CMA publishes issues statement in household pets market investigation

 

 

The Competition and Markets Authority (CMA) has published its issues statement in its market investigation into the supply of veterinary services for household pets in the UK.

The CMA made the market investigation reference on 23 May 2024.

The CMA has identified the following initial high-level theories of harm:

1.       concerns about lack of effective engagement by pet owners in the choice of the best veterinary practice

2.       concentrated local markets

3.       incentives of large integrated groups to act in ways that reduce choice and weaken competition

4.       overpayment by pet owners for medicines or prescriptions

5.       an outdated regulatory framework.

The CMA has also identified some potential remedies that may help to address these issues if one or more adverse effects on competition are identified in the investigation. These could include:

1.       information transparency remedies such as mandating what information should be provided to customers, as well as how and when this should be provided

2.       price remedies such as imposing maxima for prescription fees, or maximum prices or mark-ups for other services

3.       market opening remedies aimed to lower barriers to entry or otherwise to promote competition in the provision of certain elements of veterinary services. Remedies in this category could include targeted structural remedies.

The CMA invites comments on the issues identified by 30 July 2024.

https://www.gov.uk/government/news/cma-takes-next-procedural-step-in-vet-services-investigation

CAT rules that claims against MasterCard arising before June 1997 are time-barred

The Competition Appeal Tribunal (CAT) has ruled that Walter Merricks’ collective competition law damages claims against MasterCard are time-barred in respect of any loss suffered before 20 June 1997.

In January 2023, the CAT granted Merricks permission to argue that limitation periods should be postponed under both English and Scots law to allow for the inclusion of claims that had already been time-barred when the Competition Act took effect in 2003.

The CAT rejected the Class Representative's (CR) arguments that the operation of the primary six-year limitation period was suspended pursuant to either section 32(1)(b) or section 32(2) of the Limitation Act m1980. The CAT found no deliberate concealment of relevant facts nor any deliberate breach of duty for the purposes of these provisions. 

The CAT’s findings on the application of the EU principle of effectiveness are instructive.  The CAT ruled that “the EU principle of effectiveness does not impose a hard-edged rule that for such proceedings the limitation period cannot (sic) being to run until the ‘average class member’ can reasonably be expected to discover the relevant facts necessary to bring those proceedings or be aware that they have suffered harm as a result of the alleged infringement” (para 109).

Rather, “[s]ince the class representative is the person bringing the proceedings, we consider that for the purpose of the EU principle of effectiveness, the knowledge requirement should apply to the class representative. We have already observed that, here, the CR was very far from being in the position of the average class member or average consumer: para 61 above. The burden is on the CR to displace the operation of the primary limitation period and we did not hear any evidence as to what the CR knew or could reasonably have discovered” (para 110).

It follows that the CAT will be slow to displace the normal limitation rules by the EU principle of effectiveness.  The relevant knowledge is that of the CR and not the “average class member”. 

 

Case 1266/7/7/16 Walter Hugh Merricks CBE v MasterCard Incorporated and Others

Ruling on relief from sanctions in Rachel Kent collective action

 

The Competition Appeal Tribunal (CAT) has ruled on relief from sanctions in the collective proceedings brought by Dr Rachael Kent (the Class Representative (CR)), under section 47B of the Competition Act 1998.

The proceedings allege that Apple has abused a dominant position, in breach of Article 102 of the TFEU and the Chapter II prohibition of the Competition Act.

The alleged infringements involve requiring iOS App developers to distribute iOS Apps exclusively via the Apple App Store.  It is further alleged that Apple device users are charged excessive and unfair prices represented by a commission charged by Apple on all purchases over Apple payment system.

In August 2023, the CAT ordered that the parties serve signed statements of witnesses of fact by 26 January 2024. The CR sought relief from the sanction set out in CAT Rule 55(2), to submit a witness statement of Christian Owens, dated 13 May 2024.

Although the failure to provide witness statements in accordance with the timetable directed by the CAT is a serious matter, the CAT concluded that the failure in this case was not of material significance and at the lower end of seriousness for the type of breach. It was found that Mr Owens gave evidence on 11 April 2024 in proceedings in an Australian court against Apple entities and the CR only became aware of that evidence shortly thereafter.

Dr Rachael Kent v Apple Inc and Apple Distribution International Ltd [2024] CAT 40, ruling on relief from sanctions

Judgment granting application by Ad Tech to bring collective proceedings against Google for abuse of dominance

 

The Competition Appeal Tribunal (CAT) has given judgment on the application for a collective proceedings order (CPO) brought by Ad Tech Collective Action LLP (the PCR) under section 47B of the Competition Act 1998, against Alphabet Inc, Google LLC, Google Ireland Limited and Google UK Limited.

The action concerns an opt-out claim concerning Google's alleged conduct in relation to sale of digital display advertising.

The application combines two standalone claims originally brought separately by Mr Claudio Pollack and Mr Charles Arthur for damages caused by alleged breaches by Google of Article 102 of the TFEU and the Chapter II prohibition of the Competition Act 1998.

Google argued that the claim form was insufficiently pleaded so as to preclude certification at this stage because the Pro-Sys v Microsoft test was not satisfied.  The CAT rejected those arguments.   

