Class actions focusing on banks and competition law breaches

Hart: ESG will become source of claims

The UK’s biggest banks are facing 109 class actions across different jurisdictions, 41 of them relating to interest rate swaps, research by City law firm RPC has shown.

Meanwhile, a separate study from Thomson Reuters revealed that the value of UK class actions against companies for competition law breaches multiplied more than six fold to over £26bn last year.

The most common type of case related to manipulation of LIBOR and other interest rate benchmarks (41 cases), followed by breaches of the US Anti-Terrorism Act (18), where banks processed transactions which claimants allege were destined for terrorist organisations.

These include claims against major banks for handling funds sent to Iran, which the lawsuit alleges were then used to fund terrorist attacks on US service personnel in places such as Iraq and Afghanistan.

Barclays faced the most class and group actions, with 41 cases, followed by HSBC with 31 and NatWest with 28.

RPC partner Simon Hart predicted that claims relating to environmental, social or governance (ESG) issues would soon be joining the list.

“It’s clear that the leading UK banks are still parties to an enormous number of legal disputes globally with customers and market counterparties.

“Many of these relate to legacy matters of compliance failings and market manipulation, the effects of which the banks are struggling to shake off.

“However, the range of actions both in terms of subject matter and jurisdictions highlight the ongoing legal risks faced by banks.”

Mr Hart forecast that the combination of asset price volatility, a recessionary environment and litigation funders looking for more cases meant it was realistic to expect the number of class and group actions to grow globally over the short to medium term.

Meanwhile, Thomson Reuters said the “dramatic increase” in competition law class actions was notable for its focus on technology and digital markets, responsible for 10 out of 14 applications made last year.

“In the most recent claim for up to £13.6bn, it is alleged Google abused its dominant position in adtech to the detriment of tens of thousands of websites and app developers.”

In another, with a preliminary damages estimate of up to £5bn, a major multinational was accused of abusing its dominant position on various digital gaming markets.

“Such is the growth of class actions in the UK that some US claimant law firms have opened UK offices to take on these kinds of cases.”

Researchers said one reason for the increasing number of actions was that litigation funders were “particularly keen” to fund them as liability had already been established by a European Commission case in many, meaning the disputed issues could be narrowed down to damages owed.

However, more recent claims were being made on a standalone basis, without relying on previous competition authority decisions.

“This additional hurdle has not however stopped these claims from obtaining funding from litigation funders,” Thomson Reuters said.

The UK was “becoming the destination of choice” for competition-related class actions, following the December 2020 decision of the UK Supreme Court in Merrick, the landmark £17bn claim against Mastercard, which allowed the case to proceed on an opt-out basis.

“Almost all recent collective damages applications made to the Competition Appeal Tribunal (in 2021 and 2022) were brought on an opt-out basis, although some claims proposed both opt-in and opt-out and asked the Competition Appeal Tribunal to choose its preferred method of claim.”

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