On March 31, the UK’s Competition Appeal Tribunal (CAT) issued its first major decision in Gibson v. Pride Mobility Scooters – the first case brought under the new collective action procedures available for competition law claims. The CAT adjourned the proceeding to give the applicant an opportunity to amend the application and further develop expert evidence, while making several legal rulings that will bear on future cases.
For example, it now looks like proposed class representatives will face lower burdens in obtaining a collective proceeding order (CPO) than in U.S. class actions. Interestingly, the CAT also emphasized the use of subclasses to address individualized questions.
Most significantly, the Gibson decision is the first major test of The Consumer Rights of Act of 2015, which allows UK residents, to bring collective proceedings for competition law violations, similar to U.S. class actions, for the first time.
The 2015 Act and the Gibson Case
On May 26, 2016, Dorothy Gibson brought the first putative collective proceeding, seeking damages on behalf of all consumers who purchased Pride Mobility Scooters between 2010 and 2012. UK competition authorities had determined in 2014 that Pride unlawfully agreed with eight retailers that the retailers would not advertise online certain scooters at prices below agreed levels. Opinion, ¶¶ 5-6. Ms. Gibson argued that these eight agreements had an “umbrella effect,” causing all Pride scooter prices to be higher across the market, for all retailers and for both in-store and online purchases, an allegation that greatly increased the size of the class.
For claims based on conduct preceding the Act’s October 1, 2015 effective date, plaintiffs may bring claims based on public findings of competition law violations (“follow-on claims”) two years after public enforcement proceedings end. However, they can only bring “stand-alone claims” (claims that do not directly stem from a public finding) within two years of the anticompetitive conduct.
Due to the timing of the conduct and investigation in Gibson, the umbrella claims would be timely only if the eight agreements between Pride and the retailers raised prices for all online and in-store purchasers. The Applicant’s expert proposed creating four subclasses, but the subclasses did not distinguish between purchasers from these eight retailers and other purchasers. Id. at ¶ 107. Additional background on the case is available here.
The CAT’s Decision
The CAT considered whether there were common issues to resolve. The court indicated that its approach to certify claims “should be rigorous” and it should not “simply take at face value whatever may be said by the Applicant.” Id.at ¶ 102. The CAT noted that, unlike the U.S., the CPO application would not require extensive discovery or expert testimony, but only the demonstration of a sufficiently credible or plausible methodology to establish some basis in fact for the commonality requirement. Id. at ¶¶ 104-05.
The CAT also distinguished U.S. class certification standards, highlighting that the 2015 Act did not require common questions to predominate over individualized inquiries, as is the case in the U.S. Id. at ¶ 103.
However, in applying these standards to the claims against Pride, the CAT found the CPO application and expert evidence to be lacking. The applicant’s expert did not distinguish between claims involving purchasers from the eight retailers who reached agreements with Pride and other purchasers. Id. at ¶ 107. Given the limitations period that governs conduct pre-dating the Act’s effective date, the applicant had to establish that damages flowed only from these eight agreements. Id. at ¶ 110. The applicant’s expert noted that he could alter his methodology to estimate loss attributable to the eight agreements at issue. Id at ¶ 113. This would require the creation of additional subclasses that distinguish between purchasers from the eight retailers and purchasers from other sources. Id. at ¶ 113.
The CAT stated that the plaintiff had to both quantify damages and establish causation between the competition law violations and the umbrella claim damages. Id. at ¶ 118. In other words, plaintiffs had to show that the unlawful agreements, and not other factors, increased prices for the umbrella claims. Id. at ¶ 118. The CAT made clear that if the case were to proceed, it would be on an opt-out basis, which was unsurprising, given that the class is large and made up of consumers seeking relatively small individual damages. Id. at ¶¶ 123-24.
Although CPO applicants in the UK appear to face lower hurdles than U.S. class action plaintiffs, applicants in the UK will still need to show that expert methodology is capable of approximating damages on a class-wide basis, and that subclasses may be the preferred tool for addressing discrepancies between class members. Further, defendants in future UK cases will likely push for increasing scrutiny on applicants’ experts at early stages of cases, paralleling the trend in recent U.S. class action decisions.
The putative Gibson class faced certain difficulties that other plaintiffs will not face, including the intersection of umbrella damages and the Act’s treatment of conduct pre-dating its effective date. The most significant hurdle now facing the Gibson class is establishing that the umbrella damages actually arose from the agreements between Pride and the eight retailers, and not Pride’s general policy or other factors, an issue that many future plaintiffs will not face.
The next test of the UK’s collective proceedings regime will likely be the CAT’s ruling on the CPO application in the £14 billion Merricks v. MasterCard case, which also involves umbrella damages and other significant commonality challenges, which you can also read more about here.
The CAT’s ruling in Gibson may encourage plaintiffs to bring future competition law collective proceedings, particularly claims based on conduct post-dating the 2015 Act’s effective date. In particular, the CAT has indicated that UK CPO applicants need not offer as strongly developed expert methodology as plaintiffs seeking class certification in theU.S. However, the CAT also stated that applicants still must seek disclosure of key facts and proffer an expert who can explain how a proposed methodology could reasonably approximate damages.
Further, the CAT’s statement that an opt-out collective proceeding would be appropriate in Gibson, if the other requirements are met, suggests that large classes of consumers are the most likely plaintiffs in future collective proceedings cases.
About the Authors
Matt Siembieda is Counsel at Reed Smith concentrating on antitrust, competition law, class actions, complex litigation and enforcement matters. He has litigated cartel cases before the European Commission, defended criminal antirust enforcement matters, civil class actions ( including antitrust), international litigation and investigations and complex litigation throughout the United States.
Ed Duffy is a senior associate at Reed Smith, focusing his practice on antitrust and competition law. He has litigated civil antitrust class actions and defended criminal antitrust investigations, as well represented clients in a number of international and domestic arbitrations and litigation throughout the United States.