Home Office: Separate teams involved in case
The Competition Appeal Tribunal (CAT) has granted the first public sector collective proceedings order (CPO), with the Home Office as litigation funder and largest class member.
Separately, it has rejected the first standalone collective action – that is, a claim that was not a follow-on action from the findings of a regulatory or competition authority.
Mrs Justice Bacon, president of the CAT, said potential class members in the Home Office-backed claim were seeking damages of £600m to £650m in an opt-out action over “excessive and unfair prices” charged by the provider of emergency communication services, owned by Motorola.
As well as major national emergency services, potential class members include smaller fire and rescue services, local authorities, the coastguard and charities like the RSPCA.
The proposed class representative (PCR) is Clare Spottiswoode CBE, former director general of Ofgas, who estimates the likely size of the class as between 400 and 2,000 members. She is advised by City firm Ashurst.
Bacon J said the Airwave Network – owned and operated by Motorola – was “critical for national security, enabling emergency personnel to communicate securely”.
The CAT heard that the Competition and Markets Authority launched an investigation into mobile radio network services in 2021, concluding that the Home Office was “locked-in” with Motorola and had “very weak bargaining power”. It imposed a “charge control”, limiting the price for services from August 2023.
Ms Spottiswoode claims that, between 1 January 2020 and 31 July 2023, Motorola held a dominant position in the market for the supply of radio communications network services for public safety and ancillary services, and abused it by charging unfair prices.
In making the CPO, Bacon J rejected various Motorola arguments, including that the action should be opt-in, not opt-out. There was evidence that “the time and resources required to make active decisions on opting in to the proceedings” meant that “at least some” police forces would not do so.
The same was true of smaller fire and rescue services, local authorities, and charitable organisations. An example was given of the Loch Lomond Rescue Boat Service, which paid annual charges for services of £1,500 to £2,000.
The CAT did not accept that opt-in proceedings would provide a “better balance” between the Home Office and other class members.
It said the Home Office has established two separate teams, one to manage the litigation funding agreement and the other to represent the secretary of state’s interests as class member.
“The employees assigned to these two teams have signed undertakings to give effect to a series of arrangements to establish and maintain this separation and independence.
“These include that the teams should work in different offices, and that the funding team will approve invoices for the PCR’s legal costs, without the involvement of or communication from the other team.”
Motorola also expressed concern about the scope of exclusion clauses in the litigation funding agreement that would allow the Home Office to challenge its liability for adverse costs if the PCR acted unreasonably.
The PCR’s position was that there was “no realistic prospect” that the exclusion clauses could lead to a position where Motorola would be unable to recover an adverse costs award.
But the CAT approved additional clauses agreed by the parties that narrowed the scope of the clauses.
Via another department, the Department of Business and Trade, the government is currently receiving responses to its call for evidence [1] over the operation of the collective action regime.
Separately, the CAT last week found against class representative Justin Gutmann in the boundary fares litigation, the first stand-alone opt-out claims in the tribunal.
It ruled that, on the assumption that the defendants –First MTR South Western Trains, London & South Eastern Railway and Govia Thameslink Railway – each held a dominant position, “none of the conduct alleged against them constitutes an abuse of that position”.
Mr Gutmann’s solicitors, London firm Charles Lyndon, said: “We are disappointed in the outcome following seven years of hard work, particularly in light of the fact that one of the train operating companies settled before trial [2]; however, we are grateful to all those who have stood with us along the way…
“We are considering the judgment and any next steps with the class representative, counsel, and our funder.”
In a message on LinkedIn, Mr Gutmann said Charles Lyndon “did everything you could. I could not wish for better support since January 2018. We won the moral argument. Onwards”.
Class action firm Hausfeld was co-counsel until February 2024; the case was funded by Woodsford.
In better news for Mr Gutmann and Charles Lyndon, the Supreme Court has refused Apple permission to appeal April’s Court of Appeal decision [3] that the CAT can order payment to litigation funders and lawyers from a damages award ahead of the class in collective actions.
In a statement, Charles Lyndon said: “This outcome brings welcome certainty for all stakeholders in the collective proceedings regime, and confirms that the CAT is empowered broadly to use its discretion in the face of the myriad different circumstances it may be faced with at the conclusion of proceedings.”
Balance Legal Capital is funding this action.