More CPO fun and games as CAT certifies opt-out class action against Google in relation to its Play Store
Following its “on the spot” certification of the class action against Google at a certification hearing on 18 July 2022, the UK’s Competition Appeal Tribunal (“CAT”) has now handed down its judgment setting out its full reasoning for the certification. While Google didn’t oppose the certification, there are a couple of lessons to be taken from the CAT’s latest opt-out collective proceedings order (“CPO”).
Background
The opt-out class action is brought on behalf of an estimated 19.5 million UK consumers by proposed class representative (“PCR”) Elizabeth Coll, a consumer rights advocate with a professional background in consumer protection, public policy and digital markets. The claim is estimated to be worth between £263 and £752 million (excluding interest), and alleges abuse of dominance with respect to Google’s Play Store on the basis that Google has engaged in (and continues to engage in) the following exclusionary and exploitative practices:
- bundling the Play Store with other apps, such that smart mobile device manufacturers who wish to pre-install other apps on their devices have no choice but to install, and prominently display, the Play Store;
- imposing a series of contractual and technical restrictions which restrict the ability of Android app developers to distribute Android apps via distribution channels other than the Play Store;
- requiring that payments for Android app purchases be made exclusively through Google’s Play Store payment processing system; and
- charging an excessive and unfair commission in respect of all Android app purchases.
The proceedings give rise to similar allegations advanced in the Apple proceedings which were certified in May 2022 (see our previous blog post about the Apple CPO judgment here) and follow the recent conclusion of the Competition and Markets Authority’s year-long market study into mobile ecosystems (report available here).
Certification of the CPO – authorisation and eligibility
Before granting the CPO, the CAT had to be satisfied that:
- it is just and reasonable for Ms Coll to act as the class representative (the authorisation condition); and
- the class members are identifiable, the claims raise common issues and the claims are suitable to be brought in collective proceedings (the eligibility condition).
Google originally sought to challenge certification of the CPO, but withdrew its opposition “in the light of recent judgments and Court of Appeal guidance”. Google was not represented at the CPO application hearing but the CAT was keen to show that it takes its gatekeeper role seriously, exploring several of the issues Google had raised in prior correspondence with Ms Coll relating to her proposed funding arrangements.
With respect to the authorisation condition, the CAT was satisfied that Ms Coll will act fairly and adequately in the interests of the class members in pursuing these claims. As regards the eligibility condition, the CAT held that the proposed class is identifiable through Google’s transaction-level dataset, the claims raise common issues which are substantially the same for all of the proposed class members and the claims are suitable for inclusion in collective proceedings.
The judgment features only a brief consideration of whether the proceedings should be opt-in or opt-out given that neither party suggested that opt-in was preferable, and the CAT considers the proposed claims to be sufficiently strong to proceed on an opt-out basis.
Consideration of funding arrangements
The CAT’s judgment focuses on the suitability of Ms Coll’s funding arrangements and addresses points raised by Google in its earlier correspondence with Ms Coll. The claim will be funded via a Litigation Funding Agreement (“LFA”) between Ms Coll and Vannin Capital PCC for and on behalf of Project Pontac PC (the “Funder”) and deferred fee arrangements between Ms Coll and her legal team.
Google contended that a number of the features of the funding arrangements were “unsatisfactory” and raised specific points for consideration relating to the LFA and to the After the Event Policy (“ATE Policy”), which is the means by which Ms Coll intends to cover any liability to pay Google’s costs.
The LFA
With respect to the LFA, Google’s concerns all related to the Funder’s financial arrangements with its own lenders, rather than the LFA entered into between the Funder and Ms Coll. In summary, Google questioned the contractual basis on which Vannin Capital PCC (a protected cell company under which the assets and liabilities of each cell are segregated from the other cells) is entitled to obtain funds from another entity within the Funder’s corporate group and, particularly, whether or not the availability of funding for the case is ring-fenced, or is in some way dependent on the outcome of other cases funded by Vannin Capital PCC.
In addressing Google’s queries, counsel for Ms Coll highlighted Vannin Capital PCC’s membership of the Association of Litigation Funders of England and Wales, under which it is subject to a voluntary Code of Conduct and referred to the CAT’s statement in UK Trucks Claim Limited and others v Fiat Chrysler Automobiles N.V. and Others [2019] CAT 26, that the Funder has a “clear commercial incentive to continue to fund the claims through to judgment (or settlement)”. Counsel for Ms Coll further submitted that in the “extremely unlikely event” that the Funder would default on its terms under the LFA, Ms Coll would seek funding from elsewhere and, in the worst-case scenario, Google’s costs would still be covered by the ATE Policy.
The CAT held that it was satisfied that the terms of the LFA do not impair the ability of Ms Coll to act fairly and adequately in the interests of the class members and that adequate funding had been arranged to pursue the litigation effectively.
ATE Policy
Google had expressed concerns regarding the Anti-Avoidance Endorsement, which reserves the insurer’s right to recover costs paid to Google under the ATE Policy from Ms Coll in the event she breaches its terms. Google noted that this creates a “material risk of the PCR being inhibited in her pursuit of the Proceedings for fear of creating a situation in which the insurer might be permitted to avoid cover or cancel the ATE Policy”. This would become particularly relevant in the event of a proposed settlement as the ATE Policy affords the insurer the right to terminate should Ms Coll’s legal representatives advise her to agree to settle and she refuses to follow that advice without insurer approval.
Despite Google’s concerns, the CAT was not persuaded that such a situation was likely to arise or that the remote possibility that it might can be said to present a material risk that Ms Coll will not act fairly and adequately in the interests of the class members. The CAT further noted that any settlement would require the CAT’s approval, including as to terms relating to costs.
Key takeaways
The judgment pulls into focus the importance of the adequacy of the PCR’s funding arrangements and the CAT’s considered but practical assessment of such arrangements.
More broadly, the judgment highlights that the CAT will continue to determine CPO applications at an oral hearing rather than on the papers. The CAT justified its approach by reference to, among other things, its “gatekeeping role” in relation to collective proceedings and the developing nature of this area of law. That said, the CAT did not rule out the possibility of CPO applications being determined on the papers in future.
The CAT’s page with links to the formal documents in the case is accessible here.
