(Note: Stefan was appointed as the behavioural expert for BT in the case. The window of appeal remains open at the time of writing.)
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In this article, we reflect on the Competition Appeal Tribunal’s (CAT) judgment in Le Patourel v BT. We highlight the important role that behavioural economics played in the resolution of the claim and how the CAT responded to the behavioural evidence. We also discuss what the judgment implies for the role of behavioural economics in future cases. 
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Our takeaways include that:

• the CAT showed that it was receptive to behavioural evidence for understanding consumer decision-making e.g., for assessing inertia, including specifically for considering whether excessive prices by a dominant firm were unfair;
• the CAT sought concrete empirical evidence that specific alleged behavioural biases had affected consumers’ decision-making - generalised and theoretical behavioural claims were deemed as speculative and were not persuasive; and
• behavioural economics can play a central role in defining and assessing ‘economic value’, and is therefore relevant for cases alleging that prices charged to consumers are unfair.  
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However, the judgment leaves open some fundamental questions, such as how best to assess whether consumers are ‘informed’ or ‘engaged’. We reflect on the questions that behavioural evidence could address and the methodologies that will be used in future cases.

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‍What was the case about and what did the CAT conclude?

On 19 December 2024, the CAT handed down its judgment in Le Patourel v BT – the first opt-out collective action claim to proceed to trial. This is a landmark case in several respects, including being the first to feature specialist behavioural economics testimony.

The class representative, Justin Le Patourel, sought £1.3 billion in damages on behalf of the class members, BT customers who had purchased standalone landlines (i.e., not in a bundle – known as Standalone Fixed Voice (SFV) services). The claim alleged that BT held a dominant position in the UK market for these services and abused that position by charging prices that were excessive and unfair. ‘Excessiveness’ and ‘unfairness’ form the two limbs of the United Brands test, an established framework for assessing excessive pricing claims.

The CAT concluded that the market should be defined for SFV services only, i.e. does not include bundles, and that BT was dominant in that market. The CAT also considered that BT’s prices for landline voice services were excessive (‘Limb 1’).

However, critically, the CAT considered that BT’s prices were not unfair; that is, ‘Limb 2’ was not met. It concluded that the price paid by class members bore a ‘reasonable relation’ to the economic value derived from the service, and consequently, the claim failed.

The CAT’s findings as regards Limb 2 relied heavily on the evidence put forward by the behavioural economic experts, described below.

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‍What were the behavioural economists asked to opine on?

The CAT granted permission for behavioural economic evidence to examine the extent to which consumers were informed decision-makers and made deliberate choices not to switch away from BT’s SFV services.

The primary question was whether the class, which consisted of relatively elderly people, might be captive customers of BT and unable to effectively engage in the market, as alleged. Was the decision to stay with BT deliberate (as the CAT ultimately concluded) or rather due to other factors such as lack of engagement or information, which resulted in inertia

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‍What is behavioural economics? And why is it relevant to competition cases?

Behavioural economics is a well-established field [1] that combines insights from psychology and economics to understand and explain how people really make decisions.

It differs from standard ‘neoclassical’ microeconomics, which assumes that consumers make perfectly rational choices. In contrast, behavioural economics considers real-life factors like competing demands for people’s attention, limits on cognitive capacities and in-built biases, such as inertia. 

These factors can affect consumer decision-making in many settings. However, whether there is an effect, and the magnitude are highly context dependent. Consumers can make good decisions, even if not perfectly rational. Nonetheless, in many markets behavioural factors significantly affect consumer decision-making, business strategies and how firms compete.

Behavioural economics has been increasingly used in different types of cases, including market studies and investigations by competition authorities and regulators, as well as in competition litigation. It can form a critical ‘piece of the puzzle’ in shaping the competitive landscape, such as where firms seek to exploit certain consumer tendencies. [2] For example, in the U.S. Department of Justice’s 2024 case against Google, the court drew heavily on evidence from the behavioural expert, Dr Rangel, on the power of defaults, concluding that:

‘…as Dr. Rangel convincingly explained, the combination of user habit, Google’s brand, and choice friction creates a powerful default effect that drives most consumers to use the default search access points occupied by Google.’ [3]

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‍What did the behavioural economic experts agree and disagree on?

