Competition law mass action fails to make trial in UK first

Competition law expert Angelique Bret, and technology, media and telecoms dispute resolution expert Emily Cox, both of Pinsent Masons, said the judgment highlights the scrutiny proposed class representatives (PCRs) can expect to come under when seeking to raise claims on behalf of a wider group of people.

Bret said: “This is the first time in the UK’s competition law collective proceedings regime that the CAT has outright refused to approve a competition law mass action for trial by deciding not to make a CPO. When the CAT had misgivings about a CPO application in the past, it allowed the PCR an opportunity to address defects identified by the tribunal and ultimately granted the CPO, greenlighting the case to proceed to trial.”

“The judgment also represents the first time that the CAT concluded that a PCR was not suitable to lead the proposed collective action, which led to the CPO being denied,” she said.

Cox added: “To date, the CAT has taken a largely ‘claimant friendly’ approach and routinely granted CPOs, and the present judgment does not necessarily signal a change in the CAT’s approach. However, it does emphasise that the CAT will closely and critically examine the suitability of a PCR before a CPO is granted, which may include cross-examination of the PCR to assuage or confirm any doubts the CAT may have. The PCR’s relevant experience and their incentives and independence – including around the terms of the litigation funding agreement – will feature in this equation.”

The case before the CAT was brought by Christine Riefa Class Representative Limited (Riefa) and revolved around allegations that Apple and Amazon had breached competition laws through so called ‘brand gating’ agreements related to the sale of Apple products on Amazon's UK website. Riefa aimed to represent consumers who allegedly paid higher prices for Apple products because of those agreements.

However, on 14 January, the CAT decided not to certify the collective proceedings order (CPO) that Riefa applied for.

The CAT found that Riefa did not meet the necessary authorisation condition to qualify as a PCR. This condition requires the PCR to show they can act fairly and adequately in the interests of the proposed group, or ‘class’, of claimants.

The CAT was particularly concerned about the PCR's funding arrangements, which included a success fee that the CAT considered could lead to excessive returns for the funder, a requirement to prioritise payments to the funder over distributions to the class, and confidentiality provisions that kept the funding terms hidden from class members.

Even though the funding terms were amended after the CPO hearing, the CAT felt that Riefa had not shown enough scrutiny and understanding of these terms, which it considered to indicate a lack of regard for the class's interests.

Christine Riefa herself, representing the PCR, was cross-examined during the certification hearings. The tribunal found that her performance did not demonstrate the necessary independence and robustness required to act as a class representative. The CAT noted that the PCR’s approach to the funding arrangements and her understanding of their implications were insufficient, further undermining her suitability as a class representative.

The tribunal also had concerns about the way Riefa had proposed to define the class of claimants she purported to represent, as well as with her argument that, because of alleged ongoing infringement by Apple and Amazon, damages should accumulate up until the point of judgment or settlement in the case. These issues were effectively conceded by the PCR following the first certification hearing.

The CAT’s refusal to certify the CPO means that the proposed class of consumers will not be able to pursue collective proceedings against Apple and Amazon under this application. However, Apple and Amazon each continue to face other, separate, collective proceedings before the CAT.

Competition law expert Tadeusz Gielas, also of Pinsent Masons, said: “Even in cases where a CPO is granted, the final outcome can vary. For example, the CAT recently dismissed the first competition opt-out collective action to have progressed to a full trial, involving an excessive pricing claim against BT, and has approved for the first time a handful of collective settlements in other cases.”