You lose, you pay (some) – the CAT’s cost ruling in Walter Hugh Merricks

(by Sebastian Peyer) The burden of costs in civil litigation is considered of great importance to the incentives to recover damages in competition law. In particular, the ‘loser-pays’ rule that dominates European legal systems is thought to create significantly greater risks for prospective collective actions, in contrast to the American rule where each party is normally responsible for paying its own costs.[1]  The UK Competition Appeal Tribunal’s (‘CAT’) recent ruling on cost in Walter Hugh Merricks v MasterCard is therefore significant in thwarting an attempt to deviate from the loser-pays rule that is prevalent in English civil litigation and striking a balance between applicants’ and respondents’ interests. Earlier this year, the CAT rejected an application for an opt-out collective proceedings order (‘CPO’) under section 47B of the Competition Act 1998 (see my comment here). The question that the CAT still had to answer was who would bear the cost of that unsuccessful CPO application and to what extent are the actual costs incurred recoverable. In its decision, the CAT stressed that the loser-pays rule applies to CPO applications, but reiterated that the parties’ expenses must be proportionate in order to be recoverable. This means that parties cannot inflate their expenses to discourage would-be claimants.

Does the CAT’s fast-track procedure strike the right balance between claimants and defendants?

(by Sebastian Peyer) The Consumer Rights Act 2015 significantly expanded the jurisdiction of the Competition Appeal Tribunal (‘CAT’).[1] The Tribunal can now adjudicate stand-alone damages claims, award permanent and interim injunctions,[2] allow opt-out collective proceedings (see previous blog post) and deal with claims in the new Fast Track Procedure (‘FTP’). Enforcement mechanisms prior to 2015 were ineffective for small and medium sized enterprises (‘SMEs’) because of the high cost associated with bringing such actions before the High Court and the narrow jurisdiction of the Competition Appeals Tribunal (‘CAT’) for follow-on damages actions. A comparative glance at Germany showed that claimants had a strong preference for simply stopping anti-competitive behaviour through an injunction, yet even this simple tool was considered costly and complex in England. Since the introduction of the 2015 Act, a number of claimants have applied for the fast track procedure and the CAT has awarded one injunction in the FTP (Socrates Training Limited v The Law Society of England and Wales).[3]  The FTP appears to be both effective at capping costs to reasonable levels and, more importantly, at providing a credible mechanism to encourage out of court settlements.

Has the CAT’s MasterCard decision killed off opt-out class actions by indirect purchasers?

(by Sebastian Peyer) On 21 July the Competition Appeal Tribunal (‘CAT’) rejected an application for an opt-out collective proceedings order (‘CPO’) in Walter Hugh Merricks v Mastercard Inc, thereby  blocking the largest opt-out competition claim brought in the UK to date and one of the first large indirect purchaser actions. The applicant brought the claim on behalf of 46.2 million people asking Mastercard for around £14 billion in compensation. Despite the negative outcome for the applicant (and millions of consumers), the CAT’s decision has clarified a number of important points for future CPO applications. But the Tribunal’s decision may have also inadvertently raised the bar for indirect purchaser claims.

Will much change in Antitrust post Brexit?

(by Andreas Stephan) The UK’s decision to leave the European Union has come as a shock to markets, politicians and indeed to many ‘Brexiteers’. Although protests demanding a reversal of the outcome and legal wrangling over Art 50  (the process for leaving the EU) continue, mainstream politicians have almost universally accepted the result (the obvious exception being in Scotland) and there is little evidence of public perceptions having shifted towards ‘Remain’ since the vote, despite accusations of a dishonest and misleading campaign by the ‘Leave’ camp. It is therefore almost certain that the UK will cease to be a full member of the EU. Bruce Lyons wrote about the (limited) advantages and (greater) disadvantages of Brexit for competition policy in an earlier blog, but here I suggest that much may remain the same regardless of what the UK’s new relationship with the EU ends up being.

Why harmed consumers may be more satisfied in the future – the CMA’s new redress scheme

(by Sebastian Peyer) In an earlier blog post I wrote about the new opt-out collective action regime introduced by the Consumer Rights Act 2015. This is not the only measure that is to help consumers and other injured parties to obtain compensation for the violation of EU and UK competition law. The new sections 49C-49E of the Competition Act 1998 provide powers for the Competition and Markets Authority (CMA) to approve voluntary redress schemes. This blog post considers whether these are a welcome innovation.