In Le Patourel v BT, there were several areas of agreement between the behavioural experts – Dr Stefan Hunt (for the defendant) and Professor Graham Loomes (for the claimant):

• Both used customer ‘journey’ frameworks for their assessment of consumer behaviour. These practical frameworks set out the sequence of a customer’s decision-making journey – for example, starting with the customer attending to some stimulus, then acquiring and assessing new information, and ending with the customer acting, either switching service or supplier or staying with their existing service. [4]
• Both experts agreed that such frameworks, as long as they include sufficient focus on consumer attention, are helpful. While there are variants, they all provide a solid basis upon which to assess the evidence.  
• The experts also agreed that how terms like, ‘deliberate’, ‘informed’, ‘active’, and ‘engaged’ were defined was critical to interpreting class members’ behaviour. For example, if a relatively high bar were set for determining whether consumers were informed, such as by requiring them to gather a wide array of information, then fewer consumers would be considered informed.

But there were key areas of divergence or disagreement:

• The experts disagreed on the definitions of what it means for a consumer to be ‘deliberate, informed and/or active’ or ‘engaged’, which in part explains why they reached differing conclusions about why class members remained with BT.
• The experts used different information and analyses to reach their conclusions. The claimant’s expert, Professor Loomes, relied on academic and regulatory research papers, as well as BT’s own communications with its SFV customers and internal documents. BT’s expert, Dr Hunt, used some of this information, though gave less weight to empirical evidence from other settings. He also conducted additional analysis including of Ofcom’s consumer switching data and consumer satisfaction evidence, as well as to the economic value that BT’s SFV services (including service features) provided to class members.
• The experts disagreed on whether switching rates and measures of satisfaction were relevant information for assessing the choices of class members.
• The experts disagreed on whether class members were sufficiently informed about their existing BT service and whether they meaningfully engaged with the market.

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‍How did the CAT use the behavioural economic expert evidence?

The CAT used the evidence from the behavioural economists in two sections of its judgment.

In Factual Matters, the CAT included Dr Hunt’s switching analysis as accepted facts, with the judgment concluding ‘switching rates are much higher than those quoted by Ofcom and used in its 2017 Provisional Conclusions’. [5] 

The vast majority of the behavioural evidence cited by the CAT was in relation to Limb 2. Here, the judgment focused predominantly on ‘unfairness in and of itself’ and whether BT had provided sufficient economic value to its SFV customers. It heavily relied on the behavioural evidence and the facts on switching.

The CAT’s analysis of the provision of economic value had four parts. [6]

First, it considered, in theory, whether the ability to switch and the fact of switching (or not switching) can be relevant to the assessment of economic value. The Tribunal accepted that it can be relevant, for example, because it can show whether customers are captive or not. In particular, if customers can switch readily, then the fact that some do not can be evidence that they attach a positive value to the product or brand.  

Second, the CAT considered whether aspects of BT’s product provided material economic value. It referred to evidence put forward by Dr Hunt that class members used their landlines significantly more than other consumers and particularly valued certain features of the service, such as the sound quality and reliability. The CAT also found that other features – the onshoring of customer call centres, protection against scam calls and BT’s fault repair service – created economic value.  

Third, the CAT considered BT’s brand and the degree to which class members valued it. It referred to evidence published by Ofcom on consumer satisfaction and noted that BT’s internal ‘Net Promoter Score’ measurements yielded conflicting messages on consumers’ overall satisfaction levels. The CAT considered that the Ofcom evidence presented a better guide to consumers’ satisfaction and supported the hypothesis that they valued BT’s brand.

Fourth, the CAT found that, given that the vast majority of SFV customers had ultimately switched, a ‘level of consumer engagement’ can be inferred. It also considered that the nature and number of price change (and other) notifications received by class members – and that they were likely to read letters sent to them – meant that they were very likely aware that prices were increasing and, therefore, did receive ample triggers to engage in the market.

Overall, the CAT’s key conclusions on these matters were that
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‘[Class members] were not generally inert’;

‘there is significant evidence that the SFV customers as a whole did engage with their SFV products’;

‘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.’ 

In sum, the CAT concluded that class members who stayed with BT appeared to have engaged with their SFV service, were generally satisfied with it, and attached value to the BT brand.

This underpinned the CAT’s conclusion on Limb 2 that class members received economic value from the underlying service and BT’s brand. [7] It concluded that BT’s prices did bear a reasonable relation to the economic value of the SFV services.

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‍Four key takeaways for the use of behavioural economics in competition litigation

Takeaway 1: The CAT accepted that behavioural economics plays a critical role in assessing consumer decision-making
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The judgment shows that the CAT is comfortable engaging with behavioural expert evidence when assessing consumer decision-making.

In the Le Patourel v BT judgment, the CAT considered several hypotheses that needed to be tested using behavioural economic evidence. Namely, it took seriously the possibility that consumers could be irrationally inert, that is, not taking action when it would be in their best interests to do so. Similarly, it recognised that a lack of consumer attention could be an issue and that consumers can have difficulty in decision-making.

