UK competition ‘class actions’ face increased scrutiny

The evidence for this view lies in how the Competition Appeal Tribunal (CAT) and appeal courts have scrutinised whether claims, settlements and funding arrangements are proportionate, workable and aligned with class members’ interests in a raft of recent competition collective proceedings. That trend is now unfolding alongside a new UK government consultation on making opt-out collective actions, regulatory appeals and competition enforcement “swifter and simpler”.

The recent government consultation, opened on 17 July 2026, follows last year’s initial ‘call for evidence’ and now seeks views on proposals relating to the bringing and financing of opt-out collective actions, alternative dispute resolution and settlement, distribution of damages, interaction with public enforcement, and CAT resourcing.

With its consultation, which runs until 25 September 2026, the government does not propose expanding or narrowing the regime at this stage. It says opt-out collective actions should remain confined to competition law claims for now, although the government has separately asked the Law Commission to look at the benefits and risks of a consumer class actions regime. Views are also sought on whether the certification threshold should be amended so that the CAT gives greater weight to absolute suitability, prospects of success, proportionality, cost-benefit analysis and evidence for assessing aggregate damages.

The latest consultation reflects themes already emerging from recent case law.

An examination of the cases

In the case of in Waterside Class Limited v Mowi ASA & Ors (Mowi), the CAT refused to certify proposed opt-out proceedings concerning alleged collusion in the Atlantic salmon market. The proposed class was estimated at between approximately 35 million and 44 million people, or between approximately 18 million and 23 million households. The proposed class representative alleged there had been collusion to increase Atlantic salmon prices and that some of that increase had been passed on to consumers. The CAT refused to certify the proceedings because, as formulated, the costs and benefits of the proposed proceedings did not support granting a collective proceedings order.

The Mowi judgment is significant because the CAT focused not only on whether the claim could in principle be brought collectively, but on whether the likely return to the claimant class justified the costs of pursuing it. It said proposed legal costs had to be weighed against the sums likely to be returned to class members and drew on recent experience of low take-up in collective settlements in other CAT cases. The CAT warned that outcomes appearing predominantly to benefit lawyers and funders, rather than class members, are not in the public interest. 

The ruling also shows closer scrutiny of proposed class representative remuneration. The CAT accepted that acting as a class representative may justify remuneration but expressed concern about a proposed hourly rate of £300 and budgeted total charges of up to £316,950. It said the trend towards class representatives self-authorising fees of that magnitude was undesirable and could blur the distinction between the interests of the class representative and those of lawyers and funders whose conduct the representative is expected to scrutinise.

The CAT’s judgment in Sciallis v Fender Musical Instruments Europe Limited & Ors (Sciallis) further raised issues involving litigation funding governance. The proposed opt-out claims, brought against five musical instrument manufacturer groups following Competition and Markets Authority (CMA) resale price maintenance decisions, were withdrawn after Sciallis – the proposed class representative in all five claims – was unable to secure funding. The tribunal held that, once negotiations with the original proposed funder had ceased and no alternative funding agreement was in place, that material change should have been disclosed promptly to the CAT and the proposed defendants.

The CAT did not criticise the initial filing of the first four claims while funding terms were being finalised. However, it found that the subsequent failure to disclose the collapse of the funding position was “unreasonable to a high degree” and outside the norm of litigation practice. Costs before April 2023 were therefore to be assessed on a standard basis, while costs from April 2023 onwards were to be assessed on an indemnity basis.

In the case of Consumers’ Association v Qualcomm Incorporated (Qualcomm), the CAT approved a “drop hands” settlement of certified opt-out proceedings brought by Which? against Qualcomm. The claim concerned alleged infringements of competition law relating to smartphone chipsets and standard essential patent licensing. The class was estimated at around 29 million consumers, with originally estimated aggregate losses of approximately £482.5 million including interest. The settlement provided for no damages, no costs payment by either side, no admission of liability and each party bearing its own costs. The CAT described this as a “drop hands” settlement and noted that, unlike previous collective settlements the CAT had approved in other cases, the class would receive no distribution of damages and derive no direct benefit from the proceedings or settlement.

The CAT approved the settlement in the Qualcomm case only after close scrutiny. It rejected the parties’ request for the application to be dealt with without a hearing and on a ‘papers’ only basis, stressing that settlement approval is not a formality where millions of absent class members may be bound. It also required the parties to narrow an overly broad release of claims, noting that terms acceptable in a commercial settlement between consenting parties may not be acceptable in opt-out collective proceedings.

