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First opt-out class action withdrawn as potential costs outweigh damages

The UK's first 'opt-out' class action claim has been withdrawn on the basis that its costs would outweigh the potential damages available.05 Jun 2017

National Pensioners Convention (NPC) general secretary Dot Gibson launched the claim last year against Pride Mobility Products, arguing that the company had breached competition law and overcharged around 30,000 customers. The claim followed an Office of Fair Trading (OFT) finding of illegal resale price maintenance (RPM) by Pride in 2014.

The claim was the first case filed in the wake of the introduction of opt-out collective action rules through the 2015 Consumer Rights Act. They allow damages actions to be brought on behalf of groups of individuals in certain circumstances, regardless of whether they have actively 'opted in' to the claim. Previously, collective actions could only be brought on an 'opt in' basis, and by a listed 'representative body'.

Such claims can only proceed after a certification hearing by the Competition Appeals Tribunal (CAT), which decides whether or not the claim can proceed on a collective basis. In the case brought by Gibson the CAT hearing lasted three days and involved an examination of the proposed economic analysis behind the claim, which estimated that damages would be worth between £2.7 million and £3.2m, before interest.

In March the Competition Appeals Tribunal (CAT) handed down judgment, expressing significant concerns with the economic approach to the claim. It adjourned the application to give Gibson the opportunity to amend her claim.

On Friday the NPC said Gibson was withdrawing the claim, having decided it was “not worth enough money to proceed given the costs”.

Competition law expert Ben Lasserson of Pinsent Masons, the law firm behind Out-Law.com, said: "The CAT took a permissive approach, allowing a 'second bite at the cherry' in terms of the certification application, but in this particular instance the level of potential damages available meant that it did not make sense to pursue the claim further. 

“The CAT's judgment nevertheless offers helpful guidance as to the approach that will generally be taken to certification in future cases.  In particular, applicants should expect their economic methodology to damages to be scrutinised carefully even at this early stage,” Lasserson said.