10 May 2023
Fiona Garside, a Senior Expertise Lawyer in Ashurst's Antitrust, Foreign Investment and Regulation team, is joined by Anna Morfey, Partner, and Senior Associate Max Strasberg.
The trio discuss the significant increase in the number of class actions being filed in the UK, key developments from 2022 relating to certification of claims and what we are anticipating for 2023.
This is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Listeners should take legal advice before applying it to specific issues or transactions.
Hello and welcome to the first episode in the Ashurst Competition Disputes Podcast. In this series, we'll be covering recent developments in competition litigation and class actions in the UK. My name is Fiona Garside, and I'm a Senior Expertise Lawyer at Ashurst in London. I'm delighted to be joined today by Anna Morfey, who recently joined our team as a Partner, and Max Strasberg, a Senior Associate. They both work on competition disputes in our London office.
Thank you both for joining me.
Thanks, Fiona. Good to be here.
Thanks, Fiona. Hi.
Today, we're talking about class actions in the UK. After a slow start to the regime, the last few years has seen a significant increase in the number of actions being filed, and we've also seen the CAT and appeals courts grappling with issues relating to certification. Anna, what trends have emerged in the types of cases being brought?
Well, I think one of the main things that you notice from looking back over the past year and in the collective actions that have been filed in the Competition Appeal Tribunal, the CAT, is that the numbers are ramping up and up. We had quite a slow start, as you've alluded to, at the beginning of the regime. Quite a lot of cases were backed up behind one case, Merricks, that went to the Supreme Court. Since then, I think, in 2021, there were I think seven claims filed. There had been seven filed in the year prior to that. Last year, I think there were 12, possibly 13: they're not all up on the CAT's website yet. A few were announced in December, so right at the end of last year but, clearly, the volume of cases that the CAT is seeing is going up and up, and I think we can expect to see more coming this year.
I think there are totally 25 that are in front of the CAT at the moment, and that's after just a couple of years of the regime. The numbers are quite noticeable, and I think we'll continue to see that uptick this year. Interestingly, again, the majority of these claims are what we call standalone claims for abuse of dominance. I think, when the regime was initially conceived, I think the feeling was that these claims are likely to be follow-on class actions further to regulators' infringement decisions in probably likely to be cartel type cases. What we've in fact seen, and this was true last year of the cases that were filed, is that there's quite a lot of cases that are alleging abuse of dominant positions by, in a lot of cases, against Big Tech. That was the theme of last year.
We saw cases filed against Apple, against Google, against Amazon and against Qualcomm in relation to chip sets in electronic products and mobile phones and so on. There has been quite a trend for those sort of cases, and that I think follows a theme from the previous year as well. In fact, I think, last year, there were only two follow-on cartel class actions that were filed. One was further to the European Commission's cables cartel and one was further to the UK regulator, the CMA's decision in relation to musical instruments. That's another theme really that there's been quite a lot of what we'd call standalone abuse of dominance cases against Big Tech.
There's also been this theme of having quite a wide variety, maybe quite a creative notion of what amounts to an abuse of dominance. Obviously, the collective action regime in the UK is rather confined to needing to relate to a competition dispute. You can only bring collective actions in relation to competition disputes and not in relation to other types of disputes. I think that has led to increasingly creative interpretations of what a competition dispute is so that this class action mechanism can be deployed, and I think we've seen that in the types of cases that have been filed over the past year. There were some more notable than others, but, for example, the case against Facebook (now Meta) that relates to what you might think of largely as data-related practices is being brought as a competition claim.
At the end of last year, there was a claim that was announced in relation to dumping of the raw sewage by the water companies and so on. Again, that's something that you might consider is more of an environmental, possibly a consumer-type claim, rather than classically a competition infringement. We've seen last year as well this continuing trend of a wide variety of alleged abuses in this sort of claim.
There's still a trend as we'd expect I think for opt-out consumer claims. The class action regime in the UK allows claims to be brought on an opt-out or an opt-in basis. Obviously, these are predominantly being brought as opt-out claims, and that is the benefit of having this class action regime. There have been a few opt-ins and a few business claims that have been brought, and notably there were two business interchange collective actions that were brought in the summer that were brought on an opt-in basis, two further ones that were brought on an opt-out basis. We've also seen a business opt-in collective action brought by the Road Haulage Association against the trucks' cartel, so we do see a bit of business claims and a bit of opt-in being used, but the trend is still for opt-out.
Thanks, Anna. As you say, some novel theories of harm being put forward in some of these cases, and it'll be interesting to follow those as they progress. Now, taking a step back, the first step in this process is certification. As listeners may be aware, the Supreme Court effectively lowered the bar certification in its December 2020 judgment in Merricks, and this led to a few cases being certified in 2021.
Max, how is the CAT approaching certification now? Are there any key themes emerging from 2022?
