9 agosto 2022 Ben Ball - Alice Chung -  Sarina Williams LinkingCollectiveRedress

UK’s CAT approves the Road Haulage Association’s opt-in CPO, resolving the trucks cartel carriage dispute

In June 2022, the Competition Appeal Tribunal (“CAT”) approved an opt-in Collective Proceedings Order (“CPO”) brought by the Road Haulage Association (“RHA”), a trade association for hauliers. In turn, it refused an opt-out CPO application brought by a special purpose vehicle, UK Trucks Claim Limited (the “SPV”). The class members are truck buyers who, following a 2016 European Commission decision, are seeking compensation for the increased prices they paid because of truck manufacturers’ unlawful price co-ordination. 

Authorisation

The CAT dismissed the defendants’ arguments that the proposed class representatives should not be authorised, and instead considered the question to be who would be “the most suitable” given the two applications. Although one CPO was sought by a not-for-profit trade association (RHA) and the other was sought by a SPV, the CAT found that this did not favour either application, because both representatives had their advantages. The judgment’s reasoning on the point is remarkably thin, particularly in light of previous disagreements between judges about whether a trade association’s involvement favoured opt-in or opt-out proceedings (see our previous article about the Michael O’Higgins CPO judgment). 

Eligibility

The CAT found both applications to be eligible as collective proceedings. In doing so, it concluded that the claims raised common issues, which the CAT determined meant “common questions”, but did not need to mean “common answers”. The CAT indicated that there must be a sound methodology for resolving an issue on a common basis (even if the answer will not be the same or even apply to all class members). If there is no “plausible method” for addressing the proposed common issues on a common basis, the claim will not be suitable for collective proceedings. On that basis, the CAT did not allow the proposed class representatives’ alleged claims for compound interest.

The defendant manufacturers argued that the claims were more suitable for individual proceedings, pointing to the various ongoing individual proceedings that are already underway. The CAT ruled that collective proceedings were more suitable, considering:

  • the estimated damages per truck of £10-20k, which meant that the costs of individual proceedings would dwarf potential recoveries for many class members;
  • many of the existing proceedings had been commenced by large operators; and
  • collective proceedings have judicial economy advantages – the number of individual actions before the CAT was already a cause for concern.

The CAT emphasised that “the relative test of suitability does not require…that it is impossible to try the claims individually, but that it is more suitable to try the claims collectively, having regard to a multi-factorial evaluation”. However, it considered that the proceedings should not be complicated by allowing non-UK trucks within the class.

The choice between CPOs

The CAT decided that it had to choose between the RHA’s and the SPV’s CPOs, which were respectively presented on an opt-in vs opt-out basis. The CAT remarked that it would be inappropriate to certify both because:

  • doing so would substantially increase the cost and complexity of proceedings, which was contrary to one of the key benefits of a CPO; and
  • class members would have to understand the complex differences between the two actions so they could decide which one to join.

The CAT decided in favour of the RHA’s CPO based on substantive factors which it considered were more appropriate for a CPO, including that:

  • The CAT preferred the RHA’s class definition because it included both new and used trucks. It would, therefore, provide access to justice for many SMEs and capture the possibility that the overcharge was passed-on when new trucks were resold. 
  • The CAT preferred the RHA’s economic expert’s methodology for calculating loss, which was based on standard regression analysis which compared the cartel period with the post-cartel period. By contrast, the SPV’s proposed model sought to establish the extent of the overcharge paid by class members by simulating how the market would have worked during the cartel period under perfect competition. The SPV’s proposed model has been used in merger cases but was novel in a cartel case. Whilst the CAT was prepared to authorise the SPV’s CPO based on the methodology, it expressed concern about the extent of data required and the (over) reliance on assumptions. It ultimately found that RHA’s well-tested and widely acknowledged methodology was more appropriate.
  • The CAT rejected the SPV’s suggestion that its own opt-out proceedings were more favourable because the defendant manufacturers could try to argue that, in opt-in proceedings, class members’ limitation periods are interrupted when they join the proceedings. The CAT held that this argument would be misconceived and the defendant manufacturers had not suggested that it was available to them.
  • The SPV argued that its funding arrangements were more favourable to class members because opt-out costs would be paid from unclaimed damages, whereas the RHA’s opt-in CPO costs would be deducted from damages available to the class. However, the CAT examined the RHA’s funding arrangements and decided that there was no realistic concern that class members would be deprived of a substantial part of their damages under them. It ruled that, provided the funder’s remuneration did not appear unreasonable, the CAT should be slow to reject opt-in proceedings due to the inevitable need to deduct funding from any eventual damages available.
  • The CAT concluded that the opt-in proceedings sought by the RHA would be advantageous because of the access it would have to class members’ data by virtue of their participation in proceedings. Opt-in proceedings were also practicable in this case because of:
    • The RHA’s industry connections and success in reaching out to class members; and
    • The substantial size of individual claims, which would incentivise class members to opt-in.

Opt-in proceedings: litigating in the middle lane

The Trucks CPO is the first opt-in action certified by the CAT. While the CAT followed the Court of Appeal decision in BT (see our previous blogpost on the BT v Le Patourel Court of Appeal judgment) by recognising there is no presumption in favour of opt-in proceedings, it considered that opt-in proceedings were practical for this claim for the reasons set out above.

The judgment didn’t all go the way of the RHA, with the CAT refusing to include trucks purchased abroad, limiting the period for the claim (finding that a run-off period of some eight years was unsupported by the evidence), and declining to certify compound interest as a common issue. 

The Trucks CPO is now dependent on the outcome of an appeal to the UK Supreme Court, which concerns a separate application brought by one of the defendant manufacturers seeking to challenge the enforceability of the claimants’ third-party litigation funding arrangements.

Of more general interest will be the CAT’s postscript at paragraph 265 of the judgment, indicating that “[t]he hearing of a CPO application is not a battle of the experts” and that respondents will in future need to seek permission of the CAT to adduce expert evidence in response to the application. Even the most economically-minded amongst us might need to concede that eighteen expert reports for a CPO hearing does seem a little excessive…