The UK Competition Appeal Tribunal (“CAT”) has refused to certify an opt out class application brought by Liza Gormsen in relation to the alleged abuse of a dominant position by a social networking platform.
The application signified a trend in claims pursued in the UK, in which it is argued that certain activities of dominant companies that strictly appear to be consumer or data law issues in fact constitute “unfair trading conditions” and/ or “supplementary obligations” under section 18 of the Competition Act 1998 and are therefore abusive. Such a classification is important because opt out actions are only available in competition cases in the UK but not for consumer rights, ESG or data breach claims. In this particular case, the proposed class representative (or PCR) argued that the social network platform’s user terms and conditions amount to an unfair trading condition or supplementary obligation because users were not adequately informed and therefore did not adequately consent as to the way that their data might be used for advertising profiling when they sign up to use the platform.
The CAT decided that the PCR in this case needs to go away and reformulate her approach – so not rejecting the application but inviting her to “have another go”. The CAT found that “there is no effective blueprint for the efficient and effective trial of the issues raised” because: (i) inadequacies were identified in the pleading of the abuses alleged in the CPO Application, (ii) the methodology proposed by the economist for the quantification of loss was not clear (it changed between the first report and the second reply report, failed to connect the assessment of loss with the pleaded infringement and did not grapple with several points that the CAT said must be “reckoned with” before it could accept that there was a viable path to trial); and (iii) the problems engendered by points (i) and (ii) meant that no analysis could properly be carried out at this stage in order to work out if the proceedings are justified in terms of cost/benefit. The case is now stayed for six months to allow the PCR time to reformulate. Tellingly, the CAT said
- “we wish there to be no misunderstanding: the methodology so far advanced by the PCR will need a root-and-branch re-evaluation, and mere tinkering with the methodology will not do. If the PCR is minded to simply “tinker”, then it is probably better for the application to be refused, and for the PCR to seek a review of our decision in the Court of Appeal. (To be clear: this should not be taken as a hint that we would be minded to give permission to appeal: that will have to be applied for, in the usual way.)”
The CAT also warned that it would need to be convinced that the claim was not in fact a complaint in consumer law as to misrepresentations made by the social network on its terms and conditions – emphasising that not only was such a complaint outside its jurisdiction but it would in any case not be apt to be tried as a class because the loss suffered by each individual consumer would be in question.
The CAT analysis accepted that a version of the Canadian Pro-Sys test should be applied at the certification stage. This requires a credible expert methodology (as per the UK Supreme Court in Merricks) and, in the CAT’s eyes, requires PCRs to identify a “blueprint to trial for the parties and for the Tribunal”. This approach reinforces the role of the CAT as a gatekeeper in UK opt out class cases at the certification stage so that – if the PCR hasn’t properly pleaded the case or explained the expert methodology or otherwise suggests that gaps will be filled later – then they will not have set a blueprint for trial.
Gormsen had argued that the Pro-Sys test amounts to the imposition of a more onerous test than strike-out and that the CAT is wrong to adopt it. It is likely that this decision will be appealed on that basis – with Gormsen arguing that the CAT cannot decline to certify cases in circumstances where the pleaded infringement is arguable and where there has been no opportunity to build or test the economic model.