CA-2025-000517 - [2025] EWCA Civ 1061

Fecha: 01-Ago-2025

Conclusions

Conclusion

This proposed ground is in substance a challenge to the factual and evaluative assessment of the CAT. It does not reflect what actually occurred and in any event does not approach the point of irrationality. I would refuse permission to appeal.

E.Proposed Ground 2: Alleged error in the finding of the CAT that 40% of BT’s common costs were attributable to SFV services and the reliance by the CAT on the Stand-Alone Costs Combinatorial test (“the SAC Combi” test)

The issue

This is a Limb 1 issue, namely the computation of Cost-Plus. It is based upon the same factual matrix as Proposed Ground 1, namely the findings about common costs. The CAT held that “around” 40% of BT’s common costs should be attributed to the SFV services. It stated at Judgment paragraph [906]:

“Having established the size of the common costs within BT Consumer as a whole, the next task is to assess what proportion of that common cost can reasonably be recovered from SFV services. Looking at the picture overall, we consider that a reasonable balance is struck where SFV Services are permitted to recover around 40% of the total common costs. Here, we bear in mind that under Dr Jenkins’ SAC Combi approach, and applying an assumption of a 25% margin, the SFV Services’ contribution to common costs would be 62%. It would fall to 56% if a 20% margin was deployed (because of the way in which the margin is itself part of each SAC Combi calculation), and of course we proceed upon the basis of a 13.5% margin, which would suggest (using Dr Jenkins’ approach) a contribution to common costs of a little below 50%.”

The premise of the proposed ground of appeal is that a figure of c.40% is an overly generous attribution artificially swelling BT’s costs and reducing the differential between Cost-Plus and price thereby making it easier (than it should be) for BT to justify the differential as “fair”.

The applicant argues that the allocation of that 40%: (i) was irrational; (ii) misapplied the principles in BT v Ofcom [2011] CAT 5 (“PPC”); and (iii) was premised upon the Common Costs Starting point, which was itself vitiated by errors of law and was not supported by adequate reasons. The CR argues that it is clear from the words “we bear in mind”, in the third sentence of paragraph [906], that the CAT, in endorsing SFV Services Common Cost Contribution of 40%, relied improperly upon Dr Jenkins’ SAC Combi approach which suggested that SFV Services should make a contribution to BT Consumer’s common costs of “a little below 50%” where a 13.5% margin was used. Such reliance upon the SAC Combi approach was irrational given the CAT’s prior findings that SAC Combi was flawed and did not provide a credible or reliable basis for allocating common costs. The applicant cites the following:

At Judgment paragraph [842], the CAT found that the SAC Combi approach failed to test any combination of products which did not include BT Sport – a heavily loss making product and that “… this seriously compromises the reliance that can be placed on such results.”

At Judgment paragraph [844], the CAT found that the SAC Combi approach and the competitive benchmark that flowed from it cannot “provide a reliable basis for the Limb 1 assessment” and that “…we do not find that the results of Dr Jenkins’ SAC Combi provide a credible basis for defining the reasonable limits of that flexibility.”

At Judgment paragraphs [854] and [855], the CAT found that the SAC Combi approach involved a “Number of Lines Error” which, once corrected, yielded implausibly high figures for the competitive benchmark for SFV Services. The result of correcting the error “suggests that there is a serious problem with her SAC Combi model.”

At Judgment paragraph [856], the CAT stated: “Overall, we consider that Dr Jenkins’ approach, insofar as it is based on the SAC Combi exercise, is seriously deficient, and it cannot justify the competitive benchmarks which are said to result from it.”

The CAT rejected Dr Jenkins’ DSAC and FAC ‘cross-checks’ on the SAC Combi: Judgment paragraphs [874] and [896].

Analysis

With respect, the argument involves a conflation of “we bear in mind” with “we accept”, which is not how the CAT analysed Dr Jenkins’ report, as is clear from a reading of Judgment paragraphs [903]-[913]. These describe the CAT’s approach:

There was no evidence on common costs from the CR which could be fed into the analysis: Paragraph [904].

The conclusion that the common costs starting point was £250 million recognised the problems with Dr Jenkins approach and this meant that even her low scenario common costs figure was too high: Paragraph [905].

The appropriate allocation of common costs which could be recovered from SFV services was governed by reasonableness which involved looking at the picture overall and striking a reasonable balance: Paragraph [906].

The CAT was entitled to “bear in mind” the analysis of Dr Jenkins’ SAC Combi approach. This is not the same as the CAT accepting or relying upon that approach: Paragraph [906].

The CAT took into account: (a) the proportion of SFV Services voice lines making up the total number of voice lines in 2015/16; and (b) the proportion of SFV Services revenue of the total BT Consumer revenue.

The CAT took into account, as “context”, the practical impact of taking 40% of the starting common costs figure of £250m (ie £100) which was £37.45 per line on an annual basis and £3.12 on a monthly basis: paragraphs [907] and [908].

It was relevant also to perform an “approximate comparison” between the approaches of both experts to identify where the CAT’s own conclusion fell between the opposing positions. The adoption of a midway point between the competing stances was a “pragmatic approach”: paragraphs [909] – [913].

This was an exercise which attached a limited relevance and value to the opinion evidence of BT’s expert. The CAT arrived at its own conclusion which entailed striking a pragmatic balance between the views of both experts (as explained in Judgment paragraphs [37] and [38], set out above). This was classic, informed, guesstimation or the wielding of the broad axe. It was a proper approach to take.

The reference to the PPC case does not assist. There the CAT observed that in many cases a combinatorial test was impracticable because of the sheer number of combinations needed to be assessed. In Judgment paragraph [824] the CAT endorsed that view and concluded that Dr Jenkins’ approach was inconsistent with the judgment in PPC. The CR complains that given this recognition the CAT inconsistently then proceeded to endorse Dr Jenkins’ approach. The argument wrongly assumes that the CAT endorsed Dr Jenkins’ SAC Combi approach, as opposed, given its limitations, to using it in a limited way as a broad marker along the route to its own, independent, conclusion on how to allocate common costs. I do not see any inconsistency in this with PPC.

F.Proposed Ground 3: Errors in the analysis of the CAT in its conclusion that BT costs bore a reasonable and fair relationship to economic value

The applicant’s submissions

Proposed Ground 3 includes seven Limb 2 arguments designed to undermine the conclusion of the CAT that the differential between Cost-Plus and selling price was justified and hence fair. An overarching complaint is that the reasoning in the Judgment is conclusionary and unexplained because the CAT did not articulate any sense of scale or measurement of those items of value it accepted were relevant to justification, and did not therefore explain how or why BT’s arguments justified the differential.

