This judgment – which can be found here – concerns the first ever class certification request in an opt-out collective damages claim in the UK.

I think this is a very important decision. Class or collective actions allow the aggregation of a large number of small claims for competition damages, and are likely to prove a crucial mechanism for customers seeking to obtain redress for loss caused by a competition infringement. Europe is not familiar with the type of class actions that are typical in North America, and the English courts – and particularly the CAT – are one of the first European courts (if not the first) to have to grapple with the challenges that such claims pose. One very important challenge is class certification, while another is the certification of the class representative.

The first opt-out collective claim ever brought in the UK– i.e. Dorothy Gibson v Pride Mobility Products Limited [2017] CAT 9 – ended with the claim being withdrawn. This decision is thus the first judgment on the topic, and deals with both of these challenges in detail.

Some background info on class actions may be in order. Very few countries outside the United States and Canada have extensive experience with class action or collective redress in competition cases, even if most European countries have adopted some form of collective action mechanism during the last few years. There are two main models for collective redress: opt-in and opt-out. In an ‘opt-in’ collective action, victims must expressly elect to join a claim as members of the represented group. The outcome of a court decision in such a claim is legally binding only on the victims who opted into the claim. This is the dominant collective action model in the EU. Under an “opt-out” collective action, all parties who fall within the definition of the represented group are bound by the outcome of the case unless they actively opted-out of the action. This is the usual ‘class action’ mechanism in North America.

The UK tried to navigate a middle way between pure opt-in and opt-out models. Reforms in 2015 created a new procedure that allows collective proceedings to be brought by a representative on behalf of a defined class of claimants, either on an opt-in or an opt-out basis. To avoid abuses of this mechanism, there are restrictions on who can bring collective actions: the claimant must be a genuine representative of the claimants or consumers – which excludes law firms, third party funders and special purpose vehicles. The main safeguard put in place, however, is that the CAT, a specialised competition tribunal, must assess the suitability of the class representative, whether the claim is suitable for collective action, and whether the claim should be brought on an opt-in or opt-out basis. The CAT does this through a decision to grant or refuse a Collective Proceedings Order (CPO), but I’ll refer to it as ‘class certification’ since this is how this exercise is commonly known across the world.

At this point, it may be useful to consider the facts of the case. This is a follow on claim from the European Commission’s decision finding that MasterCard’s EEA multilateral interchange fee (henceforth the ‘EEA MIF’) was anticompetitive. The class of claimants submitted to the CAT was quite broad: “Individuals who between 22 May 1992 and 21 June 2008 [i.e. the period of infringement identified by the European Commission] purchased goods and/or services from businesses selling in the UK that accepted MasterCard cards, at a time at which those individuals were both (1) resident in the UK for a continuous period of at least three months, and (2) aged 16 years or over”, amounting to 46.2 million people. The amount claimed was, to use the court’s euphemism, “substantial’: GBP 14 billion (yes, with a “b”).

Moving on to the decision, the court had two main questions before it: whether it should certify the class, and whether it should authorise the class representative. Looking at each one in turn:

Class certification can be granted if the claims raise ‘common issues’ and are suitable for collective proceedings.

  • Regarding the existence of common issues, the CAT found that there was not enough commonality among individual claims. The problem was that the claim was not brought by individual merchants which had been overcharged, or even by the customers who used MasterCard with individual merchants. In effect, since merchants would have raised the prices of all their products as a result of the overcharge, all customers were potential claimants. As such damages were to be calculated on the basis of: (i) volume of commerce affected; (ii) overcharge percentages and (iii) extent of pass through from merchants to final consumers.

On its own, this is plausible. The problem is that in the context of an individual claim, the claimant would have to establish: (1) that the level of the EEA MIFs had an effect on the level of the UK MIFs (for both MasterCard credit and debit cards); (2) the amount by which those MIFs were higher than the counterfactual interchange fees that would have applied in the absence of an infringement; (3) the level of pass-through of these MIF overcharges in the fee charged by Acquiring Banks to the merchants where the claimant bought goods and services; (4) for each merchant at which the claimant purchased goods and services, the degree to which that merchant passed through those overcharges and the percentage impact on its prices; (5) the amount that the claimant spent at each of those merchants; (6) if the claimant held a MasterCard credit card, what if any interest payments were made and what if any benefits were received under a particular card. The Court found that while only (1) was an issue truly common to all individual claimants, while both (2) and (3) could be sufficiently approximated that they can plausibly claim to be a “common issue. However:  “issue (4) – pass-through – and issue (5) – level of spend – are clearly very different. As regards pass-through, the experts in their oral evidence accepted that there is likely to be significant variation not only as between different kinds of goods and services but also different kinds of retail outlet. (…)Therefore pass-through cannot be described as a common issue in any meaningful sense; and the level of individual spend is manifestly not a common issue.

