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The letters referenced Tiscali's planned sale of its assets by quoting a news headline saying "Tiscali chief plots sell-off".
In the letter text, BT said: "We can understand why you're wondering what might happen to your Tiscali broadband service. And because no one really knows the answer just yet, it could be a good time to look at an alternative broadband service."
A BT spokesman said: "Following media reports suggesting that Tiscali was up for sale we recently approached a number of Tiscali customers, and pointed out the benefits of our service.
"We believe this is a legitimate and reasonable business practice - comparative marketing is an important aspect of a competitive market."
Tiscali said that although BT "has disputed the claim", it plans "to file a further court document and we will then learn the terms on which BT intends to defend the claim, if at all."
Tiscali had hoped to complete a sale by the end of June, with potential buyers of its UK interests including Sky and Carphone Warehouse, but nothing has been heard of the sale process in recent weeks.
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