Highlights from the GCR Live: Competition Litigation conference

We were delighted to once again host the annual GCR Live: Competition Litigation conference at our London office earlier this month, with a distinguished line-up of expert speakers and panellists. Kim Dietzel, co-head of Herbert Smith Freehills' competition litigation practice, co-chaired part of the event leading a small group Boardroom Breakfast event ahead of the main sessions.

As in previous years, the conference provided an excellent opportunity to explore some of the current hot topics in competition litigation. We have summarised the key highlights below.

Boardroom: What is the best approach to certification now?

This small group discussion session brought together people currently involved in competition class action certification battles to discuss the best approach to certification, following the Competition Appeal Tribunal's (CAT) recent decisions in Gormsen 2 and Google ad tech granting certification of opt-out standalone claims against Meta and Google respectively.

Kim Dietzel shared some of the key points coming out of the discussion at the beginning of the main conference:

• Certification is an extremely costly gateway phase and questions are understandably being asked as to whether there is any benefit to challenging certification, given the extremely low bar set by the CAT in recent cases.
• Opportunities remain to challenge certification, including on funding issues and the question of suitability of the class representative. However, there is a degree of unpredictability – for both sides – which drives inefficiency.
• This is illustrated by the recent certification hearing in Riefa v Apple and Amazon, where the proposed class representative was subject to cross-examination for the first time, and the lack of clarity on matters such as the CAT's approach to carriage disputes and the dividing line between strike-out and certification.

The impact of competition litigation on the Competition and Markets Authority

Chris Prevett, General Counsel at the Competition and Markets Authority (CMA) gave an insightful keynote speech reflecting on the impact of competition litigation on the CMA over the last ten years, during which time the CMA's powers and the complexity and breadth of its work has transformed.

He noted that the CMA spent 20 weeks defending its decisions in the CAT in 2023, across its antitrust, mergers and markets work. Litigation strategy has become a key consideration, as well as questions around how to navigate matters such as remedies implementation in the context of ongoing litigation.

Stressing the "complementarity" of public and private enforcement, Chris Prevett acknowledged the important role for private enforcement against the backdrop of CMA resourcing constraints. In terms of CMA prioritisation, he confirmed that the CMA takes the existence of private actions into account when deciding whether to launch its own investigation. However, its ultimate decision will depend on the subject matter and policy aspects of the case in question, including whether securing behavioural change is important alongside any penalty/damages. As an alternative, the CMA may decide to formally intervene in private actions, and indeed has done so (or indicated its intention to do so) in 10 private actions before the CAT and Court of Appeal to date. Chris Prevett indicated that we can expect the CMA to look to grow this practice.

He considered that the decision not to extend the scope of the collective actions regime to consumer protection claims during the recent passage of the Digital Markets, Competition and Consumer Act through Parliament has left open a "gap" in the regime, and that this is "something that needs to be looked at". However, he noted that redress schemes are a stronger component of the consumer regime than the competition regime.

Understanding economic evidence in collective action trials

An engaging panel discussion chaired by Rob Williams KC explored key current issues relating to the use of economic evidence in collective action trials.

The workability of mixed advisory and testimony roles for economic experts was debated in light of recent cases in which experts have been subject to considerable scrutiny. It was agreed that information flows need to be carefully managed, being mindful of the risk that exposure to defence strategy in the earlier stages may be perceived to entrench an expert's views so as to affect their ability to act independently (in line with their duty to the CAT). However, differing views were expressed as to whether this means that an expert cannot act in an investigation and any subsequent litigation, with sympathy expressed for the burgeoning costs of having different experts at different stages in multiple proceedings in multiple jurisdictions.

The panel considered different types of economic evidence and various issues that can arise, including the role of incentives analysis in class actions where factual evidence of individual loss is not available, and the potential for greater use of survey evidence (relied on in the certification of the Boundary Fares claim).

The use of "hot-tubbing" for expert evidence in the CAT was also discussed, with some interesting insights on the use of this approach in the Le Patourel v BT claim (including cross-discipline hot-tubbing). On the question of whether hot-tubbing or cross-examination of experts is preferable, it was clear that there are pros and cons to each, but hot-tubbing is now accepted as the default.

Finally, the panel explored claimant and defendant perspectives on methodology, including the scope for claimants to rely on novel techniques such as simulation models to estimate overcharge. It was agreed that there is still scope for challenging the methodology put forward by claimants at certification stage, despite the low bar set by the CAT, focussing on highlighting any flaws, revealing data limitations, and setting the stage for further arguments later down the line.

