Gutmann v First MTR South Western Trains Limited and Another: The UK Court of Appeal vindicates the emerging collective proceedings regime and consumer claims
In an eagerly awaited judgment, the UK Court of Appeal (the “CoA”) has unanimously upheld the decision of the UK Competition Appeal Tribunal (the “CAT”) to grant an opt-out Collective Proceedings Order (“CPO”) in proceedings brought by class representative Justin Gutmann against defendant companies in charge of operating London’s Southeastern and South Western railway routes. The claim, brought on behalf of approximately 3 million customers, is valued at some £93 million plus interest.
Crucially, the decision marks the first time that the CoA has been specifically called upon to consider whether the opt-out collective proceedings regime in the UK dispenses with the requirement of undertaking, for each represented claimant, an assessment of liability and causation. This point is significant as it facilitates the recovery of losses caused to large classes of consumers who may have small individual claims which would otherwise be impracticable to bring on an individual basis. All eyes were therefore focused on whether the CoA’s ruling in Gutmann would signal a turning point for the opt-out collective proceedings regime following a claimant-friendly ruling by the CAT on this issue.
On 28 July 2022, the CoA dismissed the defendants’ appeals in their entirety and upheld the CAT’s decision to grant Mr Gutmann an opt-out CPO. The judgment contains important points of principle and confirms that large consumer claims are very much at the heart of the competition collective actions regime in the UK.
The Gutmann proceedings relate to train “boundary fares,” also known as “extension tickets,” which allow London rail passengers who own a Travelcard to travel beyond the zones covered by their Travelcard without doubling up on payment. Mr Gutmann alleges that the defendant companies in charge of operating London’s Southeastern and Southwestern routes do not make boundary fares sufficiently available for Travelcard holders to purchase, or make passengers aware of their existence, leaving customers with little option but to buy a higher fare. Mr Gutmann further alleges that this imposition of unfair prices is an abuse of the train operating companies’ dominant market position on their respective routes and therefore in breach of UK competition law. Since Gutmann is a ‘standalone’ claim for breach of competition law – that is to say, it does not rely on a pre-existing regulatory decision to establish liability – these allegations were supported by an independent survey conducted before the claim was issued.
At the time of filing in February 2019, Gutmann was the first application for standalone collective proceedings brought before the CAT, the UK’s specialised antitrust court.  The proceedings were, however, stayed between September 2019 and December 2020 pending the UK Supreme Court’s judgment in Merricks v Mastercard Inc. and Others, since the Supreme Court judgment would determine the relevant test for certification in Gutmann. This resulted in the CPO hearing being fixed in March 2021, some two years after the application was filed. Although the defendants vigorously objected to certification, the CAT unanimously granted a CPO in October 2021. The defendants were nonetheless granted permission to appeal the CAT’s judgment to the CoA in January 2022, with the CoA hearing taking place in June 2022.
The appeal raised four distinct issues in relation to the CAT’s earlier decision. For present purposes, however, we will consider only the following two interlocked issues that are potentially of wider application to other pending cases:
- Aggregation of liability: whether issues relating to proof of liability, as opposed to quantum, are to be determined upon an aggregate basis or must the position of each member of the class be assessed individually.
- Aggregate damages methodology: whether, if the regime does permit the aggregation of liability (as above), the CAT erred in approving the aggregate damages methodology proposed by the class representative.
The CoA rejected the defendants’ arguments in respect of all issues, including the above two, emphasising the CAT’s “generous and broad margin of judgment or discretion,” as well as its “gatekeeper role” at the certification stage in striking an appropriate balance between the right of the class to seek vindication on an opt-out basis and the right of defendants not to be subject to spurious claims.
Aggregation of liability
The CoA declared that the proper interpretation of Section 47C(2) Competition Act 1998 (“Section 47C(2)”) was that liability and damages may be determined on an aggregate basis, and not just class-wide quantum, and that this interpretation was supported by case law, including the recent decisions of the UK Supreme Court in Merricks and Lloyd v Google LLC. In other words, for the purpose of establishing causation, the CoA determined that a tenable claim for aggregate damages dispenses with the requirement of undertaking an individual assessment of causation and the amount of damages recoverable by each class member.
The defendants had argued that the CAT erred in holding that Section 47C(2) covered aggregate liability, given that it does not in its language refer specifically to liability but only to damages. According to the defendants, applying normal principles of construction, the UK statute could not lead to the conclusion that the system of aggregation extended to liability. If that were the case, according to the defendants, it would have the effect of improperly reversing the burden of proof and creating a risk that an aggregate award of damages would overcompensate the class and unfairly penalise the defendants.
