Microsoft: Claim to proceed
The Competition and Appeals Tribunal (CAT) has approved a £1.7bn opt-out collective action against Microsoft despite admitting that “a degree of uncertainty” surrounded its funder.
Litigation Capital Management (LCM) has been in difficulties for some time and its share price fell to an all-time low of 3.9p last month after it revealed a £58m loss in the last six months of 2025.
A strategic review of the business has been going ongoing since last autumn its directors said there was material uncertainty whether LCM might be able to continue.
The CAT was told that LCM’s lender, Canadian investment firm Northleaf Capital Partners, provided a $75m (£55m) facility, which was renewed in December 2024 with the potential to double it.
The CAT said that although appointment of a proposed class representative (PCR) for a collective proceedings order “no doubt carries with it an expectation that funding will be available to carry the proceedings through to trial, that is not the same as saying there must be absolute certainty.
“We only have to be satisfied that the appointment is just and reasonable, and so we consider that a reasonable expectation of funding should be sufficient; and a reasonable expectation can exist even where there is some doubt.”
The CAT said counsel for the PCR argued that 62% of the funding sourced by LCM for the claim against Microsoft was “capital derived from funds under management”, as opposed to coming from LCM itself.
“That percentage of the funding is thus not exposed to any risk arising from the position of LCM Ltd. The overall costs budget for the claim put forward by the PCR totals some £14m. Thus, roughly £8.7m is to come from third-party funders, outside the LCM structure.”
The CAT said there was “a risk associated with the remaining 38%, or £5.3m, of the overall budgeted figure”, but it did not consider “the level of risk is such as to persuade us at this stage” to refuse the claimants’ application.
Although “a degree of uncertainty surrounds LCM, the level of concern we have is not such as to persuade us that it would not be just and reasonable to appoint the PCR as class representative”.
The claim, brought by digital markets regulation expert Dr Maria Luisa Stasi as PCR, seeks compensation for around 59,000 businesses and organisations which used Microsoft’s Windows Server on rival cloud services and allege that they were overcharged. The CAT said aggregate damages were estimated to be “in excess of £1.7bn”.
Microsoft argued that the application for a collectivep proceedings order should be dismissed in whole or in part for various reasons, including the questions around LCM’s solvency.
The CAT, chaired by Mr Justice Adam Johnson, noted that LCM’s latest accounts listed assets totalling £41m, while it also had access to the Northleaf facility.
“Weighing the evidence here, we are sufficiently reassured there is a reasonable expectation of funding being available under the PCR’s proposed arrangements, even as to the 38% share to be provided by LCM itself.
“Even were that not to be the case, there is the further point made by the PCR’s solicitor in evidence, that alternative funding should in any event be available from the litigation funding market if needed, given the present state of the market and the fact that a claim which is already certified would likely be viewed favourably as a funding proposition.”
The CAT said the PCR’s solicitors, Scott+Scott, had written to it in December last year to remove “any ambiguity” around the basis on which LCM could terminate the litigation funding agreement on the footing that the merits of the claim were no longer satisfactory or it was no longer considered economically viable.
This confirmed that the assessment of whether to terminate should be made by reference to “independent legal and, if appropriate, expert advice” obtained by the funder.
The CAT said: “In the circumstances, we are satisfied that the proposed funding and governance arrangements put forward by the PCR support the conclusion that it is just and reasonable to confirm her position as class representative.”
It ruled that the claim was appropriate for certification on an opt-out basis and made the order.
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