BSkyB in legal wrangle with IT firm

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Satellite TV giant BSkyB is taking legal action against US information technology services provider Electronic Data Systems for "deceit, negligent misrepresentation and breach of contract".
BSkyB said it was today filing a claim "for a material amount" relating to a contract to design, build and implement a new customer service system for two call centres in Scotland.

The company had signalled it was planning legal action against an IT provider when it unveiled annual results earlier this month.

In an announcement to the City today, BSkyB said it was taking the action after EDS "failed to perform its contractual obligations".

"Our view is that the decision by BSkyB to select EDS... was founded on fraudulent representations made by EDS," a BSkyB spokesman said. "They were made to induce BSkyB to award the contract."

The contract with EDS, which was signed in summer 2000, was terminated in early 2002 "after BSkyB became convinced that EDS would not deliver a CRM [Customer Relationship Management] system in accordance with its contractual obligations", the spokesman added.

After ending its relationship with EDS, BSkyB took over responsibility for the customer support systems, and the group says it has spent £170m the CRM project project over the past four years.

The investment covers software, technical infrastructure, systems integration and refurbishment at the company's call centres, which are based at Livingston and Dunfermline.

The BSkyB chief executive, James Murdoch, announced earlier this month the company would be investing another £50m over the next four years to complete the project.

BSkyB is being represented in the legal action by top City lawyers Herbert Smith and by Mark Howard QC of Brick Court Chambers.

They have prepared a "very thorough dossier" after analysing more than 50,000 documents, the company's spokesman said.