BT and TalkTalk broadband pricing appeals to be referred to CMA

The Competition Appeal Tribunal has referred the matter to the CMA following the appeals made after Ofcom’s decision on superfast broadband pricing last March.

As the former state incumbent, BT is the largest retail provider of fibre broadband services over its Openreach network but is also required to allow other operators to use Openreach's infrastructure to sell superfast broadband to consumers, a process known as ‘virtual unbundled local access’ (VULA).

The Ofcom pricing rule aimed to ensure that BT keeps offering a sufficiently lower price to rivals for its wholesale superfast broadband charges, in order to allow them to profitably match BT's prices.

TalkTalk had complained BT was unfairly setting its own retail prices too low and wholesale prices too high to use its dominant position as a former state monopoly to squeeze out the competition.

Ofcom, which as part of another review into BT recently admitted it was looking at options for the FTSE 100 telco that include the “structural separation” of Openreach from BT, rejected that claim but proposed new rules for BT on broadband pricing.

The regulator's new rule preserves BT’s current flexibility to set its wholesale fibre prices and at same time said the company will "not be able to set prices in such a way that might prevent other operators from competing profitably for superfast broadband customers".

But both sides were unhappy and so the new appeals will be heard by a group of independent panel members supported by a case team of CMA staff, with a six-months deadline to send its final determination to the CAT. The CAT will then include this determination in its judgment alongside the other issues it has considered as part of the appeals.

TalkTalk will be supported by Sky as a fellow 'intervener' in BT's new appeal, the CAT added.