British Collective actions in the FX cartel case: The Competition Appeal Tribunal “opts-in”
In 2019, two competing opt-out claims were brought to represent two overlapping claimant classes and claim compensation following on from two decisions sanctioning large City banks. The banks acknowledged they had exchanged information on the foreign exchange spot market which amounted to an unlawful cartel, as per the European Commission’s settlement decision. In parallel, grouped claims were brought by several claimants, also before the Competition Appeal Tribunal.
Both claims were filed under Section 47b of the Competition Act, allowing class representatives to bring proceedings on behalf of an op-out class of alleged claimants. As required, a collective proceedings order must first be obtained in order to allow none, either or both claims to continue to trial; a phase called certification. In this case, the Defendants did not argue either claims should not be certified, because a recent Supreme Court decision in Merricks v Mastercard (see summary) have lowered the required standard for a class to be certified. Therefore, the two issues that the Competition Appeal Tribunal had to resolve were (i) whether the claims were suitable to be brought on an opt-out basis (otherwise requiring both or either claims to be brought in parallel on opt-in bases) and (ii), if so, which of the two competing class representatives should be allowed to represent the opt-out class. On 31 March 2022, the Competition Appeal Tribunal ruled the following, (although for the first time in the CAT collectives regime, a dissenting minority opinion was issued):
- The Opt-in v Opt-out issue
Firstly, the CAT decided that it could, at discretion, go against the wishes of the claimants and certify the claims on a basis they did not seek. If so, the CAT deems it just to allow a 3 to 4 months breathing period for the claimants to consider whether they are willing to pursue a claim if such a dramatic change was decided, which it did here: both claimants sought to bring their claims on an opt-out basis.
Secondly, the CAT ruled that such a choice should be based having in mind two factors:
- The strength of the claims: the Tribunal should assess the strength of the claim on each basis. In other words, it must assess how strong the claim is when brought on an opt-in basis, as well as when brought on an opt-out basis,
- The practicability of the proceedings to be brought as opt-in: the Tribunal should assess how practicable it is for a reasonable putative class member to “buy in”, based on various criteria: lack of knowledge of the infringements, ignorance of the proposed action, cost of participation weighed against the likely benefits etc.
Thirdly, the following circumstances were also taken into account:
- The fact that none of the representatives were a pre-existing body (such as a trade association), points away from opt-out, but instead have come forward “at the behest of the lawyers they now instruct” (para. 370)
- The fact that the claims were under-budgeted may convince the opt-out representatives to settle too early, whereas in opt-in, the class members could have a say in this,
- There is no entitlement to opt-out, when a specific claim can only be viably brought on an opt-out basis, although in less clear-cut cases, this could play in favour of opt-out proceedings,
- The fact that there are two competing claims argues for opt-in as this effectively resolves the carriage dispute,
- Most of the claims would need to be brought by sophisticated companies, thereby arguing against opt-out (rather geared towards mass consumer claims).
- The Carriage Dispute issue
The CAT acknowledged that the denial to certify the claims on an opt-out basis effectively cancelled out the need to select one claim over the other: theoretically two opt-in claims may compete in building their books. Yet, the CAT gave indications as to how it would have ruled were the claim suitable to be brought on an opt-out basis:
- Although filing first is no criterion, not attending a case management conference would not be a good idea for latecomers,
- Unduly early applications could be deemed premature,
- Unduly late applications would need to be carefully apologetic about their timelines.
In conclusion, the CAT notes that one of the claims is better “thought-through”, probably because more time was devoted to creating two sub-classes within the claimant class. Therefore, the CAT decides that this claim should override the other. In this respect, the CAT adopts a view different to that in the US, where multiple op-out claims may be consolidated and managed by different representatives in so-called ‘steering committees’.
On other notes, the CAT also makes helpful developments regarding the burden to demonstrate causation in the event of a market-wide harm (and rules in this instance that neither class representative substantiated enough their claims in economic theory), the adequacy of funding (and considered that the costs were underestimated, thereby incentivising them to settle early, too early?), access to justice (although this should be taken into account when deciding whether a claim should be brought on an opt-out basis when no claimant would opt in, it cannot justify unmeritorious claims to be brought).
- The dissenting opinion
Interestingly enough, one of the three judges dissented for numerous reasons:
- In this case, the CAT rules unmeritorious claim cannot be brought on an opt-in basis, but the dissenting judge notes that this should merely mean that the claim should not altogether go forward,
- Justice would not be accessible as in this case, it is expected that many class members would never opt in, as the CAT noted in the majority opinion,
- Lawmakers and factual circumstances required these types of claims to be in effect brought by lawyers and funded by litigation funders, the CAT should not regret that or take it into account in the assessment,
- Opt-outs are actually cheaper to trial, so the CAT erred in thinking the costs of the proceedings mandated opt-in.