The headings below are based upon the classification of the issues used by the applicant in written submission which are themselves based upon the proposed grounds (see paragraph [13] above). The arguments can be summarised as follows:

Scale of excess: The CAT misdirected itself as to the significance of the scale of the excess.

Failure to address/consider: The CAT failed to address or consider whether excessive SFV prices would pertain in a workably competitive market.

Price and cost dispersion: The CAT made errors of law in addressing price and cost dispersion and/or failed to focus upon the relevant question which was whether SFV customers would have been prepared to pay excessive prices.

The Willingness to Pay fallacy: The CAT misdirected itself on the nature of the Willingness to Pay fallacy and/or the CAT committed the Willingness to Pay fallacy in assessing the evidence on switching.

The test of distinctive value: The CAT misdirected itself by equating economic value with its flawed concept of “distinctive value”.

Gives: The CAT erred in law in its assessment of the Gives.

Brand value: The CAT erred in law in its assessment of brand value.

Before addressing individual objections, it is important to stand back. The complaints go to the evaluative Limb 2 exercise performed by the CAT as to the weight to be given to different strands of evidence relevant to value and justification. The applicant valiantly seeks to identify issues of law but cannot escape the fact that the CAT’s final analysis was, at its core, based upon the weight it gave to different pieces of evidence each of which was, by its nature, more or less impossible to attach quantified values to. The task of this Court is to decide whether the objection can properly be classified as one of law and insofar as it focuses upon questions of fact whether the finding was within the bounds of the CAT’s discretion. Where the challenge, for instance, is that the CAT irrationally ignored or gave insufficient weight to evidence adduced by the CR and/or gave too much weight to conflicting evidence from BT, that is not something an appeal Court can readily assess, not having sat through the 6 weeks of evidence, so as to have a proper feel or understanding for the evidence as a whole. The threshold for turning such a complaint into an appealable point of law is high.

The relevance of switching to the assessment of value

The conclusions of the CAT about switching underpin many of the CR’s arguments. It is important at a number of key junctures. In respect of dominance, an issue was whether the significant degree of switching observed reflected a material constraint upon BT’s SFV market power sufficient to rebut the presumption of dominance which, otherwise, flowed from its persistent high market shares. On the facts the CAT held not. A further issue, this time relevant to Limb 2 and the proposed grounds, was whether customers attributed a value to SFV services over and above that attributed to the bundled service, the main comparable. The CAT considered whether there was capacity for switching and if there was whether there was evidence of non-switching and, if so, whether that reflected a deliberate decision on the part of consumers based upon an appreciation that there was incremental value attributable to the SFV relative to the comparable bundled service. The alternative was that non-switching reflected the fact that customers were captive to BT and had no choice but to pay the high prices.

The CAT prefaced its analysis with general observations about how to measure economic value and switching at paragraphs [956] – [962] where it explained what, in adjectival terms, it was seeking to identify and assess and also what sort of evidence could cast light upon that task. The CAT focused upon switching and non-switching, the intuition being that if a consumer had a choice to switch but chose not to, that might constitute evidence that, in relative terms, the consumer valued the SFV services over the bundled service i.e. it generated “distinctive” value. The CAT was clear that ultimately this was all a question of fact:

“The Extent or Level of Economic Value Required

In evidence, Mr Parker adopted what we consider was too high a threshold for the existence of any relevant economic value, by using the expression “unique”. In the event, the CR, in his closing submissions, did not go so far. Rather, he contended that there needed to be some “distinctive” value provided. The expression “distinctive” derives not from United Brands or Phenytoin, which simply referred to whether the price bears a “reasonable relation” to economic value. As already noted at paragraphs 76-81 above, the expression was deployed in Hydrocortisone and we are content to adopt it in the way set out in paragraphs 82-83 above.

The Relevance of the ability to switch (or not)

We have already noted the undoubted fact of extensive switching on the part of SFV customers either to other voice-only providers or (in more cases) to bundles, in paragraphs 163-177 above. We have also concluded that the principal reason for such switching was not as a reaction to the particular prices charged by BT but because of the secular trend away from voice-only services or separate voice and broadband contracts, towards bundles instead – see paragraphs 211-303 above.

BT relies upon the ability of SFV customers to switch, and the fact of their switching, as a significant factor in the determination of unfairness or otherwise. This is not because it is some free-standing further economic value point in and of itself… Rather, BT contends that it suggests that since customers could (and did) switch, for those who stayed (while they stayed) they should be assumed to have ascribed positive economic value to their BT landline. …. This contention is then said to be supported by Dr Hunt’s evidence.

On the other hand, Ms Kreisberger KC argued that the ability to switch is irrelevant at the Limb 2 because it has nothing to do with the economic value of the SFV Services.

For our part, and as a matter of principle, we would accept that in theory, the ability to switch and the fact of switching (or not switching) can be relevant to economic value. For one thing, the fact that a product may have some additional economic value cannot itself be a defence to a claim based on unfair pricing if the customers are in a truly captive market in all respects and have nowhere else to go. This is the essence of the Willingness to Pay fallacy. In such a case the excessive price will not bear a reasonable relation to its economic value. On the other hand, if the customers are not captive, then it would be easier to ascribe a reasonable relation to the underlying economic value…

Put another way, it may be possible to infer that those who stay with the product have actively chosen to stay (since it was open to them to switch but they have not) because they subjectively attach a positive value to the product or the brand. Of course, all of this depends on the facts and the whole question of the existence or otherwise of customer inertia here (dealt with below); but in principle, we consider that the phenomenon of switching can be legitimately relevant in this way.

Beyond stating those principles, it seems to us that the existence of a reasonable relation to economic value (or not) is highly fact-sensitive, as well as being a matter for the exercise of judgment. The resolution of this question also depends, of course, on the extent of the excess of the price over the competitive benchmark because the particular price is the “thing” which must bear a reasonable relation to the economic value.”

The CAT also addressed the issue at paragraphs [1099] – [1134]. There the CAT focused upon how “engaged” customers were and the extent to which they were able, freely, to form an assessment of the relative value of the BT SFV services. The dividing line between the parties was set out in paragraphs [1101] – [1102]:

… The key question is the extent to which it can be said that those who (at any time in the claim) did not switch thereby made a positive or deliberate choice to stay, and in that sense were sufficiently engaged, as opposed to being simply inert and disengaged so that no inference of any attribution of value could be made from them staying. We should add, of course, that merely because customers were engaged, it does not necessarily establish the relevant level of economic value, but it does at least enable an inference to be made that they were capable of making a positive choice to stay because of the value ascribed for example to the BT brand - if this is what they did.

