State of Play
A number of significant developments in the UK collective
proceedings regime (the UK CPO regime) have marked the past several
months. The current landscape continues to evolve. Recent
Competition Appeal Tribunal (CAT) decisions refusing to certify
various collective proceedings, which we unpack below, follow the
first-ever substantive judgment of the CAT in collective
proceedings in Le Patourel v. BT. In late 2024, the CAT
handed down a lengthy judgment, dismissing the claim on the basis
that, broadly, landline prices charged by BT, although excessive,
were not unfair. From the perspective of defendants and companies
potentially facing the threat of a collective action, the judgment
demonstrates that the CAT will carefully scrutinize merits on a
case-by-case basis.
In the first quarter of 2025, trials also took place in the
collective proceedings in McLaren v. MOL (regarding two
remaining defendant groups) and in Kent v. Apple.
Judgments are currently awaited in both cases. The next scheduled
trial is in Which? v. Qualcomm, which is set to begin in
October 2025.
Update on Certification Requirements
Although the threshold for certification is low, the CAT's
decision in Riefa v. Apple and Amazon demonstrates that
collective claims can be rejected at an early stage if the class
representative does not persuade the CAT that he or she can
adequately protect the interests of the proposed class. Unlike in
Gormsen v. Meta, where the CAT initially refused
certification in early 2023 but allowed the class representative to
amend her claim and reapply, securing certification a year later,
Professor Riefa's claim against Apple has been denied
certification.
In Riefa, the Tribunal — chaired by Mrs. Justice
Bacon, who has recently been announced as the new CAT President
— had concerns about the proposed class representative's
funding arrangements and decided that, in the particular
circumstances, the proposed class representative should be
cross-examined on these arrangements at a hearing.
Following this hearing, the CAT handed down a judgment finding that
the proposed class representative lacked an effective understanding
of the funding arrangements and did not demonstrate sufficient
control of the litigation and the necessary level of independence.
Following this refusal of certification, the proposed class
representative has been ordered to pay Apple and Amazon more than
£3 million in costs. This outcome, subject to any appeals,
will likely prompt "claimant" stakeholders, including
lawyers and funders, to carefully consider the arrangements they
have in place with the potential of adding a funding expert to
their advisory boards to ensure the proposed class representative
is fully versed in the funding details.
Separately, in a collective action brought against Thames Water and
other water companies, the proposed class representative alleged
that customers were overcharged for sewerage services permitted by
the relevant regulator, Ofwat, based on misleading reporting
information supplied by water companies to the regulator. The claim
failed to secure certification because the relevant regulation
applicable to the water industry precluded it. The proper forum for
the type of concerns raised was Ofwat at a regulatory enforcement
level rather than private damages litigation. Accordingly, the
collective action against the water companies is one of a small
number of cases in which certification has been refused, albeit on
very different grounds from Riefa. However, the Court of
Appeal has granted the proposed class representative permission to
appeal, meaning it will hear the case at a substantive hearing in
due course.
Further High-Profile Collective Settlements
The collective action in Merricks v. Mastercard, which
was originally valued at approximately £14 billion, resulted
in the first contested collective settlement in the UK. The class
representative settled with Mastercard for only £200 million,
a fraction of the original valuation. Mr. Merricks' funder,
Innsworth, (fiercely and publicly) opposed the proposed settlement
as insufficient in terms of its return. The settlement nevertheless
received the CAT's approval, underscoring that the Tribunal
will take a pragmatic approach when reviewing proposed
settlements.
The CAT acknowledged in its judgment that the settlement was
"an extraordinarily low proportion (under 1.5%) of the claim
as originally advanced in 2016, and under 1.2% of the claim as
revised in late 2022." However, the level of settlement
reflects the fact that the value relating to approximately 95% of
the claim would have been at serious risk at trial. In light of
these factors, the CAT found the settlement to be just and
reasonable.
The CAT deferred the specifics of the distribution to a later date.
However, the class members will collectively receive at least
£100 million, with the potential for more depending on the
take-up rate, and Innsworth will receive £68 million. The
latter figure comprises the funder's costs of approximately
£45 million and a return at a multiple of 1.5 . Innsworth has
since filed an application for judicial review of the distribution
plan, challenging the split of settlement funds between class
members, the funder, and the charity ordered by the CAT, although
Innsworth has not appealed the CAT's underlying judgment
approving the settlement itself.
In another recent development arising from the settlement approved
in 2024 in a collective action challenging rail ticketing
practices, class members have reportedly claimed just over
£200,000 out of the available £25 million agreed
settlement fund. The likely reason behind the very low take-up rate
is the fact that in the vast majority of collective proceedings,
individual compensation per class member tends to be negligible,
often in single digits, and many consumers who might be eligible
for compensation continue to be largely unfamiliar with the UK CPO
regime. The CAT has listed a hearing for later this year to
consider issues related to the distribution of the remaining
balance.
Court of Appeal Decision on Funding and Related Legislative Initiative
In late 2023, the CAT certified an earlier claim against Apple
brought by Justin Gutmann (the same class representative from the
train ticketing case) concerning allegations that Apple concealed
battery issues and slowed down the processors in tens of millions
of iPhones. The certification was granted based on the
understanding that, in light of the Supreme Court's judgment in
PACCAR (which prohibited funders' recovery from being
based on a percentage of damages in collective proceedings), the
class representative would amend the terms of funding such that
they would comply with that judgment. A few months later, the CAT
approved the amended litigation funding agreement, a decision which
Apple challenged before the Court of Appeal.
The Court of Appeal upheld the CAT's ruling, including that
funders can receive their share of damages or settlement sums
before funds are distributed to class members. What matters more
than the order in which class members and stakeholders are paid are
the proportions of damages to which they are respectively entitled.
As long as the interests of the class are sufficiently protected
— which requires an assessment of the terms and facts
overall— individual funding provisions or particular
arrangements might not be problematic. This decision recognizes the
reality that collective actions would not be feasible without
significant external litigation funding.
Another piece of welcome news for litigation funders is the Final
Report on Litigation Funding published in early June 2025 by the
Civil Justice Council's Working Party on Litigation Funding.
The main conclusion of the report is that the CJC recommends
legislative action to reverse the effect of PACCAR. This
recommendation is premised on the principle that litigation funding
is a pillar of access to justice.
Looking Ahead
With a number of trials in collective actions now concluded, the
body of case law continues to grow. Decisions (and potential
appeals before the Court of Appeal and the Supreme Court) will
continue to be critical to shaping the UK CPO regime, providing
further guidance on the fundamental building blocks of collective
disputes.
One of the emerging themes at this juncture is that the standard of
certification is still evolving. At the inception of the UK CPO
regime, the certification threshold was perceived to be extremely
low. However, the most recent decisions by the CAT refusing
certification demonstrate that the CAT will carefully scrutinize
collective actions.
The body of case law is also growing regarding settlements, and the
recent decisions offer a number of takeaways for class
representatives, funders, and advisers. The CAT clearly does not
wish to stand in the way of settlements which are unopposed, and
which broadly pass the tests of fairness to class members and
reasonableness. However, if a conflict arises, the CAT's
decision in Merricks shows that it will prioritize class
members' interests, while also considering the interests of the
funder. In Merricks, the CAT was careful to emphasize the
"exceptional circumstances of this case," and its
decision "should not be regarded as a guide for more positive
settlements of cases that reflect better the public policy behind
the introduction of collective proceedings." The appropriate
return for funders in collective proceedings is a matter for
debate. It will be interesting to follow how appellate courts will
grapple with the challenge of striking a balance between an
attractive litigation investment environment and safeguards for
class members.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