Well, it's definitely a good time to look back because it's been a couple of years since the Supreme Court judgment in Merricks, which as you said, Fiona, is often seen as the catalyst that really got this regime going. It's fair to say that there's been quite a shift in the CAT's attitude since that judgment , a move away from a reasonably detailed consideration of how the claim would be made out to something closer to the standard that'd be applied in a strikeout context and that's entirely consistent with what the Supreme Court said, refocusing the debate around whether the claim has a real prospect of success and away from a mini merits assessment.
We're now in a world where most claims are being certified, eight in 2022: only two of those are follow-on, which are the RHA claim Anna mentioned earlier, and Mark McLaren's claim arising from the maritime car carriers cartel. All the others are standalone abuse of dominance cases, which again shows an increased appetite to use the CPO mechanism. You've got the Which claim against Qualcomm about LTE chipsets, David Boyle's claim against various rail companies about differences in prices charged for travel on the same route with different types of tickets. You've got Elizabeth Coll's claim against Google relating to the use of the Play Store and Android devices, and Rachel Kent's claim against Apple, which is similar, relating to how the App Store works in the iOS environment. And then Justin Gutmann's claim in the boundary fare certification, which is about customers travelling into London from outside the TFL fare zone being charged twice for the part of their journey that is within that zone, but also covered by their travel card.
You get another sense of the more permissive environment we're now in when you look at the CPO applications that failed this year because none of them really failed as a result of the merits of the claim itself, so the Evans and O'Higgins claims against the banks relating to forex failed because of problems with the pleadings and the fact that they were brought on an opt-out basis. They were told to go away, regroup and try again, and that's under appeal. David Boyle continued as the sole class representative when Edward Vermeer was not approved, thereby allowing the claim against the rail companies to continue.
UKTC's rival CPO application to the Road Haulage Association failed in large part because the CAT preferred the RHA's opt-in structure and class definition, and that one is also under appeal. Finally, there's the Compare-The-Market claim which was withdrawn after the CMA's underlying decision was annulled, but nowhere here do you see the CAT really saying "no, forget it. This claim has no prospect for success".
I think we've also seen that in relation to the judgments that have gone on appeal and the appeal judgments that were handed down last year. Both of them have been pretty favourable to the claimants, to the proposed class representatives in terms of getting this regime off the ground. There were two notable Court of Appeal judgments in this space last year. The first one back early towards the start of the year was in the case of Le Patourel v BT. He was bringing a claim on behalf of largely older customers who use BT's voice-only packages rather than taking a bundled package that involves broadband and so on. BT's appeal against the CAT certification of that claim focused on the fact that it should be an opt-in claim, not an opt-out claim and that appeal was unsuccessful, so the CAT certification stood.
The other appeal that was brought in and decided last year was against the earlier boundary fares appeals where there were questions around whether individual causation needs to be shown for claimants to claim. That would've thrown up quite a few hurdles for not just the regime generally but Mr. Gutmann's claim in that instance, and the Court of Appeal was effectively having none of it and they were very clear that the claim as certified could progress. Again, we've had two Court of Appeal judgments. We'll come on to talk about the fact that we're expecting some more in the coming year, but two Court of Appeal judgments that have been pretty favourable to effectively allowing the regime to proceed and allowing the class representatives to continue with their cases, so I think defendants can expect to see not just a reasonably low threshold for getting these claims certified by the CAT, but also quite a high bar then set in the Court of Appeal for those certifications to be revoked.
Thanks both. Following certification, Max, are there any other procedural issues which listeners should be aware of?
Well, we've seen some interesting case management from the CAT in the last year. Again, consistent with the lower certification threshold, the CAT started certifying some claims on the spot. This happened in Kent v Apple and then again in Coll v Google. We're starting to see the issue of split trials come up as well. Apple asked for one in the Kent claim but was unsuccessful because the CAT thought that a unitary trial would allow the case to be tried quicker. That's been set down for the first available date in October 2024, which is actually quite speedy when you remember it was only certified in June 2022. That contrasts with the Boyle claim where a split trial was ordered, albeit this was essentially done by consent. There seemed to be agreement there that dealing with quantum at a second stage could save a lot of expense if it turns out that the claim falls down at the liability stage.
We started to see some new defensive tactics in these types of claims. In the McLaren claim, relating to maritime shipping, a number of defendants wrote 20 or so letters over the summer to large businesses that fall within the class trying to persuade them to opt out. One feature of the communications was the burden that those entities may face when the defendants start making heavy disclosure applications against them. The CAT was asked to step in and ordered the defendants to stop doing that, and it mentioned that these types of communications undermine the collective proceedings regime as a whole.
We've also started to see some interventions. For example, the CMA intervened in Coll v Google, and the Secretary of State for Transport has also intervened in the Gutmann and Boyle claims against Govia.
Finally, it's probably worth saying that the CAT is bound to have to deal with a carriage dispute sooner or later, which is to decide between two rival and overlapping CPO applications. This could have come up in Forex or Trucks, but didn't really, and I think it's only a matter of time before the CAT has to engage squarely with that issue.
It's been a very busy and interesting 2022. Now, if we look forward to 2023, what are we expecting to see from the CAT this year?
