Competition Appeals Tribunal grants Collective Proceedings Order in Trucks Litigation

Between 1997 and 2011, the manufacturers, who include Iveco, DAF and Volvo/Renault, “colluded… on truck pricing and on passing on the costs of compliance with stricter emission rules [to consumers]”. Collectively these companies (known as “the Trucks Cartel”) were fined

€2.9bn by the EU Commission (with one whistleblowing manufacturer, MAN, being granted immunity.) The EU Commission found the manufacturers in breach of Article 101 of the Treaty of the Functioning of the European Union (“TFEU”) (the prohibition on practices having the effect of preventing, restricting or distorting competition.)

The CAT’s decision was a long time coming. Two applications for CPOs (one by RHA and a second, by UK Trucks Claims Limited (“UKTC”)) were originally listed to be heard in early 2019. The resolution of those applications was delayed pending the Supreme Court’s landmark decision in the Mastercard litigation in December 2020.

The two applications under consideration by the CAT were for fundamentally different CPOs. Whilst RHA applied for an opt-in CPO, with a (current) class size of around 18,000, UKTC had requested an opt-out CPO with approximately 38,000 claimants. The CAT held that although both applications met the suitability requirement for the grant of a CPO, it would be “wholly inappropriate” to approve both. That would lead to significantly increased costs and confusion for potential class members. In reaching its “clear view” that RHA’s application was preferable to UKTC’s, the CAT considered both the general features of the two types of collective proceedings and more specific elements of the Trucks Litigation.

We expect this decision to have a number of influences on the state of UK class actions going forward:

1. Opt-in proceedings are often likely to be preferable to opt-out

Whilst the CAT noted that there is no legislative presumption in favour of either opt-in or opt-out proceedings, it came to the clear conclusion that in this case the opt-in proceedings were “not only practicable but the more reasonable and sensible way of proceeding, in the interests of justice to all parties”. A key factor in reaching this conclusion was that the opt-in proceedings had the advantage of giving expert economists access to a very significant source of data from which to quantify damages. Where a claimant class is limited enough that the class representative can contact and mobilise a high proportion of the potential claimants, the CAT is likely to prefer the “opt-in” formulation. In the current case, RHA succeeded in defining a class of claimants who stand to recover material damages and are fully engaged with the project. Opt-out proceedings, on the other hand, are likely to continue to be better suited to “gargantuan” classes (in this regard we note last week’s application for a CPO by Justin Gutmann, on behalf of around 25 million Apple iPhone users in the UK).

2. The CAT will be slow to interfere with funding structures as long as they are

It is, of course, clear that collective proceedings – which seek to compensate claimants who may not otherwise have come forward – will continue to rely heavily on third party funding. The CAT held that without collective proceedings the “overwhelming majority” of RHA’s class members would be unlikely to be able to bring their claims, and that the collective proceedings would be “impossible” without third party funding. The CAT considered that it should be slow to reject opt-in proceedings like RHA’s as long as the funding did not appear unreasonable. This was the case even if, as in this case, the funding position would be better for the opt-out claimants. What is “reasonable” will, of course, vary from case to case, but the CAT seemed wary of interfering with commercial funding arrangements. In this case, RHA’s litigation funder, Therium, stands to recover between 5% and 30% of the total pot (decreasing as a percentage as the pot increases), which the CAT considered to be reasonable. If the claim is worth as much £3Bn, as RHA predicts it might be, Therium would recover 6%. The CAT did not consider that this represented an unfair operation of a funding structure or that the claimants were likely to be deprived of a significant part of their damages via this structure.

3. There will be considerable flexibility around what constitutes a common issue for the purpose of collective proceedings.

The CAT rejected the suggestion that in order for there to be a common issue in collective proceedings, there must also be a common It noted that the question of common issues is one of “fact and degree”. In this case, where the European Commission has found that there was “overarching systemic wrongdoing” and all potential class members purchased or leased a truck, it was possible for the various issues to be resolved on a common basis despite differences in the positions of individual claimants.

4. Petitions for aggregate damages will continue to face a high bar.

Although the CAT’s rejection of UKTC’s application was not on the basis of concerns about aggregate damages, the CAT did comment that it “felt more confidence in the robustness” of RHA’s expert methodology, which would distribute any award based on individual losses rather than by an estimation of the total. Access to individual claimant data is an asset to quantum experts (although there is an obvious practical barrier here where much larger classes are involved.) Aggregate damages will tend to be more suitable where there is a commonality of loss across a claimant class (i.e. where all claimants were affected in broadly the same way by the same issue), whereas the losses of the truck buyers varied.

The CAT is not required to assess the substantive merits of proposed collective proceedings at the certification stage, save when addressing the issue of “opt-in” vs. “opt-out”. In its limited remarks on this aspect of its considerations, the CAT said it had “no concerns about the strength” of RHA’s claim, which follows the EU Commission’s finding of a “very serious infringement.” While the Trucks claimants have a long road to travel yet, this initial “green light” represents a major milestone, both for them and for future UK competition enforcement claims.