The first opt-out collective action to go to a full trial before the Competition Appeal Tribunal has returned a verdict for the defendant in a decision likely to dampen investors' enthusiasm for the fast-growing sector.
In Justin Le Patourel v BT Group plc, the tribunal, chaired by The Honourable Mr Justice Waksman, ruled that while telecom giant BT’s prices for residential landlines were excessive, they were not unfair. The ruling, after a trial between January and March this year, rejected a claim brought by Justin Le Patourel, a former Ofcom executive, as class representative for some 3.7 million customers.
BT welcomed the ruling, which marginally lifted its share price.
Experts in collective actions said the decision could have wide implications. Tim West, partner at global firm Ashurst, said the claimants’ disappointment ’may be felt more broadly by class representatives in other opt-out collective actions in the CAT and by the funders of those cases.
’That is because, contrary to expectations when the collective action regime was established, a significant majority of the cases are “standalone” or hybrid claims (in that they take inspiration from a regulatory finding, but one which is not binding on the question of liability), and this standalone case has not succeeded.’
In particular, West noted, the CAT found that it should not give material weight to regulator Ofcom’s findings, relying instead on its own set of primary materials ’which included a very substantial body of expert evidence based on far more data than had been available to Ofcom’.
However he said that while an appeal is likely, the ruling could to ’have a dampening effect, at least in the short term, on the availability of capital to fund the more novel or unusual claims in the CAT moving forward’.
Mohsin Patel, director of litigation finance broker Factor Risk Management, commented: ’This will be a bitter pill for the class representative, his lawyers and backers to swallow. Inevitably, they will be considering the judgment carefully and considering potential grounds for appeal. Therefore, there may still be some light at the end of the tunnel.
’For many, it will be deeply regrettable that the first full opt-out trial to be heard in the CAT has failed. However, this should not detract from the fact that there have been a number of recent high-profile settlements in favour of consumers, which indicates that the CAT regime is creating a positive impact overall and affording redress where previously there was none.’
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