Tribunal Blocks £500m Amazon-Apple Collective Action: The Implications of the Decision.
In a landmark decision, the Competition Appeal Tribunal (CAT) has blocked the certification of a £500 million collective action against Amazon and Apple, citing concerns over the independence of the proposed class representative, Professor Christine Riefa. This ruling marks the first time a collective action has been refused certification outright without offering the class representative a chance to amend the application.
The case, which alleged a secret deal between Amazon and Apple to restrict sales of Apple products on the Amazon Marketplace, has captivated the legal and commercial communities. However, the CAT’s decision raises important questions about the independence of class representatives and the process through which collective actions are structured.
The Heart of the Issue: Independence and Conflict of Interest
At the core of the CAT’s decision is the requirement for a class representative to act with full independence from their legal advisers and funders. In this case, the tribunal concluded that Prof Riefa, who had been selected by Hausfeld & Co. to lead the action, was overly reliant on her legal team and funder, Exton Advisors. This dependency, the CAT argued, compromised her ability to act as a truly independent advocate for the class.
The tribunal’s ruling is particularly significant because it highlights the potential conflict of interest that arises when class representatives are selected by law firms who have already partnered with third-party funders. While these arrangements are often viewed as necessary in large-scale cases, especially when the financial stakes are high, this judgment underscores the delicate balance that must be struck between funding arrangements and the interests of the class.
Prof Riefa, a respected consumer law academic, was paid £180 an hour, with a daily cap of £800, for her work on the case. However, her apparent lack of understanding of the arrangements and her hesitancy during cross-examination raised doubts about her ability to protect the class’s interests. The CAT expressed concerns about her role, noting that she failed to demonstrate the necessary understanding of the financial and legal implications of the action, particularly the potential conflicts of interest that could arise due to her relationship with the funder.
The CAT’s decision calls into question the sufficiency of current protocols for selecting class representatives, especially in light of the growing role of third-party litigation funding in collective actions. These funding arrangements are often crucial for enabling large-scale claims to proceed, but they also bring with them the potential for significant conflicts of interest, which must be carefully managed.
A Cautionary Tale for Class Action Law
The judgment highlights several important lessons for the future of collective actions in the UK. First, it underscores the critical importance of transparency and independence in the appointment of class representatives. The case also reinforces the need for greater scrutiny of third-party funding arrangements and the potential for these to influence the direction of litigation.
The tribunal’s concerns about the confidentiality of the litigation funding agreement (LFA) are also noteworthy. While the LFA was not deemed to be "manifestly excessive", the CAT expressed unease about key clauses that would have required Prof Riefa to prioritise the payment of the funder over the distribution of damages in the event of a successful claim. This raised questions about the extent to which the interests of the class could be sidelined in favour of the funder’s financial interests.
The ruling, though critical of Prof Riefa's role, also provides a pointed reminder that the integrity of the class representative is fundamental to the credibility of collective actions. As the tribunal explained, the class representative must not be "merely a figurehead" but must take a robust stance on behalf of the claimants. This is essential in ensuring that collective actions do not devolve into a situation where the interests of the class are subordinate to those of the solicitors or the funders.
A Missed Opportunity for Accountability?
From an opinion standpoint, the CAT's decision, while legally sound, could be seen as a missed opportunity to allow the case to proceed with the possibility of reformulation. Given the magnitude of the alleged anti-competitive conduct by Amazon and Apple, which could have far-reaching consequences for consumers and market competition, there is a legitimate argument to be made that the case merits closer scrutiny, even if the procedural hurdles are not entirely clear at this stage.
Although the decision to reject Prof Riefa as class representative seems justified given the concerns about her independence, it does highlight a broader issue within the UK’s collective action framework: the risk that the financial structure of class actions can unduly influence the conduct and outcomes of cases. A more flexible approach could allow for opportunities to correct such deficiencies while still allowing valid claims to be heard, rather than summarily dismissing them on technical grounds.
In the broader context, the ruling could be seen as a cautionary signal about the challenges facing collective actions in the UK. If claimants cannot secure a sufficiently independent and informed class representative, large companies may continue to evade scrutiny, even in the face of potential wrongdoing. While the importance of procedural integrity cannot be overstated, it is equally important to recognise the need for flexibility in the judicial process, particularly when matters of public interest are at stake.
What’s Next for Collective Actions?
Following this ruling, one could argue that the system for certifying class representatives in collective actions may need to be revisited. While the standards set by the CAT are appropriate for ensuring the integrity of the process, the decision raises questions about whether the UK’s current framework for collective actions is overly rigid.
The implications for future collective actions are significant. As more cases—particularly in the realm of competition law—seek to hold powerful corporations accountable for anti-competitive behaviour, the courts may need to refine the criteria for selecting and certifying class representatives. Without this, there’s a risk that valid claims may be prevented from progressing due to technicalities, rather than on the merits of the case itself.
For now, Hausfeld & Co. have indicated that they are reviewing their options following the ruling, and we can expect a more cautious approach to the appointment of class representatives in the future. Ultimately, the key lesson from this ruling is the need for greater independence in the class representative's role and the careful scrutiny of funding arrangements, which must prioritise the interests of the class members over those of the financial backers of the action.
The CAT’s refusal to certify this £500 million collective action is a significant moment in the development of UK competition law. While the tribunal was right to raise concerns about the independence of Prof Riefa as class representative, the decision also highlights the complex relationship between class representatives, solicitors, and funders in modern collective actions. Moving forward, the legal system must strike a balance between ensuring procedural integrity and allowing legitimate claims to proceed in the pursuit of justice. If not, we risk creating a system where powerful corporations can continue to sidestep accountability, while those seeking redress are blocked by technicalities rather than the substantive issues at hand.
“The tribunal was struck by the fact that Prof Riefa has only engaged with the confidentiality issue in terms of the need to respond to the tribunal’s concerns. She is clearly alive to the interests of the funder. She does not, however, appear to have considered sufficiently where the interests of the class members lie.”
The CAT said it did “not wish to be harsh to Prof Riefa, who is no doubt an accomplished scholar in her field”, and said it appear it was “quite common” for a PCR to become involved after solicitors have found a funder.
“The tribunal does not criticise this, but the case does underline the importance of the process by which those promoting the proceedings identify and recruit the PCR.”
In a statement, Hausfeld said: “We are disappointed by the ruling but it is important to note that this judgment does not criticise the substance of the case against Apple and Amazon.
“We are carefully reviewing the tribunal’s reasoning and reserve further comment as we examine our options.”
