RE: Re Class Action - this too will pass11 May 2024 06:42
My expectation is that BT will win this case, hence buying in two weeks ago at circa 105p. In short it's a gamble and I think the upside outweighs the downside, especially at these levels.
My reasoning is there was no overcharging, BT were not making high let alone unusually high profits on this business. Just because the service was not considered good value, does not mean that they are being overcharged if the cost of provision of that service is higher, and perhaps even subsidised by the sale of broadband to most customers, after they voluntarily cut the price.
Just because they made an offer to reduce the price does not mean that they were overcharging, just that they accept the it was not good value.
What is good value?
If the court allow this action, it will be opening a door to hundreds if not thousands of claims. An example, Asda and Waitrose both sell food. Could Waitrose be sued because it does not offer good value when compared to Asda?
Do Aston Martin offer good value, relative to other car manufacturers, even if they are making a loss on selling cars.
Surely the cost of provision, even if it is seen as bad value to the consumer does not mean that they are being overcharged. They are just paying the company a price that reflects the costs to that company, plus a reasonable profit on providing that service.
Back to BT, a case in point, all of the other line providers were charging the same rate as BT for these customers. Virgin also voluntarily lowered the price at that time.
...and most importantly, OFCOM did not fine BT or in anyway force them to lower the price. Whilst in the past even when BT made an error in pricing of 118 calls to mobile users, they were fined because of the error, even though they had already rectified it and refunded it.
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