We were delighted to host the GCR Live: Competition Litigation conference at our London office last week, marking a welcome return to a fully in-person format with a distinguished line-up of expert speakers and panellists – including Kim Dietzel, co-head of Herbert Smith Freehills’ competition litigation practice.
As in previous years, the conference provided an excellent opportunity to explore some of the key current themes in competition litigation. Highlights from the discussions included:
- An insightful keynote address by The Honourable Mr. Justice Marcus Smith (President of the Competition Appeal Tribunal (CAT)): reflecting on the Chinese curse “may you live in interesting times“, Sir Marcus Smith suggested that whilst competition lawyers are certainly currently living in “interesting times”, this should be a source of celebration rather than regret. As society becomes ever more complex and networked, the more important competition law becomes, with the CAT now charting its own course post-Brexit when novel issues arise.
Sir Marcus Smith focussed in particular on three areas where unnecessary procedural complexity has crept in, and suggested some possible solutions:
- Treatment of common issues, where an infringement gives rise to many claims: the difficult combination of commonality and difference in the context of competition law claims – as illustrated by, for example, the application of the pass-on defence – makes it difficult to rely on traditional approaches to dealing with common issues (such as res judicata, use of lead cases, or sampling). The recent Practice Direction on Umbrella Proceedings aims to assist in extracting out common issues and thereby reduce the risk of different tribunals reaching different conclusions on broadly similar facts (as previously seen in the litigation related to multi-lateral interchange fees). He acknowledged that this approach is procedurally cutting-edge and emphasised that the CAT would be grateful for input/feedback as to how the new Practice Direction is working.
- Limits to proper protection of confidential information: whilst recognising the importance of ensuring proper protection of legitimate confidential information, Sir Marcus Smith expressed concerns that redaction and confidentiality regimes have become an excessive “cost centre”, which can also negatively impact the ability of lay clients to properly instruct their legal advisors and complicate proceedings at the trial stage. He suggested that one possible way forward may be to move away from multiple complex tiers of confidentiality rings, and instead to seek to “weaponise” the undertaking not to use disclosed documents for collateral purposes.
- Practical issues relating to disclosure: Sir Marcus Smith identified the disclosure process as another significant cost centre in competition litigation, where efficiently isolating relevant documents can be very difficult. He acknowledged that there is no easy answer, but suggested that options worth further exploration could include: (i) expert-led disclosure (whereby economic experts identify what material they need, and the parties produce it) and/or (ii) reverse disclosure, where the disclosing party makes available a larger-than-usual set of documents which can be repeatedly searched by the receiving party as the proceedings progress.
- The extent to which it is worth challenging certification of collective actions given the recent permissive approach of the CAT: against the backdrop of a wave of successful applications for certification of competition collective actions, it was noted that challenges based on personal attributes of proposed class representatives (PCRs), or the funding arrangements made by PCRs, have generally been unsuccessful to date. However, whilst there are examples of defendants opting not to contest certification (such as Apple, in the context of the claim brought by Dr. Rachael Kent in relation to its AppStore arrangements), there remain some key battlegrounds, including subtleties in class (and sub-class) definition, the issue of opt-in vs opt-out (with the former seemingly favoured by the CAT for business claims rather than consumer claims), and challenges focussed on whether the underlying conduct could amount to an infringement of competition law. Casey Halladay (McCarthy Tetrault) offered an interesting perspective from the Canadian regime, where in recent years defendants have begun to have more success in resisting certification, or even successfully moving to strike out claims before certification. Suggested reasons for this included less specialist lawyers bringing claims which can be shown not to be founded on a competition law infringement, and a focus on access to justice considerations for defendants as well as claimants, bearing in mind the impact of lengthy proceedings for defendants facing unmeritorious claims.
- Practical difficulties relating to pass-on and volume effects, and the scope for “compromise and creativity”: the particular difficulties raised by quantification of pass-on and volume effects were explored in an interesting panel which combined a practical overview of the key legal principles and takeaways from recent judgments by Kim Dietzel (Herbert Smith Freehills) and Kate Vernon (Quinn Emanuel Urquhart Sullivan) with insights and commentary from economists. Jon Adlard (Frontier Economics) emphasised the importance of ensuring that any analysis done by economists is grounded firmly in the facts of the case, given that econometrics can only ever show correlation, not causation, as illustrated by the BritNed case (see our e-bulletin). With regard to the role of the “broad axe” in estimating harm, Richard Murgatroyd (RBB Economics) highlighted the potential impact of a degree of statistical imprecision at every step, with a significant risk that too much estimation ultimately leads to final figures which are “simply wrong”.
- Competition law and “Big Tech”: the final panel session focussed on the application of competition law to “Big Tech”, both in terms of regulatory activity and damages claims brought in the UK, EU and USA. Given the increasing importance of Big Tech to the modern economy, and a decade of regulator scrutiny leading to a series of high-profile infringement decisions, it is unsurprising that we have seen increasing private litigation in this area. James Hennah (Linklaters) described the current environment as a “perfect storm” for Big Tech, in the sense that courts have shown a willingness to find companies to be in a dominant position, the CAT has set a low bar for collective claims in terms of any real merits assessment at the certification stage, funding for collective claims is readily available, and “creative” approaches have been taken to allegations of abuse. He suggested that we may see some degree of correction over time in this area, but the general consensus was that competition law issues arising in the context of Big Tech will remain a “hot topic” in the future, alongside increased regulation via various legislative initiatives such as the Digital Markets Act at EU level.