The Competition Appeals Tribunal has specified the circumstances in which defendants may or may not respond to correspondence received directly from proposed class members. The tribunal also ordered the proposed class representative to disclose information to the defendants on the nature of the proposed class members, grouped by broad categories such as industry sector and turnover so as not to identify individual members.
In Commercial and Interregional Card Claims Ltd v Mastercard Inc and others  CAT 1, proposed class representatives are seeking a collective proceedings order in order to bring claims on behalf of merchants against a number of credit card issuers who are said to have charged inflated and anticompetitive multilateral interchange fees (MIFs).
As the card issuers informed the tribunal, they frequently receive correspondence from merchants who potentially fall into the proposed class, seeking to enter into without prejudice discussions with a view to settling their disputes directly.
However, in the unrelated case of Mark McLaren Class Representative Ltd v MOL (Europe Africa) Ltd  CAT 53, the tribunal ruled that it is generally inappropriate for proposed defendants to correspond with proposed class members directly, because to do so runs counter to the objective of managing a large number of disputes more efficiently through collective proceedings than could be achieved through a multiplicity of conventional proceedings. The collective proceedings scheme envisaged that communications would flow through the class representative. If there were particular circumstances that required communication between the proposed class members and the proposed defendants, it should only be conducted with the prior permission of the tribunal and under its supervision. These principles were said to apply from the time the application for a collective proceedings order is filed.
Issues for the tribunal
At a case management conference, the card issuers made two applications:
- For permission to respond to settlement approaches from proposed class members;
- For information regarding the identities of the proposed class members, their responses (if any) to contact from the proposed class representatives, and certain details of their transactions with the card issuers.
Responses to settlement approaches
The tribunal noted that the card issuers had acted appropriately in seeking directions as to their correspondence with proposed class members. It took into account the following factors:
- The large number of merchants meeting the class definition and the variety of agreements they had with the card issuers
- The existence of multiple other proceedings involving MIFs, as a result of which a large number of merchants are already legally represented and likely to be able to make informed choices about their participation
- The need for merchants involved in existing proceedings to choose in due course whether or not to discontinue these in order to opt into the proposed collective proceedings
- The fact that the card issuers were seeking to respond to approaches made to them, not to initiate correspondence themselves
- The likelihood that a decision on the proposed collective proceedings order will follow relatively shortly, since a hearing is currently fixed for 3 April 2023.
Balancing the interests of the merchants in achieving an early settlement against the desirability of effective case management, the tribunal stated that negotiations with individual class members must not be “used as a pre-emptive tool to undermine the efficacy of the proposed collective proceedings.” The tribunal noted, in that regard, that the collective proceedings might become “less viable” if sufficient claims were settled.
After weighing these considerations, the tribunal distinguished between three categories of merchants:
- Those whose claims were clearly outside the scope of the proposed collective proceedings, e.g. because the claim periods did not overlap. The tribunal had no objection to the card issuers responding to approaches from these merchants.
- Those whose claims potentially fell wholly or partly within the proposed collective proceedings, but were already the subject of existing proceedings. The card issuers were given permission to respond to these merchants, provided they were legally represented and the representatives had been given notice of the collective proceedings. If these provisos were not met in a particular case, the card issuers should seek further directions from the tribunal.
- Those whose claims potentially fell wholly or partly within the proposed collective proceedings, but were not the subject of existing proceedings. The tribunal refused permission to respond to these merchants. If the card issuers believed that a different approach should be taken in a particular case, they should seek further directions.
Disclosure of class information
The tribunal recognised that the information sought was potentially relevant to whether or not a collective proceedings order should be made, since the considerations for the tribunal would include the extent and significance of any differences amongst class members. However, there was also a valid concern that disclosure of merchants’ identities at an early stage might deter them from participating in the collective proceedings.
The tribunal therefore ordered the proposed class representatives to disclose:
- The number of merchants who had expressed interest or registered to join the proceedings;
- The number of merchants who had not responded;
- A breakdown of the merchants in each of those categories by sector, domicile and estimated turnover within bands of £25 million.
This decision shows that the Competition Appeal Tribunal will carefully weigh competing interests in its case management decisions and, in doing so, will place a high priority on ensuring that the objectives of the collective proceedings regime are achieved.
Businesses who find themselves the target of a proposed collective action should consider carefully to what extent it is permissible or appropriate to correspond with potential class members directly rather than through the proposed class representative. Although the tribunal’s remarks were directed to a situation where a collective proceedings order had already been applied for, some of the points made – such as the potential for unfairly deterring participation in intended proceedings – could conceivably also apply prior to that stage. Particular care will be required when dealing with unrepresented claimants. This issue should be considered at an early stage of planning a litigation strategy. Once an application has been made, directions should be sought before engaging in any further communication, even if initiated by a potential claimant.