The CR’s position is that little or nothing can be inferred as to a positive choice to stay because the customers were indeed generally disengaged. It is important to note that this is not because the Class Members as a whole are considered to have some particular vulnerabilities or characteristics as a class. Professor Loomes specifically eschewed this approach. Rather it was because of what can be said from a behavioural economics point of view about how consumers act (or not) generally. Dr Hunt, for his part, noted that VOCs were generally in an older demographic … for the purposes of his analysis of their engagement, and of course BT made reference to their age demographic in the March 2019 Survey.”

In paragraphs [1103] – [1134] the CAT considered a series of evidential questions: levels of engagement amongst class members who later switched suggesting that they were not inert and were prepared to explore options; the reasons for switching and whether it was price or quality driven or, alternatively, was part of a “secular trend” towards bundled services; whether SFV customers were captive and whether there were barriers preventing them taking alternative options; whether there was a “rump” of consumers who were immune to switching and, if so, as to their prominence within the class; the different forms of stimuli or “triggers” to customers which might prompt customers to question whether there were incremental benefits which flowed from the SFV services, etc.

The final conclusion, on the facts, was that there was a substantial number of customers who were not inert (i.e. were capable of switching) but who remained loyal to the BT SFV brand, even though switching was a continuing phenomenon:

Overall, and in the light of the matters referred to above, we consider that it seems likely that a substantial number of those who stayed (while they stayed) probably did so out of a sense of loyalty to a brand to which they had been attached for probably many years. They were not generally inert, as is shown by the fact that most of them (eventually) did switch, and all the indications suggest that those who remained SPCs are continuing to switch to bundles, as there were 1.87m such customers in 2014 and only 0.49m by 2022.”

The CAT was not able to determine whether non-switching was attributable to particular features of the SFV services offered by BT. Its conclusion was more generic and concerned value generally. Equally, the CAT was not able to turn its findings into precise values. It treated evidence of non-switching as a proxy for determining whether it was possible to conclude, in a broad sense, that some material cohort of consumers did value features of the SFV service over and above those offered by BT in the comparable bundles market. I turn now to the individual complaints.

Scale of excess: The CAT misdirected itself as to the significance of the scale of the excess

The first complaint is that the CAT wrongly took into account that the differential (between Cost-Plus and price) was “dramatic[ally] different from that alleged by the CR”. It is said that this arises from Judgment paragraphs [933] – [934] where the CAT focused upon the difference between the calculation of the CR of the differential and its own conclusions on the issue and observed that the difference was dramatic. The CR says that this conclusion was immaterial to any part of the proper legal analysis and downplayed the absolute scale of the overcharge across the claim.

I disagree. In the paragraphs complained of the CAT did no more than observe that, for the purpose of its (i.e. the CAT’s) analysis of whether the differential was fair, it could not accept the starting point of the CR, which was that the average was 78%. The CAT observed, in paragraphs [932] – [934], that the difference between the claim of the CR and its own findings of an average of 38% was “dramatic” and the consequence of this was to reduce the ability of the CR to say, based upon its (i.e. the CR’s) own rejected analysis of the differential, that the extent of the excess was so substantial that it either entailed unfairness in and of itself or, in any balancing exercise that would be a strong factor against BT. When paragraphs [932] – [934] are read in the round the point made by the CAT was logical and correct. Given the scale of the difference between the conclusions of the CR and the CAT, the CR could not continue to raise arguments predicated upon his own rejectedanalysis.

Failure to address/consider: The CAT failed to consider whether excessive SFV prices would pertain in a workably competitive market

The proposed ground alleges that the CAT failed to consider or address two relevant matters. As drafted this objection is answered by the conclusion that the CAT did, in fact, consider and address these matters, at some length. The two complaints are:

Inferences from price comparison with bundled services: The CAT failed to consider whether in a workably competitive market BT SFV customers would have been prepared to pay prices inflated by the persistent excess above Cost-Plus. Customers of DP bundles from BT were buying the same products as SPCs (landline and broadband) but under a single contract. The bundled market was workably competitive during the relevant period (Judgment paragraph [946]) but bundled prices were generally stable or declining (Judgment paragraph [446]). The evidence of Mr Parker (for the CR) on market definition focused upon the gulf between the high prices paid by SPCs and low prices paid by DP customers for the same services. That analysis was upheld by the CAT (Judgment paragraph [371]) which then, inconsistently, failed to infer and/or consider whether that conclusion indicated that there were no other factors not already accounted for in the Cost-Plus benchmark which justified extracting excessive prices for landlines from SFV customers under Limb 2.

Inferences from finding of dominance: The CAT failed to draw inferences from its conclusion that BT was dominant on the SFV market. The market was incapable of producing prices corresponding to economic value. The CAT failed to question whether the high differential was due to a lack of price competition faced in SFV services, rather than additional value above Cost-Plus.

As a general proposition it is common ground that what happens in a comparable, workably competitive, market might be relevant even in a Cost-Plus case (which is itself a means of seeking to determine what prices should be charged in a workably competitive market, see e.g. Cinven (ibid) paragraph [77]). Such evidence is different in nature to evidence of value. But it is certainly relevant to that evaluation. For example, it can shed light on the features of a product or service that a consumer might treat as valuable and/or it might indicate whether in a competitive market price congregate around some measure of cost or Cost-Plus or, otherwise, include some level of incremental profit. For example, in Cinven (ibid) the CAT benchmarked its Limb 2 conclusion (on the lack of justification for the differential between Cost-Plus and selling price) for the drug Liothyronine, against the selling price of the drug charged in comparable, competitive, markets, where they tended to congregate around Cost-Plus. The prices charged by the dominant undertaking were ten times (and more) above those in the comparable markets relied upon by the CMA and CAT, which the latter held were relevant and meaningful. The CAT rejected the competing contentions of the defendant undertakings as to how prices behaved in competitive markets.

There are two points to make about the CR’s criticism.

First, in the present case the CAT accepted that, in principle, observable features of a competitive market could guide the approach to Limb 2 of the Cost-Plus test. Such a conclusion is consistent with established case law. The CAT did in the Judgment address the value of the SFV services relative to the bundled service. The analysis of non-switching (see above) was specifically designed to test this relationship and that analysis formed an important component of the CAT’s findings on value. It is accordingly incorrect to say that the CAT failed to address the issue.

