BIRA Trading Ltd (BIRA) and Professor Andreas Stephan (Prof Stephan) have both submitted claim forms requesting Competition Appeal Tribunal (CAT) certification for opt-out collective proceedings. Each aims to serve as the class representative (CR). Therefore, the Tribunal is tasked with determining which of the two applications will advance to a certification hearing.

BIRA, the British Independent Retailers Association, is a leading trade association for retailers in the United Kingdom. Established in 2009, it emerged from the merger of two organisations with roots tracing back to the 19th century. Prof Stephan has been a professor of competition law at the University of East Anglia Law School since 2013.

In both instances, the proposed class consists of independent retailers, with the same five companies from the Amazon group identified as the defendants. The claim forms seek collective damages for the proposed class, alleging that Amazon has abused its dominant market position in the UK.

In its initial observations, the CAT notes that Amazon has previously agreed binding commitments to the European Commission and the UK’s Competition & Markets Authority after investigations into suspected infringements and that there is a pending application for certification against Amazon, initiated by Mr Robert Hammond, who acts as the proposed class representative for all consumers who have purchased products through the Amazon UK Marketplace.

In addressing the carriage dispute, the CAT made several noteworthy observations.

The CAT emphasized that it is generally more beneficial for potential class members if carriage disputes are settled amicably, with the two PCRs agreeing to consolidate their actions under suitable terms. While resolving such disputes separately is better than incorporating them into the full certification hearing, they still incur significant costs and lead to delays in the main proceedings. Unfortunately, achieving consensus is not always feasible.

The CAT expressed initial concern regarding the stark discrepancies in the class size estimates. BIRA’s application suggested that the class comprised approximately 35,000 UK merchants, while Prof Stephan’s expert assessment indicated a figure exceeding 200,000.

Although a larger class size would favour Prof Stephan’s case, this could not be conclusively determined based on the information available thus far. The disparity appears to stem from a lack of precise data and the utilization of varying sources for the estimates. The CAT anticipated that this issue would be clarified once Amazon supplies the necessary data, concluding that there is no basis for presuming that BIRA’s proposed class is smaller than Prof Stephan’s.

Preliminary conclusion on suitability

The CAT noted that despite Prof Stephan’s financial management experience within an academic setting, it is generally preferable to have a well-established trade association as the class representative.

Nevertheless, Prof Stephan, despite having less relevant experience, has assembled a distinguished consultative panel to offer him advice and guidance throughout the case. Since Prof Stephan’s litigation budget allocates significant funds for the panel members’ contributions, their involvement is expected to be substantial.

The PCRs are represented by highly qualified solicitors and Counsel teams specializing in competition law. The CAT perceives no distinction between them; thus, this aspect is considered neutral.

In the CAT’s assessment, BIRA is, in principle, the more appropriate class representative; however, Prof Stephan is certainly not unsuitable.

Funding

Prof Stephan has entered into a Litigation Funding Agreement (LFA) with Innsworth that commits the funder to a maximum of £32.9 million for his costs and expenses. Similarly, BIRA has secured an LFA with LCM that allows for up to £28.15 million. Consequently, both LFAs offer substantial funding.

The anticipated returns for the two funders differ significantly. BIRA’s LFA stipulates a funder’s return that increases from a total multiple of 4 to 6.5, contingent upon the recovery period exceeding five years. Prof Stephan’s LFA allows for a total multiple of 4 to 10, provided the recovery occurs after the substantive trial begins. Therefore, the potential return for the funder is considerably greater if Prof Stephan initiates the proceedings rather than BIRA.

While the CAT acknowledged that the maximum return under Prof Stephan’s LFA is “remarkably high,” it also pointed out that the funder explicitly consented to the condition that any entitlement to such fees would be disbursed from undistributed damages.

In the event of a ruling, the Tribunal will manage the allocation of damages. The CAT’s primary concern is the LFA’s impact on the interests of the class members. The elevated return agreed upon for Prof Stephan’s funder may indicate differing evaluations of litigation risk, particularly given the broader claims presented and the more significant amounts allocated for both Prof Stephan’s costs and adverse costs coverage compared to the BIRA LFA.

Thus, despite the stark difference in potential returns for the funders, the safeguards for class members lead the CAT to conclude that this is not a significant factor in favour of BIRA’s application.

Scope of the Claims

The claims pursued by the two proposed collective proceedings exhibit significant differences in scope. The BIRA proceedings are limited to two interconnected allegations of abuse, whereas Prof Stephan’s proceedings encompass these allegations but are framed in a broader context. Additionally, Prof Stephan introduces three further allegations.

The CAT essentially indicated, albeit perhaps not explicitly, that BIRA was missing an opportunity by failing to align itself with the decisions made by the Competition and Markets Authority and the European Commission. By excluding allegations made by competition authorities, the class members may be deprived of potential compensation for what could be substantial sources of additional harm.

Methodology

Both BIRA and Professor Stephan submitted their applications along with comprehensive reports from economic experts detailing their methodologies for demonstrating causation of loss and estimating resulting damages.

Dr Rainer Nitsche from E.CA Economics serves as BIRA’s expert, while Dr George Houpis from Frontier Economics is Prof Stephan’s expert. Both experts possess substantial qualifications and experience in economics. However, they employed markedly different methodologies regarding the two abuses central to the cases. Of course, Dr Houpis also elaborated on his approach to the additional abuses alleged solely in Prof Stephan’s proceedings.

According to the CAT, Dr. Nitsche’s econometric methodology is workable and meets the Microsoft criteria; however, when evaluated against Dr. Houpis’ alternative, it preferred Dr. Houpis’ methodology.

Additionally, Dr. Houpis’ approach benefits from its resemblance to the methodology proposed by the economic expert in the Hammond proceedings. If the collective proceedings on behalf of merchants and the Hammond proceedings on behalf of consumers are both certified and then heard together, it is “highly desirable that they should use the same basic approach to the quantification of the effects of that aspect of Amazon’s conduct on which both proceedings rely.”

So, even though it is generally preferable to have a well-established trade association as the class representative, the CAT felt that the advantages of BIRA as CR are clearly outweighed by the factors favouring Prof Stephan, particularly the scope of the claims and the expert methodology. Consequently, the CAT determined that Prof Stephan’s case is the more suitable to go forward to a certification hearing.