Vodafone, EE, O2 and Three ordered to defend £3bn overcharging claims

CAT ruling narrows timeframe but greenlights multibillion-pound case over post-contract mobile fees

Britain's four largest mobile network operators – Vodafone, EE, O2 and Three – are facing a collective action lawsuit worth more than £3 billion, after the Competition Appeal Tribunal (CAT) ruled that the case can proceed.

The claim accuses the companies of systematically overcharging millions of customers who remained on bundled phone-and-service contracts after their minimum terms expired.

The class action, filed in November 2023 by consumer advocate Justin Gutmann, alleges that around 28 million mobile customers paid inflated monthly fees because their providers failed to reduce charges once the cost of their handsets had been fully paid off.

Many mobile contracts bundle device payments with network service costs, but the lawsuit claims customers who stayed beyond their initial term continued paying the same rate, effectively paying again for phones they already owned.

Gutmann, a former Citizens Advice executive, described these excess fees as a widespread "loyalty penalty", arguing that loyal customers were penalised for not switching plans or providers immediately after their contracts ended.

Citizens Advice has repeatedly criticised mobile operators for charging customers the same bundled price after their contract terms end.

The group highlighted the issue in a public notice, explaining that although customers are free to switch or stay after a two-year contract, they often unknowingly continue paying for a handset that has already been fully repaid.

In its ruling on Friday, the CAT allowed the collective actions to move ahead but placed restrictions on the timeframe from which damages can be claimed.

It agreed with the operators that claims before 1st October 2015 must be struck out under limitation rules. However, it rejected a further attempt by Vodafone, BT/EE and Three to also exclude claims predating 8th March 2017, ensuring that a substantial portion of the case remains intact.

The tribunal also formally approved Gutmann as the class representative, dismissing arguments from operators that questioned his ability to fund or manage the litigation.

Operators deny wrongdoing

All four companies maintain that the claims lack merit.

In its latest quarterly report, published before the ruling, Vodafone said the allegations were "without merit" and that it could not estimate any potential financial exposure.

An O2 spokesperson welcomed the tribunal's narrowing of the claim's historical scope.

"We maintain that there is no merit to Mr Gutmann's case for the remaining period and will continue to robustly defend our position as it proceeds," the spokesperson said.

EE described the decision as merely a procedural step.

"We do not accept the substantive allegations of the claim. Our priority is and always will be, to provide a great experience for our customers," a company spokesperson said.

This lawsuit adds to a string of legal challenges facing UK operators.

Vodafone UK is currently embroiled in a dispute with former and current franchisees, who allege the company subjected them to "irrational and arbitrary" decisions that caused financial and personal harm.

In December last year, BT emerged victorious from a 2021 class-action lawsuit accusing it of excessive pricing for millions of landline customers. The CAT concluded that BT had not breached competition law.