Secondly, as to the argument that there is inconsistency between the finding that there was dominance and the finding that the persistently high prices were justified, this is a non-sequitur. There is no automatic or inevitable correlation between the two propositions since it is possible for there to be dominance and for prices to reflect value. Indeed, that is the premise behind the Limb 2 test; prices above Cost-Plus can be lawful when charged by an undertaking in a dominant position. On the evidence the CAT explained in detail why evidence of switching was consistent with the finding of dominance but also consistent with the finding that some value was attributed to the SFV services which was incremental to that attributed to the comparable bundled service. These were conclusions made by the CAT on the facts, and they are not mutually exclusive.

Price and cost dispersion: The CAT made errors of law in addressing price and cost dispersion

This complaint challenges the finding of the CAT that BT’s prices did not have to centre around Cost-Plus such that any price above that marker was abusive. The terms “price and cost dispersal” refer to the fact that in a competitive market there might be a range of prices charged by the competitors, and a range of margins because different competitors have different cost structures and in consequence different profit margins, even if they charge similar prices. In paragraph [1152] the CAT explained:

“The premise for this point is that in many workably competitive markets there will be a range of cost levels among rival firms and if the equilibrium market price needs to cover the costs of the marginal source of supply, this will often mean that at the workably competitive price level, lower cost sources of supply (and lower cost suppliers) will earn returns in excess of that minimum level. One instance where this phenomenon can apply is in markets where there are significant economies of scale due to the existence of some fixed costs. In such markets, the more suppliers there are, the higher will be the price that is required to remunerate the costs of the firms that compete within it. This can give rise to a trade-off between the advantages that more suppliers can create for more rivalry and competition in a market, and a disadvantage associated with more suppliers increasing total industry cost. the detail of this basic proposition (which we did not understand to be in dispute) ….”

In Judgment paragraph [1139] the CAT summarised the argument of the CR:

“There was, however, some divergence as to how this workable standard should be applied, with the most important difference between the parties being their view as to whether firms could earn profits in excess of the competitive level in conditions of workable competition. Specifically, Ms Kreisberger KC for the CR claimed that workable competition involved the market price being driven down to a level of zero excess profit. In her oral closing she submitted that in a workably competitive market, the price will be driven down to cost-plus, so zero economic profits, but if the firm could point to some unique feature that distinguishes it from the market, then it may be able to put its prices above cost-plus.”

BT argued that applying a benchmark of workable competition was consistent with a wide range of prices and price-cost margins and “…it certainly did not entail a zero profit constraint, which was a standard associated only with perfect competition.” (Judgment paragraph [1140]). The CAT concluded (Judgment paragraph [1141]) that the approach adopted by BT was the correct one and that the zero profit presumption advocated by the CR was “unrealistic”. It added, however, the important caveat that there were limits to the inferences that might properly be drawn from observable trends in a comparable market: “Of course, this does not justify an ‘anything goes’ approach to the definition of workable competition and we bear that in mind.”

The CAT tested whether there was evidence from a relevant comparable market to suggest that there was actual dispersal (Judgment paragraphs [1145] – [1158]). It examined the adjacent bundles market and held that price and cost dispersal was evident in the market. The CAT then accepted that because in the comparable market there was a range of prices, with varying margins above cost, this supported the argument of BT that a fair price was not one pegged to Cost-Plus:

… In other words even in the case of putative workable competition in the SFV Services market, there can be variations, perhaps significant variations, in the profitability of essentially the same service, sold by different suppliers. It would then be unreasonable and unfair to penalise BT, simply because of its lower cost base.”

The CAT rejected the CR’s response that BT enjoyed cost advantages because of its position as the legacy statutory monopoly provider of telephone services, not because it had achieved market power through innovation or investment which took years to recoup and that there was nothing unfair about disregarding the fact that BT had lower unit costs than its competitors. The CAT rejected this argument as “over-simplistic” (Judgment paragraph [1156]) given that BT had been privatised some 40 years ago and then went through a long period of regulation where it became free of certain control in 2006 and other restraints, including being unable to sell bundles, in 2009. It had remained under regulatory scrutiny since and there was no evidence of “regulatory failure”.

There is nothing wrong with the CAT’s approach or reasoning. The evaluation of the evidence in the paragraphs cited is rounded and balanced. There is no principle of law or economics which requires the prices of a dominant undertaking to pivot around Cost-Plus. There might be some markets where on the facts this will be so but, equally, there may be markets where a margin above Cost-Plus is evidentially justified. If it were otherwise there would be no point in the Limb 2 test, which has been part of case law for over 50 years.

The criticisms of the CR are really disputes about the way in which the CAT found, and drew inferences from, facts and amount to no more than that the CAT did not accept all of the CR’s arguments. For instance, it is said that that CAT erred in its analysis of price dispersal evidence in the comparable market because it misinterpreted the Ofcom Pricing Trends Report (Judgment paragraphs [1146] – [1150]) evidencing price dispersion between suppliers. The CR says that each line in the table depicted the average price offered by six providers, distinguishing only between standard and promotional prices across the market and the CAT therefore relied on an irrelevant consideration. This is a dispute about the evidence but in any event the relatively broad conclusions drawn by the CAT from the data analysis in those paragraphs seem perfectly rational. The same applies to the argument that the CAT erred in law in its treatment of cost dispersion at Judgment paragraphs [1154] – [1157] where it stated that firms in a workably competitive market can have a range of cost levels and a range of profit levels and that BT had a “lower costs base” and “lower unit costs” than other firms. The CR objects that the CAT (i) failed to conduct a relative evaluation of purported cost differences between BT and its rivals; (ii) failed to conduct any measurement or meaningful evaluation of whether the purported cost differences justified the excess; (iii) instead wrongly assumed that BT enjoyed cost efficiencies which justified the excess; and (iv) failed to explain how/to what extent “this second element of dispersion also counts against a finding of unfairness.” It is complained that BT adduced no evidence that it was more efficient than its rivals and the CAT carried out no analysis of BT’s costs efficiency relative to its rivals: Mr Parker (for the CR) observed that he was “not aware of any reason to suggest that BT was more efficient than rivals” and that, if anything, he suspected “that BT consumer is likely to be less efficient than rivals”; BT’s Written Closings stated that cost efficiencies had not been “the focus of evidence in these proceedings”, save for whether BT’s rivals were likely to have had materially higher customer acquisition costs given BT’s dominance and legacy customer base. All of these are factual disputes and simply reflect disagreement with the CAT’s findings. The arguments do not moreover reach the point at which they could be recast as appealable points of law.

