Out-Law Analysis 4 min. read

Data case shows CAT claims are broadening

The type of claims being raised in opt-out collective proceedings before the UK’s Competition Appeal Tribunal (CAT) is broadening, with the CAT’s recent certification of a data-related claim the latest example of this trend.

Businesses will want to monitor closely how the merits of such claims are considered by the CAT, as this will determine whether the trend will have longevity and the extent of their exposure to class action-style claims rooted in competition law being brought against them.

The latest case

In a judgment (33-page / 549KB PDF) issued on 15 February 2024, the CAT certified claims raised by legal academic Dr Liza Lovdahl Gormsen. Gormsen seeks to represent a wider group of people who she claims are entitled to damages as a result of what she alleges is an abuse of a dominant market position by Meta, the parent company behind Facebook. By the CAT’s own characterisation, the claims have been raised in “an unfamiliar and novel context, namely data or information abuse”.

The CAT originally declined to grant the collective proceedings order that Gormsen sought, determining in February 2023 that there were flaws with the way her claims had been pleaded. It decided to give Gormsen six months to file amended claims to correct the problems. Its judgment addressed the amended claims that were submitted.

The CAT considered that the information provided on the amended claims form “pleads a case that is difficult to follow” and that the significance of some points raised were not completely clear. It, however, set out its own understanding of the case Gormsen has made. It considered that “the claims obviously give rise to issues of massive substantive complexity” but determined that the issues raised are arguable and that the case can be managed in a sufficiently efficient way that it can proceed to trial.

According to the judgment, Gormsen’s claims of abuse of dominance stem from Meta’s collection of data about Facebook users pertaining to their activity on Meta products and services other than Facebook and other third-party websites and apps. Gormsen claims that Meta requires Facebook users to accept such data being collected about them so as to access Facebook and that this constitutes unfair trading and/or that Meta achieves an unfair price in respect of the data, based on the value Facebook derives from selling the data to advertisers and what users receive in return.

Meta believes the claims are without merit.

The broad claims trend at the CAT

Some of the language used in the CAT judgment in respect of the data-related claims Gormsen has brought – both in citing wording from the amended claims pleaded and in its own description of its understanding of Gormsen’s case – reflects language of UK data protection law. There are references to consent requirements, transparency obligations, and to the concept of sensitive personal data, for example, albeit Gormsen’s claim stops short of an explicit allegation of infringement of these principles.

We have already seen how the UK Supreme Court’s ruling in the case of Lloyd v Google has thwarted claimants’ attempts to bring data protection representative actions before the UK courts and caused them to explore how they might characterise such claims under other heads of claim, like misuse of private information or breach of confidence.

Claims rooted in competition law offer another potential route that claimants could look to circumvent the restrictions on bringing data protection representative actions in the UK post-Lloyd v Google. The Gormsen case can, however, be distinguished from such a hypothetical case – as flagged above, no infringement of data protection law has been alleged by Gormsen.

The Gormsen case, however, offers the latest example of the CAT’s willingness to certify a broad range of claims under the umbrella of alleged competition law infringement.

In November 2023, Justin Gutmann’s opt-out claim against Apple was certified by the CAT. The case concerns consumer law subject matter cast as an alleged abuse of dominance by Apple which relates to a software update it deployed that slowed down or throttled older iPhones to combat performance issues. Apple’s application for permission to appeal the certification has been denied.

In December 2023, the CAT also publicised Professor Carolin Roberts’ application to raise claims of an environmental law flavour against various water companies. These are claims for alleged abuse of dominance by the water companies that Roberts claims stems from their provision of misleading information to regulators the Environment Agency and Ofwat, which she in turn claims caused Ofwat to allow the companies to charge its customers higher prices for sewerage services than they would otherwise have been permitted to charge.

The business impact

There has been and, following the Gormsen case, will likely continue to be, debate about whether it is appropriate for the CAT to take an expansive view of the opt-out collective redress regime introduced by the Consumer Rights Act 2015, absent legislation. This is particularly the case as the UK government, in recent years, has expressly declined to introduce new legislation to enable non-profit groups to raise data protection claims on behalf of individuals without their permission and also rejected introducing new routes to collective consumer redress in the UK to help consumers resolve disputes, following consultation exercises.

It is, however, premature to pronounce that businesses are about to face expensive damages bills as a consequence of a new wave of class-action style cases with broadening types of claims coming before the CAT.

The CAT’s certification of a case does not involve consideration of the merits of the claims raised, far less its endorsement of them. Certification of such proceedings can also be withdrawn at any time before a case makes it to trial. So far, only one opt-out claim to have come before the CAT has reached a resolution – the relatively small settlement in the case brought by Mark McLaren against some shipping companies. Should cases fail on their merits and unsuccessful applicants be subject to adverse costs orders, the novel claims we are seeing now are likely to become less attractive for litigation funders to bring – only the most meritorious claims will remain.

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