More broadly, the behavioural evidence underpinned the CAT’s findings under Limb 2 on the value ascribed by class members to their SFV service – demonstrating its potentially crucial role in cases where the nature of consumer decision-making is a key element.

That the CAT is receptive to behavioural evidence can also be somewhat inferred by an event it organised in 2023 on behavioural economics. The event featured the foremost proponents of the legal application of behavioural economics, Cass Sunstein and Dame Vivien Rose. [8]
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Takeaway 2: Concrete context-specific evidence is required, not assertions
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The CAT was unpersuaded by assertions that theoretical behavioural mechanisms had affected specific consumer decisions. It dismissed as speculative the claim that class members could have been suffering from the behavioural bias of ‘information overload’, i.e., receiving so much information from BT and other parties that they could not make informed or deliberate choices. Similarly, it dismissed ‘cognitive dissonance’ as an explanation for why class members reported themselves as being satisfied, i.e., it was not the case that the sheer fact of having stayed with BT for so long would influence disengaged SFV customers to say that they were satisfied. It did so because these theoretical assertions were not backed up by factual evidence.

So, while the CAT is comfortable with behavioural thinking, it also needs practical, empirical evidence to substantiate the claims in that specific setting. It will likely dismiss high-level behavioural arguments based primarily on theory alone (in line with the CAT’s focus on factual evidence more generally).

This is in step with the latest research in behavioural economics. In any given setting, it is difficult to determine the degree to which any of the long list of possible behavioural biases affect consumer decision-making. Put simply, the context and facts of the case matter and specific evidence from that setting is often needed.

In addition, the CAT showed that it was amenable to analysis based on survey data (including on consumer satisfaction) that provided practical, insightful evidence about consumer behaviour and what consumers valued.  
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Takeaway 3: Behavioural economics can help distinguish between truly inert customers and those who deliberately choose to stay put  
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A major aspect of this case was whether class members were captive or not. High switching levels demonstrated many were not. Class members who choose to switch their service and/or provider will necessarily need to engage in the market and make a deliberate choice.

But what about a consumer who instead stays put? Are they making a deliberate act to do so, or are they simply disengaged (or even vulnerable) and deserve protection?

These questions have long been addressed using behavioural economics, which has explored whether consumer inaction is caused by irrational inertia. Various papers have shown that traditional economic theories cannot explain consumer behaviour in specific settings and behavioural economics is needed. For example, a widely cited research paper examined the phenomenon of ‘paying not to go to the gym’, concluding persuasively that such behaviour could not be rationalised. [9]

A range of evidence was used to understand the circumstances in which it could be said that a class member’s decision to stay put, in the context of this setting, constituted a deliberate act.

The evidence indicated that class members’ use of BT’s service served their needs reasonably well, that they were satisfied with it, and that they were reasonably well informed about alternatives. Dr Hunt’s assessment was, therefore, that based on the facts in this case, staying with BT (i.e. not switching) did constitute a deliberate act.  
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Takeaway 4: Behavioural economics can help the assessment of economic value 
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The CAT considered the evidence regarding whether class members were deriving significant economic value from their service.

Behavioural economics was helpful here too. In Le Patourel v BT, the behavioural experts assessed customers’ journeys and whether there were any impediments to switching, as well as various survey-based measures such as class members’ reports of satisfaction. Their assessment helped the CAT decide how to interpret and what weight to put on the different historical information available in this case.  

In future cases, behavioural economics could also be used to create new, primary evidence on economic value. Various methods can be used to understand the extent to which economic value exists, including

• consumer surveys (e.g., to understand consumers’ purchase journeys);
• ‘natural’ experiments (e.g., how consumers had responded to changes in firms’ behaviour, including changes in the choices presented); and
• conjoint analysis (a survey-based technique that helps determine how people value different attributes that constitute a product or service).

Given the critical role that economic value plays in the legal framework for such cases, we are likely to see a greater focus on quantitative evidence going forward. Either way, an assessment needs to be made of the quality dimensions of the product and the extent to which consumers value it.

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‍Reflections on the use of behavioural economics in future cases

This was the CAT’s first foray into behavioural economic evidence. Given how central the field is to understanding consumer decision-making and its relevance to many competition cases, we expect to see more expert evidence in this area in the future.