In fact, the conclusion of the CAT was limited. It held only that because prices in a competitive comparable market did not centre upon Cost-Plus, one would not expect BT to charge at or close to Cost-Plus when pricing SFV services. The point goes to no more than indicating that in the SFV market a price above Cost-Plus might (not would) be fair. BT’s argument opened the door to additional evidence of value and refuted the CR’s contention that the only fair price was one centring upon cost/Cost-Plus. The CAT did not, for instance, go further and say that in the SFV market BT could charge any price whatsoever that a non-dominant undertaking in the bundles market could charge, or get away with - the “anything goes” approach (see paragraph [65] above). The limited approach adopted by the CAT accords with economic as well as legal logic. In some workably competitive markets fair prices might be cost based; but in others they might not. There is no rule or governing principle in play; it is all about the facts.

The Willingness to Pay fallacy: The CAT misdirected itself on the nature of the Willingness to Pay fallacy / The CAT committed the Willingness to Pay fallacy in assessing the evidence on switching.

The CR raises two arguments about the so-called Willingness to Pay fallacy. The fallacy is to assume that because a consumer chooses to pay for a good or service supplied or provided by a dominant supplier, the price must be fair. This was addressed by the Court in Phenytoin. There the Court established that:

Economic value is the overall descriptor of the abuse not the test and it is a concept which describes: “… what it is that users and customers value and will reasonably pay for” (paragraph [171].

A proxy for economic value: “… might be what consumers are prepared to pay in an effectively competitive market” (paragraph [155]) or “… the prices being charged in relevant, comparator, markets which were effectively competitive” (paragraph [172]).

Conversely: “… the simple fact that a consumer will or must pay the price that a dominant undertaking demands is not … an indication it reflects a reasonable relationship with economic value” (paragraph [155]). The fact that a consumer is willing to pay the price demanded does not establish a reasonable relationship between price and economic value “… since otherwise true value would be defined as anything that an exploitative and abusive dominant undertaking could get away with” (paragraph [154]).

Where an issue of fact arises in relation to economic value: “… it needs to be measured and it can be evaluated in various parts of the test”; it should be “factored in and fairly evaluated, somewhere”, but not double counted (paragraph [172]).

Any economic value thus evaluated must be compared to the excessive price as: “… there might still be some economic value but not necessarily reflecting the full price demanded” (ibid paragraph [167]).

The first criticism is said to arise from Judgment paragraphs [960] – [961]. The CR says that in paragraph [960] the CAT wrongly concluded that the fallacy was confined to cases where there is a truly captive market and customers have nowhere else to go such that where customers are not “truly captive” it is possible to infer that those who stay with the product have actively chosen to stay since they have declined the option of switching. This involves, argued the CR, an error of law because the fallacy is not confined to cases where customers are captive and have no alternatives (i.e. monopolies) but applies also to cases of dominance falling short of monopoly. It is helpful to set out the section of the Judgment in which the two criticised paragraphs are found:

“The Relevance of the ability to switch (or not)

BT relies upon the ability of SFV customers to switch, and the fact of their switching, as a significant factor in the determination of unfairness or otherwise. This is not because it is some free-standing further economic value point in and of itself… Rather, BT contends that it suggests that since customers could (and did) switch, for those who stayed (while they stayed) they should be assumed to have ascribed positive economic value to their BT landline. … . This contention is then said to be supported by Dr Hunt’s evidence.

On the other hand, Ms Kreisberger KC argued that the ability to switch is irrelevant at the Limb 2 because it has nothing to do with the economic value of the SFV Services.

The analysis in paragraph [960] is a conventional way of describing the fallacy. The concept of “capture” is a reasonable term to use in context. Whether the price paid by a consumer reflects compulsion or free choice is a matter of fact and degree. It does not turn upon whether the supplier is dominant. There may be scope, even within dominance, as the CAT found upon the facts, for consumers to exercise some significant degree of choice such that non-switching can be viewed as a genuine exercise of selection (not compulsion) and for that to lead to an inference that consumers perceive there to be incremental value in the SFV services (which they have not turned away from). If, for example, an undertaking is a monopoly supplier of an essential good or service then the consumer simply pays up or does without to its obvious detriment. In such a case dominance might be synonymous with an absence of switching and to assume that the fact of payment suggests full value and free choice would be fallacious. But at the other end of the dominance scale the situation is more nuanced. If a dominant supplier has a market share of (say) 45% that might well allow for a significant degree of switching (with the residual 55%) and a decision to pay the proffered price might reflect choice. In such a case, the fact that the consumer paid up might well reflect real choice and it would not engage the fallacy for the CAT to so conclude. In the present case the position was complex. The CAT found dominance by applying the legal presumption of dominance for high market shares at the same time as finding evidence of substantial switching. As the CAT emphasised (cf paragraphs [961] and [962]), all this demonstrated was that the inferences that might be drawn from a consumer’s decision to pay a dominant price would be fact and context dependent. The CAT made no error of law. It did not assume fallaciously that because the price was paid this reflected an appreciation of value, instead of compulsion; to the contrary it made that finding on the evidence.

The second part of the Judgment where it is said that the CAT erred is paragraph [1135] in relation to switching. The CR says that the CAT swallowed the fallacy when assessing the evidence on switching:

“Conclusions on Brand Value

Overall we consider that there is significant evidence that the SFV customers as a whole did engage with their SFV products. We cannot possibly identify the individual motivation of each and every customer, and the evidence and interpretations offered by the experts, unsurprisingly, did not yield a definitive picture. However, for those who remained BT SFV customers (or while they remained), we consider there is sufficient evidence that for at least a substantial number, their decision to do so implies a degree of positive value that they attached to the BT brand.”

The applicant focuses upon the phrase “… implies a degree of positive value that they attached to the BT brand”. The applicant places this in the context of prior findings made by the CAT in paragraphs [1104] – [1134] in relation to value and switching. It breaks down the CAT’s findings and conclusions as follows:

some SFV customers switched to bundles; (ii) such switching was not driven by quality or price but was part of the secular trend (J1104); (iii) a rump of SFV customers never switched (mainly VOCs) (J1105); (iv) it “appears especially odd” that more SPCs did not switch given the price benefits of moving to a bundle (J1131); (v) the “upshot” of their preference “simply … to stay with the supplier they had known for a long time” was to ascribe “a degree of value” to BT (J1132); (vi) despite this evidence being based on “a degree of speculation on the part of both experts”, the CAT’s view was that the speculative evidence “favours BT” (J1132). On the basis of those steps, the CAT concluded that “overall … it seems likely that those who stayed (while they stayed) probably did so out a sense of loyalty to a brand to which they had been attached for probably many years” (J1134).”

