In March 2016 the National Pensioners Convention (“NPC”) announced that it was seeking to commence collective proceedings in the United Kingdom (“UK”) against a manufacturer of mobility scooters, Pride Mobility Scooters Limited (“Pride”). NPC, the proposed class representative, had sent a letter before action (“LBA”) to Pride, inviting it to settle the potential claims arising from an infringement decision made by the UK’s antitrust watchdog, the Competition and Markets Authority (“CMA”). Depending on the outcome of the negotiations, NPC could go on to file the first opt-out collective suit under the new UK collective redress regime before the Competition Appeal Tribunal (“CAT”). 

In March 2016 the National Pensioners Convention (“NPC”) announced that it was seeking to commence collective proceedings in the United Kingdom (“UK”) against a manufacturer of mobility scooters, Pride Mobility Scooters Limited (“Pride”). NPC, the proposed class representative, had sent a letter before action (“LBA”) to Pride, inviting it to settle the potential claims arising from an infringement decision made by the UK’s antitrust watchdog, the Competition and Markets Authority (“CMA”). Depending on the outcome of the negotiations, NPC could go on to file the first opt-out collective suit under the new UK collective redress regime before the Competition Appeal Tribunal (“CAT”). 

The OFT Mobility Scooters’ Decision

The antitrust investigation in the mobility aids sector was opened in April 2012 by the Office of Fair Trading (“OFT”), a predecessor of the CMA. In 2013 the CMA issued two Statements of Objection (“SO”) to Pride and eight of its retailers, as well as to another mobility scooters manufacturer, Roma. The infringement decision against Roma came first, in August 2013, however it could not give rise to a potential collective action because it became time-barred in the CAT when the new collective regime entered into force.

On 27 March 2014 the CMA adopted an infringement decision against Pride, finding that between 2010 and 2012 Pride prevented its retailers from advertising prices for certain of its products online below the Recommended Retail Price. NPC has stated that it believes that the consumers of Pride’s mobility scooter products could collectively recover up to £7.7 million, or around £200 per individual.

The UK Collective Redress Regime

Background.

A collective regime for competition claims in the CAT, the UK’s specialist antitrust tribunal, was first introduced in the United Kingdom by the Enterprise Act 2002, which inserted section 47B into the Competition Act 1998 (“CA 1998”). The regime was significantly restricted - claims could be filed exclusively on an opt-in basis and only by the specified statutory representative, the Consumers’ Association (or “Which?”).

Due to the apparent limitations of the opt-in only system, just one collective action ever was filed, ultimately ending in a settlement. That claim was filed in 2007 by Which? on behalf of around 130 individual purchasers of football replica kits, following an OFT decision adopted against retailers of Manchester United and England football shirts.1 It was generally considered to be unsuccessful (despite the settlement), demonstrating as it did the difficulties of an opt-in collective actions regime in which consumers are generally not sufficiently incentivised to file claims.

The new UK collective redress regime.

Concerns over the viability of the collective actions regime under 47B CA 1998 led to a string of consultations and legislative work, which culminated in the adoption of Schedule 8 to the Consumer Rights Act 2015 (the “2015 Act”), which went into force on 1 October 2015. Schedule 8 of the 2015 Act modified section 47B CA 1998 by introducing an opt-out system of collective actions and settlements in the CAT, adding to the pre-existing opt-in model. It also provided for broader reform of the CAT’s authority by giving the CAT the power to hear standalone claims (before, only follow-on claims for damages could be brought in the CAT). The 2015 Act was accompanied by the publication of CAT Rules 2015, which expanded on Schedule 8’s provisions, and in detail set out the procedural and substantive aspects of collective proceedings in the UK.

UK Class representatives are now able to elect between opt-in and opt-out proceedings, or they can bring “hybrid” proceedings where, UK citizens are bound unless they opt-out, while class members from other European countries can also participate, but only if they specifically opt-in. Certain safeguards apply in order to minimize the risk of vexatious litigation (for instance, contingent Damages Based Agreements are prohibited), and there are requirements as to the appropriateness of the class representative, and the representative’s demonstrable ability to pay the defendant’s costs if the proceeding is unsuccessful.

The terms of collective settlements could arguably be more flexible than a decision in collective proceedings. A collective settlement may take place after collective proceedings have been commenced or without any such prior proceedings, when both the contemplated representative and the defendant apply to the CAT either for approval of settlement terms, or permission to negotiate such terms. Consequently, if NPC and Pride reach a mutual resolution of the potential claims in NPC’s collective proceeding, the CAT will have to sign-off on the settlement in order for it to bind  class members.

Class representative and class certification.

Collective proceedings must be brought on behalf of an identifiable class. The claims must be suitable to be included in the collective proceedings and must raise the “same, similar or related issues of fact or law.”

A contemplated class representative must show that it is “just and reasonable” for it to act on behalf of a proposed class, and that it would fairly and adequately act in the interests of the class members. A suitable class representative must either be a class member or a pre-existing organization of appropriate nature and functions. It must show that it could meet the defendant’s litigation costs should the proceeding be unsuccessful, and that it can appropriately manage the class. This suggests that without requisite third party funding and other third-party support, non-institutional entities could struggle to become the authorized class representative.

Potential issues – litigation costs and transitional limitation rules.

Although the ordinary UK “loser pays” rules apply to the collective proceedings, it is unclear to what extent the success fees under Conditional Fee Arrangements, third party funding fees, and After the Event insurance premiums can be recovered from any unclaimed damages. By default, the CAT has discretion to award any amount of unclaimed damages to the class representative, with any remaining amount going to a charity appointed by the Secretary of State. Therefore, if an NPC / Pride proceeding is instituted and comes before the CAT, it will be interesting to see the extent to which such issues will be addressed by the CAT, which were not specifically addressed either in the 2015 Act or the CAT’s subsequent Rules.

The Schedule 8 reform of the CAT’s powers in 2015 included an alignment of the two-year CAT statutory limitation period with that of the six-year limitation in the English High Court. The transitional limitation provision in the 2015 CAT Rules introduced a divide between claims arising before and after 1 October 2015. Cases such as mobility scooters, stemming from an infringement decision that was issued before the reforms in March 2014, are still subject to the two year limitation (running from the date of the final appeal of the decision).2

According to information in the public domain, the mobility scooters claim remains at the LBA stage, and formal proceedings have not yet been initiated. Any collective claim for damages will have to be filed very soon - NPC is against the clock, given the nearing expiration of the limitation period.