Carphone Warehouse bosses are claiming BT will restrict competition with its plans to make millions of customers renew 12-month phone contracts.
Carphone has approached Ofcom alleging that BT's strategy is a deliberate attempt to protect its powerful position in the home telephone market, which is under threat from younger suppliers such as Carphone's TalkTalk business.
It has emerged that Carphone complained to the telecoms regulator after BT said it would introduce new tariffs for phone lines and calls from 1 April.
Under BT's new offer, its customers can get free evening and weekend calls if they agree to sign a 12-month contract.
Carphone's concern is that BT has said it automatically renews each contract after 12 months for another 12 unless customers respond to a BT letter saying they do not wish to continue with the free evening calls part of the offer.
Charles Dunstone, chief executive of Carphone Warehouse, has argued to Ofcom that in normal circumstances phone customers can cancel their contract at 30 days' notice once they are out of contract.
He said: ‘At TalkTalk we have always championed competition and this is a clear example of BT trying to restrict competition and their customers' ability to decide who they choose as a supplier.’
However, Gavin Patterson, managing director of BT's consumer division, said: ‘As well as automatically giving free weekend calls to 10 million customers from February, we also offered them the chance to get all their evening calls for free, if they sign a free 12-month renewable contract.
‘Ofcom announced in a recent consultation that renewable contracts can be used in cases such as this, where there is a clear customer benefit.
‘Renewable contracts are common in other industries, such as insurance, and we are happy that our deal fits Ofcom's criteria.’
It will now be for the regulator to decide whether BT's proposals fit within its new guidelines on consumers' bills.