Competition class actions off to a slow but steady start

by Allen & Overy LLP
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The first judgment on class certification for competition class actions has been issued by the Competition Appeal Tribunal.  The judgment will reassure potential defendants, as the Tribunal demanded greater rigour from the Claimants in proving that the class deserved class certification.  The Claimants failed to meet the required standard, and were told to go away and start again.  However, potential claimants will take comfort from the fact that the Tribunal took a balanced approach, and adjourned the application pending further evidence, rather than dismissing it out of hand.

Summary 

The Consumer Rights Act 2015 (CRA) introduced competition law class actions in the UK, including “opt-out” proceedings for UK claimants.  Ms Dorothy Perkins, General Secretary of the National Pensioners Convention, has brought the first case for class certification of an opt-out class of Claimants. Pride Mobility Products Limited, the Defendant, had previously been found by the OFT to have infringed competition law in relation to the supply of mobility scooters, and Ms Perkins sought a collective proceedings order (a CPO) on behalf of all purchasers of Pride mobility scooters in the relevant period.  In its recent judgment1, the Tribunal found fault with the definition of the proposed classes and the methodology used to formulate them.  However, the claims were not dismissed, and instead the Tribunal adjourned the application with permission for the applicant to file an amended claim and further expert economic evidence in support.  This shows a balanced approach, as the finer detail of the class action regime is developed in the UK. 

Lessons for potential class action claimants 

The Tribunal contrasted the UK and US approaches to class certification, noting that the UK regime is intended to proceed to class certification “with either no or only very limited disclosure and shorter hearings held within months of the claim form being served.”  The application for a CPO was, in the Tribunal’s own words “…not a mini trial, and the essential question is whether the Applicant has established a sufficiently sound and proper basis to proceed, having regard to the statutory criteria”.  This required the Applicant to show that the claims raised common issues suitable to be brought in collective proceedings, and that it was just and reasonable for the proposed representative to represent the class.    

The OFT decision on which the Applicant relied had found that Pride entered into anti-competitive agreements in relation to online price advertising restrictions with Relevant Retailers in relation to Relevant Models of mobility scooter.  The Tribunal held that the Applicant’s proposed sub-classes of claimants did not distinguish between customers who had purchased from Relevant Retailers and customers who had purchased from other Pride retailers, whose prices may well have been influenced by the online price advertising restrictions, but who had not themselves been found by the OFT to have entered into any anti-competitive agreement with Pride.  Ms. Perkins was ordered to re-formulate her definition of sub-classes of claimants, and provide further expert economic evidence to support.  

The Tribunal also made it clear that there were further factors to consider before making a CPO.  The Tribunal has said that the amended claim must address not only questions of quantification, but of causation and that the revised claim may still face “considerable difficulties”.  Even once the Applicant reformulates her case, the Tribunal has said that it may need to further consider the suitability of this case for collective proceedings, depending on the revised assessment of likely costs and damages. 

Note of caution for potential defendants 

This decision will encourage potential defendants, as it shows that potential claimants will be held to a high standard in proving that a class deserves class certification.  However, the Tribunal is keen to encourage an effective mechanism for collective redress, and took a balanced approach, finding against the defendant on a number of important points, including: 

  • Pride challenged the retrospectivity of the transitional provisions that allowed the Applicant to bring the claim under the CRA, relying unsuccessfully on the European Convention on Human Rights, the Human Rights Act, fundamental principles of EU law and/or the EU Charter of Fundamental Rights.  The CAT dismissed these arguments, largely on the basis that the new collective proceedings regime, while being a new form of procedure, does not establish a new cause of action (the claimants could previously have brought their claims, albeit on an individual basis).  The CAT also held that Pride’s legitimate expectations were not breached when it decided not to appeal the OFT decision prior to the introduction of the CRA, as the new regime was foreseeable at that point, having been published as a bill and read in Parliament by the time of the OFT decision.

  • Pride strongly resisted the adjournment to allow the Applicant to reformulate its case, on the basis that the Applicant had had ample time to prepare her claim and there being no realistic prospect of the Applicant formulating her case in a way that was suitable for an aggregate award of damages.  The CAT rejected those arguments, holding that the Applicant should be allowed the opportunity to reformulate her case.

  • The CAT held that, if the issues with the proposed class discussed above can be overcome, then the case would justify class certification on an opt-out basis “given the size of the class, the fact that the class members are individual consumers, and the estimated amount that each represented class member could recover.”

  • The CAT held that it would be just and reasonable for Ms Gibson to act as the class representative, dismissing Pride’s arguments that she was unsuitable as she was not herself a member of the proposed class, that she did not have prior experience of managing litigation and dismissing at this stage Pride’s arguments in relation to her ability to potentially pay Pride’s costs.  

Footnote: 

1   Dorothy Gibson v Pride Mobility Products Ltd [2017] CAT 9 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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