The decisive factor in the Qualcomm case was the CAT’s assessment that, by the end of the first trial in the case, the class representative no longer had a realistic prospect of success. The CAT estimated the prospects of success, including on appeal, at between 10% and 15%. Although class members would receive no compensation, the CAT concluded that the outcome would have been no better if the case had proceeded to judgment, and that Qualcomm was giving up something of real substance by foregoing its right to seek costs.

In the case of Innsworth Capital Limited v Competition Appeal Tribunal (Innsworth), the High Court’s judgment reinforced the same theme in the context of settlement distribution and funder returns.

Innsworth, the funder of the landmark Merricks v Mastercard proceedings, challenged the CAT’s order for distributing the £200 million collective settlement proceeds in the Merricks litigation. The High Court dismissed the judicial review brought by Innsworth, holding that the CAT had a very wide scope to decide how collective settlement proceeds should be divided between funder and class members, and that its evaluative assessment as a specialist tribunal should not lightly be disturbed. The High Court upheld the CAT’s decision that a just and reasonable return for the funder would be reimbursement of expenditure of between £41 million and £46 million, plus profit of 50% of that expenditure.

The High Court judgment confirms that funder returns may be assessed against the outcome achieved for the class. Some critics have suggested that the judgment could make it more difficult for proposed class representatives to obtain litigation funding to bring future competition law collective claims.

In the case of Rowntree v Performing Right Society Limited (Rowntree), the Court of Appeal in England and Wales dismissed an appeal from the CAT’s decision to strike out or summarily dismiss a proposed opt-out claim concerning so-called “black box” music royalties.

David Rowntree, a songwriter member of licensing and royalties body PRS and drummer of the music band Blur, alleged that PRS had abused a dominant position in breach of competition law, by distributing unidentified royalties pro rata between writer and publisher members, rather than allocating more to writers. The Court of Appeal held that there was no reasonably sustainable case that PRS had imposed unfair trading conditions. A central difficulty was that the “true” distribution of unidentified royalties was unknowable: the problem arose precisely because data failures meant the royalties could not be matched to particular works and members.

The Court of Appeal held that Rowntree had not identified a realistic non-infringing counterfactual distribution rule against which the existing pro rata rule could be assessed. It also emphasised that competition law is not a general law of consumer protection, and that it is not enough for a group of consumers or members to argue that arrangements might have been more favourable to them.

Although the Court of Appeal in the Rowntree case did not need to decide the certification issues after dismissing the claim on the merits, the CAT’s earlier reasoning remains relevant to the wider trajectory of the UK competition law collective proceedings regime. The CAT had expressed doubt that the cost-benefit analysis would favour certification, noting that if the proceedings succeeded the class might in effect find itself contributing to litigation costs, funder fees and any damages payment, and that it was reasonably in contemplation that the principal beneficiaries might be the legal advisers and funder rather than the class. It also noted that the dispute had an internal-membership dimension, with the class “in a manner of speaking, suing itself”, and that internal governance mechanisms had not been properly explored.

These cases do not all point in one direction. The Supreme Court’s decision to grant permission to appeal in the water utilities case of Roberts v Severn Trent Water Limited & Ors (Roberts) indicates that significant questions remain about the boundary between competition law claims and sector-specific regulation. The issue on appeal is whether a cause of action under section 18(1) of the Competition Act 1998 is excluded by section 18(8) of the Water Industry Act 1991.

Meanwhile, the recently commenced proposed collective claim against major housebuilders (HORC) shows that new proposed opt-out claims continue to be brought. According to the CAT’s summary of claim in the HORC proceedings, the proposed class representative seeks to bring standalone claims informed by a CMA commitments decision, on behalf of individuals who bought newbuild residential properties from the proposed defendants, with estimated total damages in the region of £4.5 billion.

What it all means for businesses

The recent judgments show that certification and settlement approval are not simply procedural milestones. The CAT is looking closely at whether a claim is structured in a way that is proportionate, workable and genuinely aligned with the interests of the proposed class.

The cases are a reminder that collective actions are complex pieces of litigation infrastructure. Courts and tribunals are increasingly focused on how a claim will operate in practice, including how any settlement or recovery would benefit the class.

The CAT and appeal courts appear to be applying a more granular analysis of whether the regime is being used in a way that serves class members. The CAT and courts are likely to look closely at whether the proposed proceedings identify a real competition law claim, whether litigation costs are proportionate to likely class benefit, whether settlements fairly reflect litigation risk, and whether class representatives and funders are properly aligned with the interests of the people the regime is intended to protect.

For businesses facing competition collective proceedings, challenges to certification, settlement approval and distribution are likely to focus increasingly on the economics and governance of the claim, not only on the alleged infringement.

Co-written by Tadeusz Gielas of Pinsent Masons.