Indeed, it could be used to inform many aspects of a case. For example, behavioural economics could also inform

• market definition: an analysis of the alternatives that consumers choose between, e.g., which products do consumers meaningfully consider as they go through their ‘journey’?;
• dominance: consumers’ willingness to switch to cheaper or otherwise superior alternatives – relevant to, e.g., how and to what degree did they engage with the options available?;
• abuse: whether a dominant firm’s conduct relating to consumers reduces rivals’ abilities and incentives to compete, e.g., did a firm’s user interface design (‘choice architecture’) cause consumers to realise particular outcomes, for example reduced privacy protection?;
• the counterfactual: the choices consumers would have made in the absence of anticompetitive behaviour, e.g., what factors influence consumers’ choices in a given setting, and what impact did a firm’s behaviour have on consumers’ choices?

As regards its relevance to abuse, the European Commission’s draft Guidelines on exclusionary conduct make reference to self-preferencing in terms of the position or display of alternatives, or manipulating consumer behaviour or choice, as potentially abusive conduct. [10]

There is a large analytical toolkit available to behavioural economists, and it is likely that a combination of tools and information sources – ‘triangulating’ to ensure the conclusions of the analysis are robust – will provide the greatest insight for future cases.

Based on the experience in Le Patourel v BT, we expect the CAT to be pragmatic and practical in evaluating the evidence about consumers and their decision-making, and open to available and relevant sources of evidence. This includes the use of internal documents and an assessment of the customer journey as in Le Patourel v BT, and not necessarily requiring overly complex or contrived behavioural economic analysis.

Depending on the key questions in a case, however, the methodologies and evidence could, in future cases, increase in sophistication, especially when more detailed information on consumer decision-making is available. In cases where consumers continue to use a product or service today, experts might conduct their own, original primary research, such as surveys or experiments. This could provide highly valuable direct evidence on consumers.

Additionally, given the reams of data that exist in many markets on consumers’ behaviour and their decision-making – especially in digital settings – experts may be able to use real-life granular data on consumer interactions. 

The analysis will need to take both rational and behavioural models of consumer decision-making seriously, weighing the degree to which each explains consumer behaviour in the specific setting under consideration.

Our expectation is that behavioural economics rooted in context-specific evidence will be important in a range of future cases where firms compete to serve individual consumers. This evidence will be a crucial complement to that from other experts such as competition economists, technologists or industry experts.

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[1] The field has grown in prominence and credibility over the past few decades, though has roots in the writings of the earliest economists, such as Adam Smith. The recent focus can be traced back to work by Herbert Simon in the 1950s, who explored bounded rationality. In recent decades, the subject has become a core aspect of university economic syllabuses and received widespread recognition with Nobel prizes for Herbert Simon in 1978, Daniel Kahneman in 2002 and Richard Thaler in 2017. As an aside, behavioural economics may also apply to the conduct of firms, which can explain why purchasing undertakings may not always be able to secure the lowest purchase prices or suppliers may have incentives to engage in certain conduct for reasons other than profit maximisation.

[2] Behavioural evidence has already formed a key part of several major antitrust cases worldwide. For example, behavioural evidence informed various parts of the CMA’s landmark market study into mobile ecosystems, see CMA (2022, June). Available here. It also informed the EU’s Google Android and Google Shopping competition cases see European Commission Case AT.40099 – Google Android (2018, July) and Case AT.39740 – Google Search (2017, June). Available here and here. Behavioural economics has also been used in various U.S and Australian competition litigation, such as the FTC’s complaint against Amazon. Available here. The EU’s Digital Markets Act regulation has also been heavily influenced by behavioural economics for example with respect to defaults, prompts, choice screens etc. See Fletcher, A. et al (2023). Implementing the DMA: The Role of Behavioural Insights. Available here.

[3] See D.C. Court’s Opinion, page 229. Available here. See also Professor of Behavioral Economics Antonio Rangel’s evidence available here.  

[4] See, for example, Fletcher, A. (2024). Choice architecture for endusers in the DMA. Available here. See also, Bennett, M. et al. (2010) ‘What does behavioural economics mean for competition policy?’. Available here.

[5] See paragraphs 167-168 and 177

[6] See paragraphs 957 to 1136

[7] The CAT had previously concluded in the judgment that the degree of economic value required was distinctive value and in its conclusion on Limb 2 'unfair in of itself’ it stated that the economic value had reached that level.  

[8] For example, see Sunstein, C. R. (Ed.). (2000). Behavioral Law and Economics. Cambridge: Cambridge University Press. and  Vivien, R. (2010). The Role of BehavioralEconomics in Competition Law: A Judicial Perspective. Available here.

[9] DellaVigna, Stefano, and Ulrike Malmendier. 2006. "Paying Not to Go to the Gym." American Economic Review 96 (3): 694–719. Available here.

[10] See the consultation on the guidelines, available here.