It is said that this reveals errors. First, the CAT inferred economic value from the retention by BT of SFV customers in the face of excessive pricing which is the fallacy in action. Secondly, the inference of economic value from non-switching was contradicted by the earlier assessment on the part of the CAT of switching in relation to market definition as set out in Judgment paragraphs [211] – [303] where the CAT held that SFV customers who switched to bundles did so as part of changing consumer preferences for the convenience of bundles whereas those who did not switch were those with the highest willingness to pay or the lowest ability to switch. The applicant summarised his point thus: “In other words, SPCs continued to pay SFV prices because they were insensitive to price competition, not because they perceived some particular value in SFV services which justified the high price”.

I disagree. This is a variant of the first point and boils down, yet again, to the CAT’s analysis of evidence concerning switching. The CAT set out the evidence at length. In Judgment paragraph [211] the CAT observed that there was “on any view” significant switching away from SFV based upon the evidence set out in paragraphs [163] – [176]. Nonetheless, this was not a sufficient competitive threat to BT to prevent it from being found to possess dominance in the SFV market. It was accordingly a relevant question for the CAT to ask why the customer persisted in taking supplies from BT at a premium price? Was it because the customers had no choice being unable to switch from the dominant BT and had no choice but to pay up, as the CR argued? Or, was it because some portion of the excess over Cost-Plus reflected incremental value that customers appreciated and were prepared to pay for? The CAT answered the latter question in the modestly phrased affirmative – there was “… a degree of positive value”. This was a finding of fact premised upon a prior evidential conclusion that there was material freedom for customers to choose to stay with the SFV services. It was a finding of fact within the CAT’s discretion and does not reflect the Willingness to Pay fallacy. There is no law involved in this argument.

The test of distinctive value: The CAT misdirected itself by equating economic value with its concept of “distinctive value”

The next objection is a narrow point that, in the manner in which the CAT formulated the test in the Judgment, it wrongly equated value with mere difference from other offerings, which is said to be unprincipled and unsupported in case law. This is said to arise from Judgment paragraph [83] which stated:

“Subject to the caveat just mentioned (Footnote: ²), we would adopt the concept of distinctive value as a useful yardstick by which to measure that value in the product which is different to its cost (as established for these purposes by the relevant competitive benchmark under Limb 1) and which is something in some way different from the offerings of other sellers, but which can include the brand or other value ascribed subjectively by the customer for the product, as distinct from the product’s particular features. In that regard, innovation in its features is not necessary if they are perceived by the customer (subjectively or objectively) to amount to a better quality product in some way. We did not understand BT to disagree with this proposition; see, for example, paragraphs 175-177 of its Opening and paragraphs 683-688 of its Closing. We would add that, in our view, the assessment of distinctive value (or not) is highly fact-sensitive and involves a considerable amount of judgment (as noted in paragraphs 65 and 66 above).”

I do not accept this criticism. The CAT eschewed a definition based on product differentiation simpliciter. A difference relative to other products is not itself a meaningful barometer of consumer value. Just because a dominant undertaking can point to some different features of its product does not mean that those features translate into value acknowledged (even subjectively) by consumers. The CAT did not, however, make that error in paragraph [83] when it described its “useful yardstick” of “distinctive value” and which made clear that it was a relative concept addressing the relationship between value in the bundles market relative to that in the SFV market. In Judgment paragraph [78], in similar vein, it approved the following, relative, test for distinctiveness: “… any definable aspect of a Seller’s offering that adds value to the Buyer, in the sense that this aspect represents something that Buyers wish to purchase from that Seller in contradistinction to the offerings of other Sellers; and for which the Buyer will pay a premium”. I can identify no error of principle in the formulation of distinctive value by the CAT in the Judgment.

Gives: The CAT erred in law in its assessment of the Gives

The next issue concerns “Gives”. These are product features which are add-ons to the landline. At Judgment paragraphs [963] – [1032] the CAT identified the five Gives relied upon by BT: (i) Onshoring of customer call centres; (ii) Call Protect; (ii) Care Level 2 / Fault Fix Guarantee; (iv) Right Plan; and (v) Caller Display. These Gives formed a central part of BT’s case on value. The CAT held that three (Onshoring of customer call centres, Call Protect, and Care Level 2 / the Fault Fix Guarantee) had distinctive value and were relevant to justification and fairness.

The applicant says that the CAT erred:

Double counting: The CAT double counted the Gives because their cost, plus a margin, was already included in the Cost-Plus benchmark. The CAT does not explain why it considered that a further attribution of value was justified under Limb 2.

Irrational approach to the evidence: The CAT irrationally rejected the CR’s contention that BT failed to account for the fact that landlines sold to bundle customers at competitive prices, which were substantively identical to SFV landlines, also included the Gives. The CAT’s reasoning that economic value “ultimately has to be assessed by reference to the impact on those customers and the excess which we have found” (Judgment paragraph [1029]) does not engage with the CR’s point because the CAT did not consider whether the Gives offered different or greater economic value to SFV customers than to bundle customers.

Failure properly to evaluate the evidence: The CAT made the following errors:

Onshoring of customer call centres (Judgment paragraphs [965] – [973]): the CAT’s finding that this feature “…some real positive value for customers…” (Judgment paragraph [973]) was not supported by the evidence or the subject of any proper evaluation. It was at odds with the evidence of BT’s own witness (Ms Blight) that the only benefit was a local accent, and although “others would say it was a better service … she herself could not speak to this”. The c.£42 million cost of onshoring recorded at Judgment paragraph [965] was the cost to all landline customers not SFV customers only. The take-up rates at Judgment paragraph [970] refer to take up by all landline customers not SFV customers. BT began onshoring in 2016 whereas Sky already operated five customer service centres in the UK as of July 2015 so BT was merely replicating a rival’s offering. The CAT had no evidence before it of onshoring by other providers so could not assess whether BT offered “distinctive value” compared to rivals; and the CAT accepted that this feature was not technically innovative.

Call Protect: The CAT’s finding of “real and positive value to Call Protect” (Judgment paragraph [987]) was not supported by the evidence or the subject of any proper evaluation. The cost figures at Judgment paragraph [975] were costs of providing it to all landline customers, not SFV customers only. Those overall costs were inconsequential compared to the £675 million excess identified by the CAT. It was also an opt-in service taken up by less than half of SFV customers by 2021 with other customers seeing no benefit (Judgment paragraph [982]) and it was quickly replicated by competitors (Judgment paragraph [984]). The CAT’s finding that the wide availability of this Give from other operators did not undermine its conclusion that it added “significant value, especially where BT appeared to be ahead of its competitors, at least initially” was incoherent.

