Businesses subject to competition class action censured by UK tribunal

On 28 November, the Competition Appeal Tribunal (CAT) said in its unanimous judgment that the sending of letters to businesses that are members of the class raising a claim against the companies was “not proper conduct”, breached the tribunal’s rules, and merited it issuing an order prohibiting further letters being sent.

The CAT’s intervention concerns 11 of 12 companies that are defendants to collective proceedings before the tribunal.

In February 2022, the CAT certified a collective action in relation to a claim worth up to £150 million against shipping companies that were found by the European Commission in 2018 to have breached competition law by engaging in price-fixing in relation to the provision of roll-on and roll-off vehicle transportation services. 

The judgment determined that a collective proceedings order (CPO) should be granted by the CAT in favour of Mark McLaren who represents UK-domiciled consumers and businesses that purchased or leased a vehicle between October 2006 and September 2015. The CPO was then issued on 20 May. Under the terms of the CPO, UK-domiciled consumers and businesses had to opt out if they did not wish to participate in the claim. Non-UK domiciled consumers and businesses are also eligible to participate in the collective proceedings, though they had to opt in to be part of the claim. The deadline for opting out or opting in was 12 August 2022.

In July, lawyers on behalf of 11 of the 12 defendants wrote to 20 large business purchasers to say that if they did not exercise their right to opt out of the collective proceedings, their claim would automatically be within the proceedings and that they could be subject to an application to make disclosures as part of the litigation. The letters were sent almost two weeks before the 12 August opt-out/opt-in deadline

Mark McLaren, as the class representative, subsequently asked the CAT to intervene.

The CAT has now ruled that “there is a restriction inherent” in the rules governing collective proceedings “that precludes defendants from communicating with class members where a class has been certified”. It said the rules similarly preclude communications between proposed defendants and class members respectively at the application stage, where a CPO is being sought.

In the CAT’s judgment, under the collective proceedings regime it is the class representative, not the class members on whose behalf the action is taken, and the defendants who are “parties” to the proceedings. Communications regarding the proceedings therefore “should be between the parties to those proceedings, and this does not include represented persons or putative represented persons”. Direct communication with class members can lead to them incurring costs which would be “to the disbenefit of the regime as a whole”, given a key objective of the regime is “to ensure that the class representative incurs one set of costs, rather than each individual class member incurring individual costs”, it said.

The CAT also considered that the content of the letters “cut across and undermined the potential benefits of collective proceedings, at least for these particular class members [who received the letters] and potentially for all class members if and in so far as it influenced the potential make-up of the class”.

The CAT further noted “it is the Tribunal which has the ultimate responsibility for supervising the conduct of collective proceedings, and in particular the extent to which it is appropriate to involve individual class members”. If the letters sent on behalf of defendants were prompted by “genuine and immediate concern” that class members might destroy important documentation that could be subject to litigation disclosure, this should be raised with the CAT during the CPO certification stage or otherwise appropriate directions should be subsequently sought from the CAT.

The tribunal rejected assertions made by the defendants that no such restriction arises from the CAT rules, that such a restriction cannot be articulated with sufficient clarity, and that the restriction infringes their rights to freedom of expression. It further rejected the notion that non-communication obligations in relation to collective proceedings inhibits defendants from properly exercising their rights of defence.

Alan Davis of Pinsent Masons said: “In what is still a rapidly developing area of law, the CAT’s judgment provides important clarification on restrictions concerning direct communications between defendants and claimant class members. It also emphasises the important supervisory role of the CAT in such cases, with a focus on the regime’s overarching objective of providing redress for claimants who are unable to effectively or cost-efficiently bring individual claims.”