Managing multi-jurisdictional litigation

A cross-jurisdictional panel of practitioners addressed key issues arising from case management of multi-jurisdictional litigation, which is becoming increasingly common as the EU Damages Directive takes effect.

A wide-ranging discussion focussed on current trends in the UK, the Netherlands and Germany, as well as highlighting key developments in up-and-coming jurisdictions such as Portugal, Spain and Italy.

The panellists offered a number of practical tips for defendants (and their advisors) seeking to manage both logistical and cultural challenges of multi-jurisdictional litigation, including:

• the importance of not being led by the first jurisdiction / "biggest fire", but instead looking at the overall picture and considering appointing a co-ordination counsel to help ensure consistency of arguments and evidence across jurisdictions;
• acknowledging the need to allocate people to work on these matters full-time on the client side, and the importance of managing expectations, especially in respect of disclosure obligations;
• factoring in the move towards an expert-led (rather than lawyer-led) approach to disclosure (particularly in the UK), and the burden that this puts on experts at an early stage; and
• carefully considering strategic considerations upfront, including choice of jurisdiction (and the impact this can have on key issues such as pass-on) and the likely impact of appeals (noting that the overall duration of proceedings is a key focus for litigation funders).

GCR Live debate: collective proceedings are trying to push the boundaries of competition law too far

In a new format introduced this year, there was a lively and very engaging debate on the motion "Collective proceedings are trying to push the boundaries of competition law too far".

Bill Batchelor of Skadden, Arps, Slate, Meagher & Flom joined forces with Caroline Thomas of Norton Rose Fulbright to argue in favour of the motion, against Walter Merricks of the Class Representatives Network and Zoe Mernick-Levene of Reynolds Porter Chamberlain.

The audience was asked to vote on the motion before the debate, with 70% voting in favour at the outset. Both sides subsequently put forward some very engaging arguments. The proponents of the motion pointed to US evidence on low damages distribution rates and analysis showing that less than one fifth of abuse of dominance claims currently before the CAT relate to exclusionary practices. In response, key arguments focussed on the categories of abuse not being closed and the role played by funders in "weeding out" unmeritorious claims at an early stage.

In a marked shift from the pre-debate vote on the motion, Walter Merricks and Zoe Mernick-Levene were ultimately successful in swinging the vote against the motion by 57% to 43% when the audience was asked to vote again at the end of the debate, resulting in some interesting follow-up discussions in the networking break.

Developments in pass-on

The final panel session focussed on recent developments in pass-on, exploring lessons from recent cases including Royal Mail, Stellantis and Granville.

The panel considered in particular how the "broad axe" concept (under which the CAT has significant discretion to come up with an estimated figure) affects the work of economists when seeking to calculate the extent to which any loss suffered as a result of a competition law infringement has been passed on.

From an economist's perspective, it can be helpful to have more honesty about the degree of uncertainty surrounding the extent of pass-on and focus on providing a range rather than needing to pin-point a number. The Granville judgment demonstrates that the broad axe can be used to grapple with divergence in expert positions and gaps in the evidence/data available, without the court simply "splitting the difference": in that case the judge was able to narrow down the range of likely pass-on from 0-100% to 50-100% on the basis of economic theory, and then relied on the broad axe approach to determine the likely rate to be 65%.

Future predictions: 2024 and beyond

Kassie Smith KC of Monckton Chambers closed the conference by sharing her predictions for competition litigation looking ahead in 2024 and beyond:

• At the certification stage for competition class actions, we are likely to see the CAT moving the focus away from questions of triability and arguability and moving on to more practical questions. These are likely to include consideration of distribution plans (even at the certification stage), as well as issues relating to settlement and contribution claims.
• The substantive judgment in Le Patourel v BT is keenly awaited: even if damages are awarded, the class representative will need to apply for a payment to be made to the funders, and how that plays out may impact funders' enthusiasm for future claims.
• There are also a number of important judgments due to be handed down in the near future on liability issues, including in MIFs and Boundary Fares, as well as substantive trials of high-profile class actions scheduled for 2025 – including Car Carriers and Apple v Kent, which are both due to begin on 13 January 2025.
• Knotty questions will continue to arise in respect of case management, especially where there are multiple defendants and overlapping issues of substance, and we can expect to see the CAT continue to take imaginative approaches to dealing with these issues.
• A review of the CAT Rules and Guide to Proceedings is also likely to be on the agenda in the next year or so.