UK Class Actions: Opt-in Or Opt-out?

• Published date: 22 June 2022
• Subject Matter: Anti-trust/Competition Law, Litigation, Mediation & Arbitration, Antitrust, EU Competition , Class Actions
• Law Firm: Milbank LLP
• Author: Mr Julian Stait, Cormac Alexander, Emma Hogwood and Mark Padley

As reported in previous Client Alerts, there has recently been a flurry of Collective Proceedings Orders ("CPOs") in collective (class) actions for competition/antitrust claims (as introduced in the UK by an amendment to the Competition Act 1998 (the "Act") in 2015), following the UK Supreme Court's landmark 2020 decision in Merricks v Mastercard.¹

On 6 May 2022, the Court of Appeal ("CoA") handed down judgment in Patourel v BT Group (the "CoA Judgment").² This appeal considered a judgment of the Competition Appeal Tribunal ("CAT") of 27 September 2021, the second CPO to be made in the UK (the "CAT Judgment"),³ that the proceedings should be opt-out, rather that opt-in, proceedings.

In this article, we look at the CoA's decision, the first in which an appeal court has considered the approach to determining whether collective proceedings should proceed on an opt-out or opt-in basis as part of the UK's nascent collective action regime.⁴

Background

Patourel's claim is brought on behalf of around 2.3 million BT customers and concerns allegations that BT abused its dominant position in the telecommunications market by imposing unfair prices, contrary to section 18 of the Act. The claim is brought on a standalone basis (i.e., without the benefit of a regulatory finding against BT that it had infringed competition law), but relies on certain findings in Ofcom's 'Review of the Market for Standalone Landline Telephone Services' dated 26 October 2017, which "concluded that BT possessed "significant market power" ... in the market for voice only telephony services and that it had charged customers materially above the competitive level".⁵ Damages of '589m (comprising between '238-'351 per customer) are sought.

The CAT Judgment made a CPO which certified a claim for damages as eligible for collective proceedings, and ordered that, if the claim succeeded, the remedy would be an award of "aggregated damages".⁶ The CAT also directed that the claim proceed on an opt-out basis (i.e., a claim that is brought on behalf of all of the members of a defined class, except those that choose to opt-out), rather than on an opt-in basis, and it was that direction which formed the basis of BT's appeal to the CoA.

Legal framework

Section 47B of the Act governs the certification of collective actions. Sub-paragraphs (10) and (11) define opt-in and opt-out proceedings, obliging the CAT to determine that a claim proceed on one or other basis,⁷ but without specifying the criteria to be...