UK Class Action certification

In the UK, since 2015, there has been a statutory class action regime allowing full opt-out or opt-in class actions for claim for breach of competition law. Competition claims require approval (or certification) before proceedings: the first two claims failed and so the regime was slow to take off. However, since the UK Supreme Court judgment in Merricks v Mastercard1 at the end of 2020 signalled that the threshold for certification is lower than many had expected, the regime of filings has picked up pace. Nearly 2 years later, 27 class actions have been issued, 18 of them since the Supreme Court judgment. Of these claims, 11 have been certified, 2 more have been permitted to proceed as opt-in claims only, one was withdrawn, and the remainder await a decision.

Competition class actions

The statutory regime for competition class actions requires a collective proceedings order (CPO) to be made before a claim proceeds. This is the equivalent of class certification in other regimes. For a CPO to be made, the proposed class representative must be "authorised" and the claims must be "eligible" for inclusion in the collective proceedings. The Competition Appeal Tribunal, which hears such claims, must also determine if the claim should proceed as an opt-out or opt-in class.

For the class representative to be authorised it must be just and reasonable for that person to act as a representative. In practice this has caused little difficulty in the cases to date and representatives have included consumer organisations, special purpose vehicles, and individuals. The only questions that have been raised concerning whether a proposed representative ought to be authorised is whether the representative's funding arrangements are adequate. The Tribunal has taken a very pragmatic approach to these issues, allowing changes to be made to funding arrangements to cure any problems. It is clearly mindful that a workable funding mechanisms is a necessity for the regime to succeed and indeed the fact that London has a buoyant litigation funding market has been key to the rapid development of class actions.

Nearly all of the certification battles have so far been fought about "eligibility". Claims are eligible for inclusion in collective proceedings if they are brought on behalf of an identifiable class, raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings.  The Supreme Court made clear in Merricks that it views this as a low threshold. This is primarily the result of two very significant aspects of the regime and the Supreme Court's interpretation of them. 

  1. The regime provides for awards of aggregate damages, which means that damages can be awarded without considering the loss of individual class members. The Supreme Court has interpreted this as not just a tool to simplify quantification, but as applying also to proving causation and establishing liability on a class wide basis. The result is that many potential objections to certification based on the individual circumstances of class members have fallen away. In addition, the Supreme Court has adopted a relatively low standard for establishing common issues on a class wide basis (taken from Canadian case law) of merely requiring that there is a realistic and plausible method grounded in the facts. This has led to the acceptance for the purposes of certification of top down methods of assessing aggregate damages proposed by experts – even if they were accepted by the court not to be optimal.
  2. Second, the Supreme Court found that whether a claim is suitable for inclusion is a matter of relative suitability, not an absolute threshold. In other words, the question is, whether it is relatively more suitable for the claim to be brought as part of a class action than as an individual claim? The result of this is that any difficulties that a claim would face if brought as an individual claim are not viewed as a good objection to its being brought as a class action.

The Supreme Court also held that the test for certification of an opt-out class does not involve an assessment of the merits of the claim. The Tribunal will not entertain a mini trial of the issues at the hearing of the CPO application. The lack of a merits test has meant that it has become common for defendants to bring application to strike out the claim at the same time as the CPO application so that issues going to the merits can be heard. To date no such application has been successful.  

Nevertheless, it should not be thought that potential class actions will not be scrutinised. This is illustrated by the recent judgment in respect of two competing applications for certification of opt-out class actions concerning the FX market2. The judgment found that both claims were at risk of being struck out because they did not plead causation adequately and refused to certify either of them as an opt-out class because they were not sufficiently strong claims. The class representatives were instead given the option of reformulating the claims as opt-out class actions. Indeed the only other occasion since Merricks on which a CPO application failed was when the Tribunal favoured a rival opt-in class action over an opt-out one. 

The FX case was also important as the first time a carriage dispute has been addressed. The tribunal refused to determine the carriage dispute prior to the certification hearing, forcing both would-be class representatives to incur the cost of preparing the claim and applying for certification.   This approach will impose a significant costs risk on class representatives and their funders when carriage disputes arise and will be a concern for claimant lawyers.

The future

The approach to certification signalled in Merricks is clearly helpful to claimants. But the judgment in the FX case shows that there is scrutiny of class actions at the certification stage. In any event, the lower threshold applied in Merricks may simply store up problems for the future. In adopting a relatively low bar, there are issues fundamental to the viability of claims which the Tribunal is expressly leaving to be addressed at trial. Moreover, the Tribunal has more than once referred to its power to revisit certification at a later stage as the case develops. 

It seems, therefore, that the price that claimants may have to pay for a lower certification threshold is that certification is not a guarantee of likely future success. This will clearly have an impact on the dynamics of such cases going forward in respect of issues such as settlement.


Authored by Nicholas Heaton.


1 Merricks v Mastercard Inc [2020] UKSC 51
2 Michael O'Higgins FX Class Representative Limited v Barclays Bank PLC and Others & Phillip Evans v Barclays Bank PLC and Others [2022] CAT 16



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