw an adverse inference

The CR argued that BT had deliberately failed to generate factual evidence on its costs and that the CAT should have, but failed to, draw an adverse inference by ultimately ignoring the evidence of BT's expert (who had used her subjective judgment to allocate indirect costs).

The Court rejected the CR's arguments for the reason that they did not reflect the facts, noting that there was nothing in the CAT's assessment that was approaching the basis for a finding of irrationality. Ultimately, the CAT had conducted a thorough and balanced analysis of the expert evidence presented by both parties, applying its discretion and allocating such weight as it deemed appropriate to arrive at its conclusions. Despite arguments to the contrary from the CR, the Court held that there was no case management failure on the part of the CAT or 'lacuna' in the evidence, because the issue of costs allocation was covered by expert evidence.

The Court emphasised Lord Leggatt's comments in Efobi on the standard for the drawing of an adverse inference, confirming that the position is not legal or technical but is a matter of rationality and will depend entirely on the particular circumstances of the case.

The Court further emphasised that the discretion to draw an adverse inference is not intended to be punitive. The key consideration was whether the CAT was able to perform its role with the evidence it had before it. There was nothing to suggest that the CAT was left unable to 'cope' and so no reason to draw an adverse inference.

The judgment also reiterates the well-established "broad axe" principle which was wielded by the CAT to arrive at its own conclusion while striking a "pragmatic balance" between the views of both experts.

Fairness and economic value

The CR raised numerous separate arguments, which sought to undermine the CAT's assessment of whether the differential between cost and price was justified and hence fair (under Limb 2 of the United Brands test). In rejecting those arguments, the Court accepted evidence of pricing in a comparable, workably competitive market could be relevant to the Limb 2 assessment. However, there is no principle of law or economics that says that the prices of a dominant undertaking should pivot around cost plus (i.e. costs plus a reasonable rate of return). To proceed otherwise, would render Limb 2 of United Brands, which has been part of the legal landscape for over 50 years, redundant.

The Court also noted that the CAT was unable to arrive at a detailed quantification of economic value but accepted that the facts and matters relevant to value are imprecise and largely unquantifiable. It was therefore sufficient for the CAT to arrive at a broad conclusion on the existence of some value.

Simmons & Simmons Comment

This judgment will be of wider application to competition litigation practitioners, especially in the context of appeals in the collective actions regime.  It provides a clear statement from the Court of Appeal that parties cannot attempt to shoehorn what are essentially disputes of fact into disputes of law by arguing points such as irrationality.