Facing its most challenging ordeal yet: The Competition Appeal Tribunal confronts stern challenges in streamlining processes
The Bustling Battlefield: Class Actions and Litigation Funding in the UK's Competition Appeal Tribunal
The hustle and bustle of the Competition Appeal Tribunal (CAT) have made it the busiest courtroom in town, as organisational troubles and case backlogs spread like wildfire throughout the institution.
Just ten years ago, the 'opt-out' regime for competition law was enacted, unleashing a tidal wave of cases – often targeting tech giants – swamping the Tribunal. Headlines brimmed with announcements of class actions worth millions.
The regime got off to a slow start but has since been a runaway train, fueled by the CAT's low bar for certifying a case. Jess Steele, partner at Freshfields, explains, "The regime has taken unforeseen paths, with a significant focus on exploitative abuses of dominance that crossover into other areas like consumer law, data, and privacy."
Despite the legislation passing in 2015, the CAT has only produced one class action trial judgment. With a surge of new cases emerging, the workload at the Tribunal quickly escalated, and processing times increased.
Controversies and Criticism
As more class actions go to trial, the regime will be under the microscope, especially regarding management, trial structure, and pivotal points, such as settlements. Ed Coulson, partner at Hogan Lovells, warns, "With the surge of new cases being launched, the CAT regime will face scrutiny as trials and judgments are handed down over the next year."
The former CAT president, Mr Justice Marcus Smith, faced condemnation from lawyers regarding his handling of case management and his innovative approach to procedure. However, his issue ran deeper; last August, he was reprimanded for sending a written letter to a junior staff member expressing his affections, prompting him to step down from his role at the CAT last October.
Mrs Justice Kelyn Bacon is the new sheriff in town, and her appointment brought a wave of positivity to the competition-centric Tribunal. Already, she's proven to have a higher standard, dismissing a class action against Apple and Amazon, deeming the class representative unqualified.
Hiccups in the Litigation Funding Industry
Despite the rush to launch new competition class actions, the litigation funding industry has faced hurdles over the past few years. In 2023, the Supreme Court ruled in the PACCAR case that the financing backing the claims lacked proper financial arrangements to support the actions adequately.
This sent shockwaves through the litigation funding sector, prompting them to lobby both the previous Conservative government and the current Labour government. A Litigation Funding Bill was drafted but has been put on hold until later this summer following the change of government.
More recently, the Civil Justice Council released a report advocating for a 'light-touch' regulatory framework for third-party litigation funding, to be overseen by the Lord Chancellor.
After ten years in court, the Walter Merricks versus Mastercard case has been settled for £200 million, despite initially being valued at £10 billion. The settlement blindsided litigation funders, leading Innsworth Advisors to challenge the settlement and pursue damages from the class representative instead.
Andrew Leitch, partner at Hogan Lovells, commented, "Without significant investment and risk-taking from funders, collective actions wouldn't get off the ground." Funder enthusiasm will be influenced by how much they are rewarded for taking risks when cases are successful, Leitch added.
The Future of CAT and Litigation Funding
The third-party funder sector is facing multiple rounds of rule changes, with uncertainty across the industry. Jessica Radke, senior counsel at Linklaters, believes things will change when more judgments emerge, shedding light on claim management and informing whether funders' enthusiasm remains.
Radke points out that managing cases efficiently is crucial to maintain faith in the CAT and swiftly dismiss less meritorious claims. Meanwhile, pressure on capacity may continue to build on the CAT, as the impact of the Digital Markets, Competition, and Consumers Act 2024 rolls out, introducing a right to claim damages in the CAT for breaches of the new digital markets regime.
However, many funders have paused investments in new cases, preferring to wait for ongoing trials to finish unfolding. The future of CAT and collective actions will hinge on the president's ability to steer through evolving challenges, be guided by proper regulation, and balance the interests of litigants, funders, and the tribunal itself.
- The surge in competition law class actions has led to increased scrutiny of the regime, particularly in regards to trial structure, case management, settlements, and the qualifications of class representatives.
- The litigation funding industry has faced challenges in recent years, including concerns about financial arrangements supporting claims and the regulatory framework for third-party litigation funding.