Well, I mean, interestingly, as Max has alluded to, there's going to be the first trial on liability, which is again the Boyle v Govia claim in relation to rail ticketing, and that is due to be held in the summer of 2023. That is certainly the fastest-moving case in terms of getting a trial on although, as Max mentioned, this is a split trial. They're going to discuss liability this summer and quantum will then, causation and quantum I should say, will then follow on in due course. That's the only one that's set down for trial this year in the collective space so far.
We've got Le Patourel v BT, the case I mentioned earlier, which is scheduled for the start of 2024 and then, as Max mentioned, the Kent v Apple in relation to the App Store fees, which is going to be October 2024. We've currently got three trials, trial windows, that we know about. We're obviously expecting to see more being listed during the course of this year.
On the appeals front, UK Trucks Claims and the defendants are both appealing against the RHA's certification in the trucks follow-on litigation. I think we're expecting a Court of Appeal hearing sometime in the first half of this year. We're also expecting the Court of Appeal to hear the Forex opt-out claims appeals. They were the ones that Max was referring to, neither of which got certified by the CAT. They have been appealed, so we're expecting that to happen in April as well.
The last appeal to mention in connection with this year is one that's going to be heard in the Supreme Court. This also relates to the Trucks litigation and a question that was raised by one of the defendants in that litigation, DAF, about effectively a legitimacy of the funding arrangements in collective actions, whether effectively the funding arrangements that are necessary for claimants to be able to bring these cases are effectively unlawful because they amount to damages-based agreements. Now, thus far, that argument has been unsuccessful. The CAT and the Court of Appeal have said no: these are not damages-based agreements, these are not DBAs. The funding arrangements are lawful. The Supreme Court recently indicated that they would hear that appeal, and I think we're expecting that to be heard in February. We should get some sort of final decision on that we would hope during the course of 2023 from the Supreme Court. That's going to be a really important point obviously not just for the Trucks collective actions, but for collective actions in general because the question that the Supreme Court will effectively be deciding is whether funding agreements amount to damages-based agreements and are, therefore, unlawful in the context of collective actions. That would impact likely every single funding agreement that we're seeing, and so it could be a great ammunition for defendants. It could be a bit of a shock to the regime if those judgments are reversed by the Supreme Court.
How about in terms of certification? Max, are we expecting any interesting judgments this year?
I think we can probably expect the certification trend to continue. The CAT's got a busy docket this year on the CPO front. It's hearing the Meta claim at the end of January, Gutmann v Govia in March, the interchange claims against MasterCard and Visa that Anna mentioned earlier in April, and then Gutmann v Apple in May, and then there are other big claims awaiting a hearing. There's the Spottiswoode claim relating to power cables, the BSV claims relating to cryptocurrency, the Neill claim against Sony concerning the use of the PlayStation store, and then there's the Hunter claim against Amazon concerning the use of the Buy Box.
With the momentum the regime is gathering, you can only expect more claims to be filed in the future. There have already been some to be updated on the CAT website. It'll be really interesting to see whether the current trend of standalone abuse of dominance claims continues or whether we see a resurgence of collective follow-on claims or cartel claims or both. Of course, how much momentum we continue to see depends in large part on where the Supreme Court comes out on the funding issue in Trucks that Anna just mentioned because that's going to be really important.
I think something else that's going to be interesting to watch, Max, is how the case management develops over the course of this year. Obviously, we're seeing more and more of these cases being brought. I think something to watch is going to be how these collective claims interact and are managed alongside the more traditional claims that are also in front of the CAT. For instance, in the interchange litigation, aside from there being hundreds of regular retailer claims that are being brought against MasterCard and Visa, we're seeing not just the Merricks consumer class action that has been filed and is progressing in the CAT, but also, as we've mentioned, there are four retailer collective claims that have been filed last year, that were filed last summer in the CAT. Now, there are effectively five interchange collective actions that are out there. How the CAT deals with those five claims alongside the existing hundreds of retailer claims that are progressing is something that will be I think quite instructive for us all to look at how that is dealt with. From the Visa and MasterCard perspective, there's going to be an enormous amount of work there in terms of coordinating that litigation. From any of the individual retailer claimants or those running the group, the collective litigation, there's going to be a lot of case management considerations there. And then also we've seen, as you mentioned, in the cables litigation, there are several individual claims that the CAT is dealing with in relation to the cables cartel. On top of that, we now have the collective action that was filed last year, so lots to see in the next year or so, and we'll be reporting back in another podcast coming your way in the next few weeks.
Thank you both for that interesting overview. There's clearly a lot going on and, as Anna said, we'll be watching closely to see how these cases progress, particularly as the regime begins to grapple with issues that are likely to arise when the substance of the cases is heard. If you're interested in keeping up to date with competition litigation developments, then watch out for the next episode in this podcast series. To ensure you don't miss out on any future episodes, do subscribe now on Apple Podcasts, Spotify or your favourite podcast platform. While you're there, please feel free to keep the conversation going and leave us a rating or a review. Until then, thanks for listening.
Thanks very much. Bye, bye.
Thank you. Bye, bye.