In relation to the interpretation of UK statute, the CoA found that, given that Section 47C(2) empowers the CAT to make an award of damages in opt-out proceedings without reference to the position of individual claimants, the aggregate quantum exercise necessarily involves the CAT simultaneously determining liability “for the simple reason that in fixing the outer-parameters of quantum it is also drawing the line between liability and non-liability”.  Such an exercise, it follows, necessarily entails excluding categories of claimants who should recover nothing, thereby limiting the risk of overcompensation to the detriment of defendants. Indeed, according to the CoA, “it would be inconsistent for the CAT and inconsistent with the raison d'être of the collective action regime to order opt-out certification but then require the class representative to be forced to call each member of the class to establish liability; thereby restoring opt-in by the back door.” The CoA further illustrated this point by remarking that, if the liability issues of each represented claimant in Gutmann were to be assessed individually by the CAT even for a mere five minutes, the trial could last decades. On that basis, the CoA concluded that Section 47C(2) must be interpreted purposively to encompass aggregate liability and “this conclusion is needed to ensure that the system of collective redress is workable.”
The CoA considered that there was a substantial body of case law treating Section 47C(2) as applying to liability as well as to quantum. The CoA accordingly determined there was no error of law and dismissed this ground of appeal.
Aggregate damages methodology
The defendants had further argued that, if the competition collective actions regime does permit the aggregation of liability (as above), the CAT erred in approving the aggregate damages methodology proposed by the class representative. In general, the methodology acts as a broad blueprint identifying the issues for trial and how they are to be resolved, and provides important material from which the CAT can determine whether the issues are “common” and “suitable” for certification. It is relevant, therefore, to a range of issues including causation, proof of loss and quantum.
In Gutmann, the methodology relied in part on: (i) a customer survey regarding boundary fares that the class intended to carry out in the future (i.e. post-certification); and (ii) an assumption that no consumer would, rationally, wish to pay more for travel than absolutely necessary. The defendants contended that the lack of detail meant that the methodology advanced by the class failed to meet the relevant legal test, improperly reversed the burden of proof, and created a real risk that any order for damages would be unfair to the defendants and would overcompensate the class.
The CoA also dismissed this ground of appeal, concluding that the challenge regarding the proposed methodology did not raise an arguable point of law but merely reflected the defendants’ disagreement with the expert evaluation of the CAT. In any event, it is open to the CAT to adjust the methodology at trial to take account of issues the defendants prevail upon. Indeed, it was clear to the CoA that the CAT is “perfectly capable … of making such adjustments as it sees fit to preclude over-compensation.”
This ruling is likely to be helpful to practitioners in providing guidance as to the level of detail, and the nature of the supporting evidence required to be provided and identified, for a methodology to be approved for the purposes of certification. In particular, it is not necessary to have collected all the evidence that may in due course be available, provided that the sources of data have been identified, and the methodology itself is robust and can withstand scrutiny. Nor is it essential that all issues be supported by data, and reasonable assumptions can be employed where appropriate.
The CoA Gutmann judgment clarifies important questions of principle regarding the CAT's approach to the certification of opt-out collective proceedings. Crucially, the ruling marks the first time the issue of aggregate liability has been specifically considered at the appellate level. In that regard, it underscores the wide discretion available to the CAT to certify cases brought on behalf of large groups of claimants to proceed on a collective basis, even when their position on causation and loss may give rise to common questions with varied or nuanced answers. It also re-affirms earlier rulings that the evidential burden for advancing a tenable aggregate damages methodology at the certification stage is not unduly onerous.
Taken as a whole, therefore, the CoA’s Gutmann judgment is good news for prospective class representatives looking to bring consumer-level claims for competition harms. It provides helpful clarity on the ambit of the statutory scheme to determine issues of liability and causation, as well as purely of quantification, on an aggregate basis. Moreover, it offers useful guidance to practitioners on the application of the test of what constitutes a credible methodology for estimating loss on an aggregate basis at the certification stage.
*Luke Streatfeild is Partner and Charles Laporte-Bisquit is a Senior Associate in the London office.
 Hausfeld represents Mr. Gutmann in this action alongside co-counsel Charles Lyndon.
 A prepaid card allowing unlimited travel on trains for a specified period of time and within designated geographical “zones.”
 Standalone claims now comprise a significant proportion of the collective proceedings certified by the CAT, including Qualcomm and more recently the two “app store” claims filed against Apple and Google, where Hausfeld is counsel to the class representative in each case.
 Walter Hugh Merricks CBE v Mastercard Incorporated and others  UKSC 51.
 Justin Gutmann v First MTR South Western Trains Limited and Another  CAT 31.
  EWCA Civ 1077, .
 Id., .
  UKSC 51.
 Lloyd v Google LLC  UKSC 50.
  EWCA Civ 1077, .
 Id., .
 Id., .
  EWCA Civ 674,  and ;  UKSC 51, [64(a)],  and ;  UKSC 50, .  EWCA Civ 1077, .
 Id., .