Fault Fix Guarantee: The CAT’s conclusion that “there was real positive value here” was not supported by the evidence and not the subject of serious evaluation or weighing against the excess. The costs at Judgment paragraph [988] are costs across the board for all voice customers and are immaterial compared to the Excess. It was an opt-in product which required the customer to take action to receive compensation which Ofcom found in 2017 limited its consequences and in any event, it was not in place for the whole Claim Period.

I do not accept these arguments. I take each in turn.

Double counting: There is no evidence from the Judgment that there was double counting. In relation to each Give the analysis of the CAT was directed at identifying value over and above Cost-Plus. There is nothing indicating that any increment recognised by the CAT as relevant to the Limb 2 test had already been factored into the Limb 1 analysis.

Rationality: This is an argument based upon findings of fact about the evidence, not law. The CAT (i) evaluated the weight to be given to each Give; and (ii) addressed the extent to which SFV customers accorded incremental value to features of the service relative to the comparable. As to the weighing of each Give, a fair review of paragraphs [963ff] reveals that: the parties and in particular BT addressed each Give in witness statement and other evidence; there was cross-examination on each item; the CAT was able to form a conclusion in broad terms on each item including whether, for instance, the Give was innovative (or not) and/or was introduced ahead of similar moves by rivals. For example, in relation to Onshoring of Customer Call Centres the CAT concluded (Judgment paragraph [973]): “We accept that this Give was not technically innovative as such, but this does not prevent it from having some real positive value for customers, which was achieved ahead of the competition, and we consider that it did”. In relation to Call Protect the CAT (Judgment paragraph [987]) concluded: “Overall, we consider that there was real and positive value to Call Protect, even though customers had to take the step of reporting the scam and nuisance calls made to them. In our view, the value extends beyond the active users, i.e. those who had reported a nuisance call which was then blocked, and indeed beyond those who had registered for the service. This is because such customers had the reassurance that there was a free service from which all received protection.” In relation to Care Level 2/Fault Fix Guarantee the CAT concluded (Judgment paragraph [995]): “Overall, we consider that there was positive value here although, it did require the customer to take action first, and it was not in place for the whole of the claim period”. In other cases, the CAT recognised that there might be some limited utility but nothing of materiality or real significance (e.g. in relation to Right Plan - Judgment paragraph [1005]) and in others it was found that there was no value at all of any note (e.g. Caller Display - Judgment paragraph [1010]). The CAT was unable to arrive at a detailed measurement of value. It was sufficient for it to arrive at a broad conclusion as to the existence, or otherwise, of “some” value. In the absence of a sensible ability to quantify value the CAT had to exercise its judgment in factoring the Gives into an overall assessment of fairness and justification. As to the submission that the CAT did not identify incremental value over and above that attributable to the bundled service this is answered by analysis of non-switching (see paragraphs [51] – [56] above) and the CAT’s finding that there was evidence that justified the inference that consumers attributed value to the SFV services and this must, inferentially, have included certain of the Gives.

Failure to give adequate reasons in relation to the final conclusion: The CR complains that the CAT failed to quantify the values and other matters taken into consideration and that, therefore, it is impossible to know how or why, cumulatively, they justify the differential. Even if the CAT correctly attributed some value to each item that does not mean that they, necessarily, justified a differential of the magnitude found to exist; they might all be de minimis. It is correct, as the CR observes, that the CAT did not, in its Judgment, articulate a final reckoning or tallying up, even if only in narrative or adjectival terms, of the items to which value had been attributed to arrive at the conclusion that they justified the differential. It is though clear that the CAT did conclude that these items were sufficient, collectively, to justify the differential, because they said so in paragraph [1270]. Does it matter that there is no, less conclusionary, more articulated, final tallying or reckoning? In my conclusion the answer is “no”, at least in this case. There are two points to make:

First, the extent to which reasoning is required is governed by context. The concept of a “reasonable” relationship between value and selling price recognises that the decision maker might not be able, with any degree of precision, to match value precisely to selling price. What the decision maker has to do is form a judgment as to whether there is a reasonable relationship between the cumulative value of relevant features and the selling price. It is possible to put the issue into context. In the Judgment the excess of selling price over Cost-Plus is summarised in the table at paragraph [925]. For example, in 2015/16 Cost-Plus was £15.90, and the monthly ARPU was £21.86, a difference of £5.96. For that period BT's arguments on fairness hence had to establish a reasonable relationship between the sum total of the facts and matters relied upon as justification and a monthly figure of £5.96. Some very broadbrush measure of the nature of the exercise can be gleaned by dividing the differential with the number of items to which a value is attributed. So, if the CAT finds a differential of £6 and four features are found to have value then one way of looking at fairness is to ask whether consumers would have paid £1.50 over Cost-Plus per matter identified as valuable. That admittedly crude and oversimplified approach does at least provide some indication of the scale of the task facing the CAT when seeking to pull the value strands together. The process can be contrasted with that of the CMA and CAT in Cinven (ibid) in relation to the drug Liothyronine where the Cost-Plus was £4.94 per box but selling prices increased, over time, from c.£4.00 per box (i.e. at or around cost) to £247 per box (a margin of c.6000% above Cost-Plus). The defendants therefore had to explain away a differential of up to £243 per box in circumstances where: the comparables indicated that a price circling around cost/Cost-Plus was the norm; the drug amounted to old, well established, chemistry which was cheap to produce, for which no real innovation was required; and, where there was a medically fixed demand and price inelasticity. The task facing the defendants in bridging such a value gap was Sisyphean. The defendants sought to advance a case based upon medical benefits. The judicial answer was predictable, crisply articulated, and limited to a conclusion that the alleged benefits were disproportionately small and did not justify the price increases (see Cinven (ibid) paragraphs [115] – [118], [124]). The present case is at the other end of the spectrum. The gap is (relatively) modest but the facts and matters relevant to value and the bridging exercise are imprecise and largely unquantifiable. Because so much of the evaluation is based upon skilled estimation the CAT might need to build into its assessment a margin of error. If, applying the broad axe, the CAT finds that the differential is 50 units but that the sum of the features having value is 44 units, would it have then found abuse to the tune of 6 units? Perhaps not? In a perfect, hypothetical, world where everything was measurable and all calculations possible, the real or true value might turn out to be 47.5 units and it might be questioned whether an excess of 2.5 units over value warranted a finding of abuse? Catering for such possibilities is all encapsulated in the concept of reasonableness and affect the level of detail that the CAT can give in its reasoning.

