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At the end of March 2022, the UK Competition Appeal Tribunal (the “CAT”) handed down a detailed and wide-ranging 255-page judgmentone in relation to two competing applications (the “Applications”) for an ‘opt-out’ Collective Proceedings Order (“CPO”) in follow-on damages disputes arising out of the 2019 European Commission infringement decisions concerning cartels in the FX spot markets.2 The claims were brought on behalf of approximately 40,000 users of the foreign exchange markets.
In the judgment of the majority,3 the CAT found that it would be just and reasonable to authorize either proposed class representative (“PCR”)4 and that the claims advanced were eligible for inclusion in collective proceedings. However, the CAT indicated that it had serious doubts about the merits of the pleaded claims for market-wide harm and was only minded to grant an ‘opt-in’ CPO (where claimants need actively to opt into the proceedings, rather than being included automatically with the option to ‘opt-out’). The CAT stayed both Applications, granting the PCRs permission to submit revised applications for certification of the proceedings on an opt-in basis within three months.
In addition to addressing certification, this was the first time that the CAT had to consider how to resolve the fact that two PCRs were competing to represent the same class (known as a ‘carriage dispute’). The CAT took the point relatively shortly and, although it ultimately concluded that the Evans PCR should be preferred on the basis that it had advanced a marginally better-pleaded case (even though it had filed its CPO application slightly later in time), the CAT did not provide further guidance on how such disputes ought to be resolved in the future. Further guidance has, however, now been provided in the CAT’s recent decision in Trucks, which will be the subject of a separate client alert.5
The decision is noteworthy because it follows a series of decisions granting opt-out CPOs that have been made in the wake of the Supreme Court’s decision in Merricks,6 which set down an apparently claimant-friendly approach to the certification of class actions. Defendants should take heart from the CAT’s willingness to scrutinize claims that it considers lack merit and to refuse to certify opt-out proceedings where it would be more appropriate for such claims to be brought on an opt-in basis.
In this article, we first set out the background to the claims advanced by the two PCRs and then go on to consider the CAT’s decision in relation to the following issues:
- whether it was open to the CAT to strike out the claims and, if so, whether it should (the “Strike-out Issue”);
- whether it was just and reasonable for the PCRs to represent the class and whether the claims were eligible for inclusion in collective proceedings (the “Certification Issue”);
- whether the proceedings should be certified on an opt-out or an opt-in basis (the “Opt-in v Opt-out Issue”); and
- whether, if the CAT were willing to grant the CPO on an opt-out basis, which of the PCRs would be most suitable to act as class representative (the “Carriage Issue”).
The Applications were made by (i) Michael O’Higgins FX Class Representative Limited, a special purpose vehicle incorporated for the purpose of bringing the claim and whose sole director and member is Mr. Michael O’Higgins (the “O’Higgins PCR”) and (ii) Mr. Phillip Evans (the “Evans PCR”).
Both PCRs sought to bring follow-on damages proceedings following the 2019 European Commission infringement decisions known as “Three Way Banana Split” and “Essex Express” (the “Decisions”).7 In summary, the infringing conduct involved individual traders (around ten or fewer across both Decisions8) exchanging information for the benefit of the traders involved and in order to identify occasions to coordinate their trading in the FX spot market.9 As a result, a number of banks were found to have infringed Article 10110 of the Treaty on the Functioning of the European Union by object for certain defined time periods.11th
Importantly, while the Commission described the infringements as “single and continuous” in its Decisions, it recognized that they comprised a series of discrete acts.12 The CAT, therefore, observed that it was relatively easy to see how a claim could be brought against one of the banks named in the decision in relation to a specific transaction (which is, broadly speaking, the claims advanced in the separate Allianz proceedings in the High Court).13 However, in order to bring a claim on behalf of all market participants, the PCRs needed to show that the infringements found in the Decisions had caused market-wide harm, which the CAT said “can be described as a form of indirect harm or, perhaps better, a loss resulting from “umbrella” effects, where other dealers innocent of any infringement nevertheless increased prices to the wider market because of someone else’s infringement”.14
In these circumstances, both of the Applications (although they differed in some respects) alleged market-wide harm in the form of a widening in the bid/ask spreads generally (the difference between the prices that traders quote for buying and selling currencies) to the detriment of customers in the foreign exchange markets (including those who had traded with dealers who were not the subject of the Decisions).15 In other words, they alleged that “customers in general bought currency at a higher price and sold it at a lower price than they would in the absence of the anti-competitive behavior found”.16
1 Phillip Evans and Michael O’Higgins FX Class Representative Limited v Barclays Bank Plc and Others  CAT 16 (the “Judgment”).
2 Case AT.40135 FOREX (Three Way Banana Split) and Case AT.40135 FOREX (Essex Express).
3 Given by Sir Marcus Smith and Professor Anthony Neuberger.
4 The PCRs were Michael O’Higgins FX Class Representative Limited and Mr. Phillip Evans.
5 UK Trucks Claim Limited v Stellantis NV (formerly Fiat Chrysler Automobiles NV) and Others; Road Haulage Association Limited v Man SE and Others  CAT 25.
6 MasterCard Inc v. Merricks  UKSC 51.
7 These decisions involved materially the same conduct, and so the CAT only felt the need to describe the infringing conduct in the “Three Way Banana Split” decision, Judgment at .
8 Judgments .
9 Judgments .
10 Article 101 prohibits agreements, decisions or concerted practices, the object or effect of which is to restrict competition.
11 Judgments  and .
12 Judgments at .
13 Allianz Global Investors GmbH & Others v Barclays Bank plc & Others CL-2018-000840 (“Allianz”).
at 14 Judgments .
15 Judgments at .
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