On 26 May 2017 the Competition Appeal Tribunal (CAT) handed down its judgment in a damages claim brought by Socrates Training Limited, a provider of online training to law firms, against The Law Society of England and Wales. The case concerned The Law Society’s Conveyancing Quality Scheme (CQS), an accreditation scheme for firms conducting residential conveyancing. In April 2016 Socrates filed a claim alleging that The Law Society had breached Chapter I and Chapter II of the Competition Act 1998 by requiring firms to obtain training for certain mandatory CQS modules exclusively from itself. On 16 May 2016 the CAT assigned the case to the fast-track procedure.
As regards dominance, the CAT found that although The Law Society was not considered to be dominant when the CQS was launched in October 2010, it came to hold a dominant position by the end of April 2015 after Nationwide Building Society joined a number of other mortgage lenders in making CQS accreditation a pre-condition for their panel firms. The CAT noted that once the CQS became a must-have product, potential competition from other suppliers of such training was actually or potentially impaired, and that this could discourage entry by other suppliers into this segment of the market. By mandating CQS member firms to obtain the training in mortgage fraud and anti-money laundering (AML) required for CQS accreditation exclusively from The Law Society, the CAT concluded that The Law Society had engaged in an abuse of its dominant position which could not be objectively justified. It reached the same conclusion in relation to the equivalent requirements for training in Financial Crime when this was introduced by The Law Society in April 2016. The CAT also concluded that the obligation to obtain the training required under the CQS in mortgage fraud, AML and, subsequently, Financial Crime, only from The Law Society breached the Chapter I prohibition as from the end of April 2015.
The CAT subsequently made an order granting Socrates capped costs and giving the parties two months to seek a settlement over the issue of quantum for damages. Separately, Socrates’s application for indemnity costs to be awarded was rejected by the CAT.
This case is the first to be ruled on under the new ‘fast track’ competition disputes procedure, which came into force on 1 October 2015. The procedure was designed to be a quicker and cheaper option for resolving less complex private competition claims. Eligible cases allocated to the fast track procedure must be heard within six months of allocation and are subject to capped recoverable costs, with the CAT capping The Law Society’s and Socrates’s recoverable costs, at £350,000 and £200,000, respectively in June 2016.