At this point, however, the court held that: “There is no requirement that all the significant issues in the claims should be common issues, or indeed – and by contrast with the position under the Federal Rules of Civil Procedure in the United States – that the common issues should predominate over the individual issues. What is required, in the words of sect 47(6) CA, is that the claims are nonetheless “suitable to be brought in collective proceedings”.As such, the court needed to look at whether the two issues that were said not be common among individual claimants – pass through and level of spend – were such as to make the action unsuitable for collective proceedings.

It was submitted regarding pass-through that: “the Tribunal can arrive at an aggregate award of damages, which would then be distributed to the class members. We accept that in theory this may be a permissible approach. But before adopting this approach, it is necessary to consider whether in practice the Applicant has put forward (1) a sustainable methodology which can be applied in practice to calculate a sum which reflects an aggregate of individual claims for damages, and (2) a reasonable and practicable means for estimating the individual loss which can be used as the basis for distribution”. The court looked at the methodology submitted by the claimant – calculation of global loss through a weighted average pass-through – , and concluded that, while the methodology was sound, it was unpersuaded “ that there is sufficient data available for this methodology to be applied on a sufficiently sound basis. It follows that we are not satisfied, and indeed very much doubt, that the claims are suitable for an aggregate award of damages.”

Regarding individual spend, it was noted that a claim relying on the calculation of global loss through a weighted average pass-through “can only be permissible, in our view, if there is then a reasonable and practicable means of getting back to the calculation of individual compensation.” In the present case, “there is no plausible way of reaching even a very rough-and-ready approximation of the loss suffered by each individual claimant from the aggregate loss calculated”.

As a result, the court found that “these claims are not suitable to be brought in collective proceedings.”

  • While not strictly necessary given its conclusions on class certification, the judgment then turned to whether the class representative should be authorised. The proposed class representative was a lawyer with a distinguished career in consumer protection. Before the CAT there were no objections to him directly. However, MasterCard objected to the funding agreement he entered into with a third party funder. As a result, the judgment in this section provides very useful guidance about the participation of third party funders in opt-out cases.

The CAT held that it must be ensure that claimants have sufficient funding to pursue litigation and to bear any liability in costs to the respondent should the action fail.  Since the law is silent about recovery by third party funders, the court concluded that the amount of recovery by a third party funder would have to be allowed by the court, usually as cost orders.

A question which then arose was whether the costs attributed to third party funders could be paid out undistributed funds. This is likely to prove an important question in most class actions, since a number of potential beneficiaries for the claim will often not come forward after damages are awarded. In such a scenario, there will be an outstanding amount of money that the court will need to decide how to distribute. It is known that in the US and Canada, where the cy pres doctrine applies to this situation – this doctrine grants courts some discretion in how to distribute money not paid in damages – this can give rise to significant problems. English law seeks to address this by setting out that in opt-out claims any damages not claimed by the represented persons within a specified period must be paid to a specific charity. As such, it could be argued that undistributed monies could not be paid out to third party funders. Instead, the CAT found that, as long as there is a conditional liability for the claimant to pay the third party funder, this can be deemed a cost of the claimant which can be paid to the claimant out of the undistributed proceeds – but always subject to order by the court.  Even if there is a settlement: “If the Tribunal considers that the settlement is not reasonable because the amount the funder can recover out of the unclaimed proceeds is excessive having regard to the total amount of the settlement, the Tribunal would decline to approve the settlement on that ground.”


This is an interesting case. It covers a number of topics which may be relevant to the success of efforts to promote private enforcement by consumers in Europe. In this regard, it is particularly useful in how it highlights the challenges of:

(i) how to determine whether there are sufficient common issues in underlying individual claims to justify allowing opt-out collective proceedings;

(ii) assessing the suitability of a claim being brought as a collective proceeding when the underlying individual claims have some commonalities but also differ in some respects;

(iii) identifying ‘common issues’ when determining whether a claim is suitable to be brought as a collective proceeding;

(iv) evaluating funding arrangements and how they may impact a decision to authorise a class representative.

To my mind, the case also brings to the forefront the question of how to balance the objective of compensating individual losses with the greater effectiveness that using a ‘broad axe’ in collective proceeding provides. Like any categorisation exercise, the creation of a class means that more emphasis is put on the commonalities of the members of that class than on the individual characteristics of its members. To some extent, the advantage of collective actions is that they permit a number of different individual claims to be brought under the same umbrella, without requiring evidence to be provided regarding each and every claim. However, this may come at the cost of losses being calculated by reference to the group and, hence, of damages being awarded that do not exactly reflect individual losses.

This case is arguably a good example of an extremely wide class – the claimant purported to represent every single consumer in the UK over decades. It is hard to think of a wider class, and hence it is understandable that the CAT did not certify the action. Most classes will not be so wide, however, and I think it is likely that courts will soon have to determine the thresholds for commonality and suitability in a more precise way – and that such thresholds will reflect a balance between the benefits brought by collective actions against the individual interests which such actions will necessarily ignore.

Author Socials A weekly email with competition/antitrust updates. All opinions are mine

What do you think?

Note: Your email address will not be published