Secondly, and having said all of this and bearing fully in mind the uncertainties surrounding the exercise, it would have been useful in enabling this Court to navigate through the very complex and detailed analysis, to have had at least some narrative explanation of how features or items identified as having value combined and related to the differential and also how they related to the equivalent valuation in the comparable market and whether the CAT factored in some margin of error, etc. However, I cannot see that this omission alters anything and, for the reason given, I stop short of saying that its absence from the reasoning amounts to an arguable error (as opposed to a crie de coeur from an appellate court).

Brand value: The CAT erred in law in its assessment of brand value

The next issue concerns the way in which the CAT addressed the extent to which the BT brand could attract some value relevant to the Limb 2 evaluation. I start with 6 evidential propositions about brands which might be relevant to a Limb 2 analysis:

Branding plays an important role in markets by enabling competitors to differentiate their products one from the other and by increasing customer perceptions of efficiency, good value for money, luxury, status or reliability, etc.

Brands therefore can have value.

That value may be incremental to Cost-Plus assessed under Limb 1 and can therefore be relevant evidence in a Limb 2 assessment.

Evidence of the incremental value of a brand (i.e. that above Cost-Plus) might be found in the approach of consumers to the branding of goods or services in comparable, workably competitive, markets.

Such evidence might provide a benchmark for indicating the value consumers attach to a brand in the dominant, index, market.

If a dominant defendant adduces evidence that the value of the brand in the index market exceeds the value in the comparable, workably competitive, market that raises a question of fact and evidence for the CAT to assess.

The CAT addressed the issue of brand value in the SFV sector relative to that in the comparable in Judgment paragraphs [1033] – [1135]. It considered: Net Promoter Scores (NPS) (paragraphs [1034] – [1072]) which measured consumer experiences; material generated by Ofcom including survey evidence (paragraphs [1074] – [1098] designed to shed light on whether consumers viewed BT’s SFV service as particularly reliable and trustworthy and thereby reflective of brand value; and switching (paragraphs [1099] – [1134]). The analysis is granular, and the CAT formed different conclusions about probative value in relation to each category of evidence. It arrived at a highly qualified final conclusion:

The CR argues that the CAT erred by: (i) double counting the value of the BT Brand given that it was already included in the Cost-Plus benchmark; (ii) failing to explain why it nonetheless considered a further attribution of value to be justified; (iii) failing to explain why or how the BT Brand could be a source of economic value which justified the SFV prices given the BT brand was available to bundled customers at competitive prices; and (iv) failing to measure or fairly evaluate brand value or to consider whether the “degree of positive value” it identified was capable of justifying the entirety or some proportion of the excessive prices demanded.

The criticisms do not reflect accurately the reasoning of the CAT.

There is no evidence that the CAT confused the Limb 1 and 2 analyses. The evaluation of brand was quite distinct from any assessment of the cost of generating the brand. The analysis focused upon how to identify the existence of incremental value attributed to brand (i.e. discrete from the Cost-Plus measurement) but also, and importantly, how to identify relative incremental value, comparing and contrasting brand valuation in the index and the comparable markets. The valuation, in law, of fairness is measured by reference to the differential between Cost-Plus and selling price in the index market, not prices pertaining in a comparable market. But the prices charged in the comparable market and the inferences that can be drawn from those prices about value in the index market are certainly significant evidence going into the mix. If a dominant undertaking contends that branding is valued at 10 units (i.e. above Cost-Plus) in the index market but in the comparable market the CAT finds that it is valued at 5 units, the implication could be that a floor value of 5 units can be treated as going to the justification of the differential between Cost-Plus and price in the index market. That does not however rule out additional value (i.e. over 5 units) being attributed to brand in the index market if the defendant can adduce evidence that the value there is higher. The thrust of BT’s evidence, in relation to all components of value, including therefore brand, was along these lines. It was that Class Members expressed high degrees of satisfaction with SFV Services and their assessment was a relative one, i.e. when compared to dual play branded service. For example, they: “… valued the reliability of their landlines more than dual-play customers” (Judgment paragraph [1074]). Contrary the CR’s submission the CAT was plainly aware that the issue was whether value in the BT brand in the SFV services was different to that attributed to the BT brand in the comparable, bundles, market.

As to the criticism that the reasoning is lacking and the conclusion unexplained the evidence was mixed and did not enable the CAT to place a precise or even a rough value upon brand value or explain whether brand accounted for all or only a portion of the differential. The CAT was however able to conclude that there was “significant” evidence that indicated “…a degree of positive value” (Judgment paragraph [1135]). It is clearly implicit that this conclusion was a relative one, namely the “degree of positive value” was over and above that attributed to the brand in the comparable market. It is hard to see, when the evidence cited and closely examined by the CAT is borne in mind, that it could have been more specific in its reasoning than it was. For reasons already given above to demand more by way of precision would be to impose a probatio diabolica upon the CAT i.e. a burden which is nigh on impossible to satisfy.

As to the suggestion that there is double counting between brand and other features of the SFV services to which value is attributed I agree that there is no easy way of delineating the quantum of value attributed to one feature as opposed to another and that, in a broad sense, brand value might reflect and encapsulate to some degree elements of the other features treated by the CAT as having relevant value for customers. But, given the way in which the CAT approached the analysis, I do not accept it fell into an error of double counting. An important focus of analysis in the Judgment was to identify whether there was evidence that customers valued reliability and trustworthiness, characteristics which do afford some sort of a handle on brand value which might be discrete from certain Gives. The CAT’s final conclusion, cast in highly general and qualified terms, does not falsely represent that brand has some utterly unique identifiable value which can be delineated from other valued features of the SFV service. The conclusion is broad brush and, in view of the CAT’s detailed analysis of the evidence, seems a fair one. Brand value was simply one factor going into the scales alongside the Gives which, without conducting an evaluation of relative weight, the CAT held, collectively, bore a reasonable relationship to value.

I conclude that the CR’s criticisms are not borne out by a due reading of the Judgment but, in any event are, at base, challenges to the CAT’s fact finding over which the Court has no jurisdiction.

G.Proposed Ground 4: Compound interest

Finally, it is said that the CAT erred in holding that it could not award compound interest. Given that the application for permission has been refused the question of compound interest is academic and it is inappropriate to consider it.

H.Disposition

For the reasons set out above I would refuse the application for permission to appeal.

Lord Justice Newey:

I agree.