Out-Law News 2 min. read

UK Competition Appeal Tribunal certifies first excessive pricing class action

The Competition Appeal Tribunal (CAT) has given the go-ahead to the UK’s first ‘excessive pricing’ abuse of dominance claim, which could involve up to 2.3 million customers and damages of up to £469 million, plus interest.

The CAT certified the abuse of dominance claim against telecoms giant BT under a collective proceedings order (CPO). The claim is the first standalone case and the first excessive pricing collective proceeding to receive a CPO.

The claim is only the second competition case to receive CPO certification, after the follow-on action brought by former financial ombudsman Walter Merricks against Mastercard over credit card interchange fees.

Ruling both on the application for a CPO, and BT’s strike-out application, the CAT said there was sufficient merit in the case for it to go ahead as an opt-out class action.

It rejected BT’s argument that the CPO should be brought on an ‘opt-in’ basis, agreeing with the proposed class representative that many of the 2.3 million customers who would fall in scope of the action would not be sufficiently proactive to opt into the case.

Davis Alan July_2019

Alan Davis

Partner, Head of Competition, EU & Trade

The threshold for CPO certification is lower than what the class representative will face at trial when making substantive legal arguments. It is a preliminary, albeit critical, procedural step in an opt-out collective proceeding

The claim was brought on behalf of the proposed class of claimants by former Ofcom employee Justin Le Patourel, in relation to the provision of landline telephone services to residential addresses. The case concerns customers both with voice-only contracts, and those taking out a bundle involving both phone and broadband.

It follows a 2017 review by regulator Ofcom that found BT had overcharged landline customers. Le Patourel, on behalf of the proposed class, alleged that BT had never reimbursed these customers.

BT said the Ofcom review did not reach final determinations about its pricing, and did not support a case of abuse.

However, the CAT said the review was “plainly focused on the excessive pricing of BT as a direct result of its market power” and the claimants were right to rely on it as a piece of evidence.

Competition law expert Alan Davis of Pinsent Masons, the law firm behind Out-Law, said the CAT was not supposed to conduct a ‘mini trial’ at CPO application stage, for example ruling in more detail on the Ofcom review findings. 

“The threshold for CPO certification – or resisting BT’s strike-out application – is lower than what the class representative will face at trial when making substantive legal arguments. As noted by the CAT, to avoid strike-out or summary dismissal at CPO stage, the claim must have a real prospect of success, and must not be merely ‘fanciful’,” Davis said.

“The CPO is a preliminary, albeit critical, procedural step in an opt-out collective proceeding. Excessive pricing cases are rare because, even when brought by a competition authority, they can be notoriously complex, lengthy, and resource-intensive to pursue,” Davis said.

Competition law expert Tadeusz Gielas of Pinsent Masons said: “In addition to the Merricks and Le Patourel cases that have already received CPO certification, another 11 opt-out collective proceedings are currently before the CAT. We can expect to see further important developments in the coming months that will shape how UK’s antitrust collective proceedings regime is utilised by claimants”.

Litigation expert Chris Dryland of Pinsent Masons said: “It’s interesting to see that Le Patourel argued that the CPO should be ‘opt-out’ because there would be too few customers to make the claim attractive to litigation funders if the CPO was ‘opt-in’. Although the CAT thought that an opt-in CPO would still see a large number of customers opting in, it demonstrates that a critical mass of claimants needs to be achieved to get the claim 'off the ground' from a third-party funding perspective”.

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