The CAT held that limitation issues should be dealt with as part of the main trial, rather than as questions of strike out. The CAT further held that the points raised by Google as to a potential conflict of interest within the proposed class would be more effectively dealt with during the course of proceedings. The CAT also resisted a claim that the PCR should change the arrangements for its legal representation.

Ad Tech Collective Action LLP v Alphabet Inc and others [2024] CAT 38

Litigation Funding Agreements (Enforceability) Bill will see “no further progress”

 

 

On 22 May Prime Minister Rishi Sunak announced that a general election would take place on 4 July 2024. As a result, much pending legislation did not survive the pre-election wash-up before parliament was prorogued on 24 May.

The Litigation Funding Agreements (Enforceability) Bill did not reach completion on 24 May and the parliament website states that: "The 2023-24 session of Parliament has prorogued and this bill will make no further progress."

If passed, the bill would have reversed the impact of the ruling in R (PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28. By a 4 to 1 majority, the Supreme Court upheld an appeal by DAF challenging the litigation funding agreements (LFAs) in two separate follow-on collective claims against members of the EU trucks cartel.  The judgment renders those arrangements unenforceable until certain conditions are met.  The case concerns the definition of a damages-based agreement (DBA), derived from one legislative context - the Compensation Act 2006 (the CA 2006) - and its use in a different legislative context (section 58AA of the Courts and Legal Services Act 1990 (CLSA 1990)).  Section 58AA(1) and (2) CLSA 1990 provide that a DBA will be unenforceable unless certain conditions are met. The Damages Based Agreements Regulations 2013 (the DBA Regulations 2013) set out further requirements which must be satisfied if a DBA is to be enforceable. It is accepted that the LFAs in this appeal would not satisfy these conditions.  The relevant part of the definition of DBA in this appeal, pursuant to section 58AA(3), is whether the LFAs involve the provision of “claims management services".  The Court held that claims management services are capable of covering LFAs when “read according to their natural meaning”.  As a result, the claimants’ funding arrangements fell under the scope of the DBA Regulations 2013 since damages-based funders provide “client management services” and would be paid based on how much the tribunal awarded as damages.

The bill provided, with retrospective effect, that LFAs were not DBAs and thus they did not have to comply with the DBA Regulations 2013. This was achieved primarily by amending the definition of a DBA in section 58AA of the Courts and Legal Services Act 1990 to provide that an agreement, to the extent that it is an LFA, is not a DBA.

Some funding agreements needed to be revised to reflect the Supreme Court’s recent ruling but certain of the more prominent funders in the industry have reacted to say the judgment will not stem their appetite to fund a claim with merit.  With the demise of the Litigation Funding Agreements (Enforceability) Bill, appeals against certain CAT decisions finding that LFAs are not DBAs now take on a renewed significance. We will have to wait and see whether similar legislation is introduced in the next parliament.

 

CMA market investigation into veterinary services for household pets

 

The Competition and Markets Authority has launched a market investigation into the supply of veterinary services for household pets in the UK. The investigation will extend to the supply of prescribed veterinary medicines for those pets.

The CMA has identified features that may make it difficult for consumers to make well-informed choices, including information asymmetry, vulnerability at the point of purchase, and lack of transparency about pricing, ownership of the vet practice and treatment options.

The CMA finds that a majority of vets practices are owned by large corporate groups where their business models may lead to limited consumer choice.

The CMA also considers that consumers may be over-paying for medicines and that there are weaknesses in the relevant regulatory frameworks.

Between October and December 2024, the CMA plans to publish working papers which will set out its initial thinking.

The CMA must publish its final report by 22 November 2025.

https://www.gov.uk/government/news/cma-presses-ahead-with-full-investigation-into-vets-market

CAT approves collective settlement in rail ticket overcharging claim

 

 

The Competition Appeal Tribunal (CAT) has granted an application by Mr Justin Gutmann (the Class Representative) and Stagecoach South Western Trains Limited (SSWT) for a collective settlement approval order (CSAO).

The collective action concerns a claim that First MTR South Western Trains Limited and SSWT had abused their dominant positions by failing to make their "boundary fares" sufficiently available, resulting in rail passengers being overcharged for certain journeys.

The PCR and SSWT agreed to settle in relation to the claims brought against SSWT but claims against First MTR South Western Trains Limited are continuing.

Under the settlement, SSWT will make available up to £25 million to pay class members who make claims. The settlement also contains provision for the payment of the costs of the Class Representative (and its funders).

Under section 49(5) of the Competition Act 1998, the CAT may only make a CSAO if it is satisfied that the terms of the settlement are just and reasonable. This involves being satisfied that, whilst the settlement may not be perfect, the settlement is fair and reasonable. There may be a range of settlements that are fair and reasonable and not necessarily the ideal settlement that the CAT would otherwise be seeking to achieve.

The CAT has concluded that, in the circumstances of this case, and where it does not consider that the merits are strongly in the Class Representative’s favour, the settlement is just and reasonable.

Justin Gutmann v First MTR South Western Trains Limited and Stagecoach South Western Trains Limited [2024] CAT 32