London & South Eastern Railway Limited & Ors v Justin Gutmann

In competition collective proceedings, the power to award aggregate damages under section 47C(2) of the Competition Act 1998 permits liability, including causation and the existence of loss, to be established using class-wide, top-down evidence. A methodology may satisfy the certification standard despite being provisional, counterfactual and dependent on later disclosure. It must be credible, grounded in the case and workable at trial, but need not supply the answers or eliminate every no-loss claimant.

The Tribunal may use reasonable assumptions, informed estimation and the broad axe on liability and quantum. Small individual losses require no deduction from an aggregate award. It is also arguable that a dominant undertaking acts abusively where an opaque sales system routinely charges consumers for a service already covered by a pre-payment.

The Competition Appeal Tribunal granted opt-out collective proceedings orders covering about three million Travelcard holders and refused to strike out the proposed claims or give reverse summary judgment: [2021] CAT 31. The proposed representative alleged that three train operating companies abused dominant positions by making Boundary Fares insufficiently available. Travelcard holders allegedly paid again for portions of journeys already covered by their Travelcards.

The operators appealed on four grounds. The issues were whether section 47C(2) of the Competition Act 1998 permits aggregate determination of liability; whether the representative's economic methodology met the Microsoft standard; whether the Tribunal mishandled the costs and benefits of certification; and whether allegations concerning third-party ticket sellers and discounted fares were arguable.

1. Appeals dismissed. Section 47C(2) of the Competition Act 1998 encompasses liability as well as quantum. It does not alter the ingredients of the cause of action. It permits causation and the existence of loss to be established through top-down evidence. An aggregate calculation must exclude no-loss categories and therefore necessarily determines the boundary between liability and non-liability. The conclusions in Merricks and Lloyd were dispositive and the purposive construction also ensured that collective redress remained workable: [2020] UKSC 51; [2021] UKSC 50.

2. The Tribunal lawfully found that the proposed methodology satisfied the Microsoft standard. That standard confers a broad evaluative discretion. A methodology must be sufficiently credible or plausible, have some factual foundation, present a realistic prospect of establishing class-wide loss and identify available data. Because certification precedes disclosure, the methodology may be provisional, counterfactual and capable of later refinement. It must identify workable issues rather than final answers.

3. The Tribunal may use common sense, informed estimation and the broad axe when determining both liability and quantum. It may adjust the methodology or aggregate award at or before trial to exclude categories for which the defendants succeed. The possibility of some no-loss claimants does not prevent certification. Nor must aggregate damages be reduced because individual losses are small or de minimis; facilitating recovery of small consumer losses is a central purpose of collective proceedings.

4. The costs challenge disclosed no error of law. The later costs information had not been put before the Tribunal through an application for reconsideration and its wider significance was unsupported by evidence. Concerns about disproportionate expenditure are addressed through the Tribunal's close supervision of costs. Potential difficulty in distributing an award did not itself defeat certification.

5. The alleged abuse was properly left for trial. It was arguable that a dominant undertaking acts unfairly by operating an opaque or inaccessible system that routinely charges consumers for a service already covered by a Travelcard. The relevant inquiry can include whether the conduct serves a legitimate purpose and is proportionate to that purpose.

6. Claims concerning third-party ticket sellers were also arguable. Liability could potentially arise through agency, through the operators' special responsibility when establishing the sales system, or through market effects analogous to umbrella pricing. Whether discounted or Advance Fares required a Boundary Fare likewise depended on evidence. A discounted fare is not, without more, a reason to disregard a Travelcard pre-payment, although exceptionally deep promotional fares might justify different treatment.

1. Court of Appeal (Civil Division): Dismissed the appeals and upheld the certification and summary-disposal decisions of the Competition Appeal Tribunal: [2022] EWCA Civ 1077.
2. Competition Appeal Tribunal: Granted two opt-out collective proceedings orders and dismissed applications for strike out or reverse summary judgment: [2021] CAT 31.