After a slow start, use of the UK's new competition collective redress regime is now gathering pace. The first opt-out class action application, on behalf of a proposed class of pensioner consumers, has been filed in the specialist Competition Appeal Tribunal (CAT). This was swiftly followed by the announcement of a £19bn opt-out consumer claim against MasterCard, financed by a litigation funder.
The UK competition collective redress regime
The new regime came into force on 1 October 2015, but applies to causes of action arising before that date. It allows group claims in respect of competition law infringements to be brought by representatives on behalf of a specified class (consumer and/or business), on an opt-in or opt-out basis, subject to certification from the CAT.
The first class action
Having threatened to bring an action earlier this year, in May 2016 Leigh Day, the lawyers for Dorothy Gibson - the General Secretary of the National Pensioners Convention (NPC) - issued an application for a collective action seeking damages from Pride Mobility Products Limited. Dorothy Gibson is seeking authorisation from the CAT to represent a class made up of purchasers of Pride-branded mobility scooters on an opt-out basis. The claim is based on an infringement decision of the UK competition authority in relation to a form of resale price maintenance (despite it being widely expected that the first collective actions would be brought in cartel cases). The claimants would therefore only need to prove causation and damage, not liability.
The key next step will be a certification hearing before the CAT to determine whether it will allow the action to proceed. This has been set for December 2016. Although a relatively small claim (with damages being estimated at up to £4.2m), this will be watched very carefully, as the CAT's approach to certification is likely to have a significant impact on the appetite of potential claimants – and funders – to use the new procedure.
A full briefing on the case is available here.
The threatened £19bn consumer claim
In July 2016, Walter Merricks, an ex-lawyer who previously led the UK Financial Ombudsman Service, announced that he intended to launch an opt-out class action against MasterCard on behalf of UK consumers. This is reportedly the largest ever damages claim brought in the UK. He has instructed law firm Quinn Emanuel to bring the claim, and litigation funder Gerchen Keller Capital is providing up to £40m in funding.
The claim has not yet been lodged at the CAT, but the claimant states it will allege that UK consumers were overcharged by up to £19bn between 1992 and 2008 as a result of anti-competitive interchange fees charged by MasterCard for use of its payment cards, which he argues were passed-on by retailers/service-providers to their customers in the form of higher prices for goods and services. Multiple individual actions have already been brought in the UK courts by retailers and other direct purchasers against MasterCard and Visa in relation to interchange fees (following public enforcement action by the European Commission). Class actions have been brought in the US in relation to similar behaviour on behalf of both direct and indirect purchasers, with varying degrees of success.
Again, the CAT's approach to certification in this case – if and when filed – will be very significant, not least due to the size and complexity of the proposed claim. The impact of the finding of the CAT in the one individual claim which has reached judgment to date (brought by Sainsbury's) that MasterCard could not rely on the passing-on defence (i.e. an argument that Sainsbury's had passed on any overcharge to customers in the form of higher prices, more information here) remains to be seen.
The threat of class actions - in particular if the CAT demonstrates a willingness to allow these cases to proceed on an opt-out basis - represents a significant increase in the risk profile for corporates, over and above the current combination of public enforcement by the regulators and individual private damages claims. Competition law compliance is therefore more important than ever.