London & South Eastern Railway Ltd, First MTR South Western Trains Ltd & Stagecoach South Western Trains Ltd v Justin Gutmann
| Jurisdiction | England & Wales |
| Judge | Lord Justice Green |
| Judgment Date | 28 July 2022 |
| Neutral Citation | [2022] EWCA Civ 1077 |
| Docket Number | Case No: CA-2021-003329; CA-2021-003328; CA-2021-003339 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 1077
THE CHANCELLOR OF THE HIGH COURT
( Sir Julian Flaux)
Lord Justice Green
and
Lady Justice Whipple
Case No: CA-2021-003329; CA-2021-003328; CA-2021-003339
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Competition Appeal Tribunal
Mr Justice Roth (President), Simon Holmes, Professor Robin Mason
[2021] CAT 31
Royal Courts of Justice
Strand, London, WC2A 2LL
LSER — Paul Harris QC, Anneliese Blackwood, Michael Armitage, Cliodhna Kelleher (instructed by Freshfields Bruckhaus Deringer LLP)
First MTR SW — Daniel Jowell QC, Fiona Banks (instructed by Slaughter & May)
Stagecoach — Daniel Jowell QC, Jonathan Scott (instructed by Dentons UK & Middle East LLP) for the Appellants
Philip Moser QC, Stefan Kuppen, Alexandra Littlewood (instructed by Charles Lyndon Ltd and Hausfield & Co LLP) for the Respondent
Hearing dates: Monday 13th — Wednesday 15th June 2022
Approved Judgment
A. Introduction
This is the single judgment of the court.
Before the Court is an appeal against the judgment of the Competition Appeal Tribunal (“ CAT”) of 19 th October 2021 by which the CAT granted two applications by a representative acting for a proposed class of claimants (“ the class representative”) for collective proceedings orders (“ CPOs”). In that judgment the CAT dismissed applications made by the defendants to strike out the claim or part of it and/or for reverse summary judgment.
The claim is brought pursuant to section 18 Competition Act 1998 (“ CA 1998”) which is known as the “Chapter II prohibition”. Section 18(2)(a) prohibits unfair purchase or selling prices or other unfair trading conditions:
“18 Abuse of dominant position.
(1) Subject to section 19, any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom.
(2) Conduct may, in particular, constitute such an abuse if it consists in—
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.
(3) In this section—
“dominant position” means a dominant position within the United Kingdom; and
“the United Kingdom” means the United Kingdom or any part of it.
(4) The prohibition imposed by subsection (1) is referred to in this Act as “the Chapter II prohibition”.
The applicant in both cases is Mr Justin Gutmann. The claim in both cases is that the defendants, who are train operating companies (“ TOCs”), unlawfully abused a dominant position by failing to make so-called “ Boundary Fares” sufficiently available to consumers holding valid “ Travelcards” issued by Transport for London (“ TfL”).
Travelcards are TfL zonal tickets permitting unlimited travel on London's public transport network. This includes not only TfL's own services but, in addition, those of National Rail within their zone of validity excluding certain lines such as Heathrow Express. Travelcards can be issued for variable time periods and for a range of zonal combinations. There are in total nine TfL zones. However, zones 1 – 6 are the main zones and cover approximately 99% of all valid Travelcards.
A Boundary Fare is a form of add-on or supplementary ticket for use in conjunction with the Travelcard for travel to/from the outer boundary covered by the Travelcard from/to the destination. If a consumer wishes to travel from central London to a destination on (say) the south coast, that consumer will travel from central London (A) to the boundary station of the Travelcard (B) and then onward to the destination (C). In this A-B-C journey the purchase by the consumer of the Travelcard should entitle the consumer to treat the A-B leg as having already been paid for with the consequence that the consumer should be charged only for the B-C leg. The nub of the claim is that the defendant TOCs failed to make Boundary Fares available either at all or in a way that was sufficiently available. The practical effect was that for a high percentage of journeys consumers with Travelcards paid the full fare and not the appropriate Boundary Fare. Put another way TOCs charged twice for the A-B leg of the journey.
The claims relate solely to journeys out of, but not into, London. It was explained to the CAT that the claim had been framed in this manner for the sake of simplicity. The class is estimated to comprise about three million individuals who have suffered individual losses of about £33 – £55. The average claim per journey is about £5. The total claim against the defendants combined is about £93 million.
The claim concerns Boundary Fares on two rail franchises: The South-Western franchise and the South-Eastern franchise. In both cases the claim covers the period from the 1 st October 2015 to the date of final judgment or earlier settlement of the claims (in the case of the South Western franchise) or at 2am on the 17 th October 2021 (in the case of the South Eastern franchise). The CAT treated the claims as substantially identical and with the consent of all parties, directed that the two applications be heard together and that evidence in the one would stand as evidence in the other so far as relevant.
In relation to the South-Western franchise, during the relevant period there were two respondent TOCs to the first application: First MTR South Western Trains Limited (“ First MTR”) which held the franchise from and including the 20 th August 2017; and, Stagecoach South Western Trains Limited (“ Stagecoach”) which held the franchise from 4 th February 1996 until 20 th August 2017. The South-Eastern franchise was held from the commencement of the relevant period until the 17 th October 2021 by London South Eastern Railway Limited (“ LSER”).
The definition of the class, as certified by the CAT, was in broad terms and encompassed “ all” persons who held a Travelcard and who paid a full fare:
“ Class definition
5. The class of persons (the “ Class”) whose claims are certified for inclusion in the Collective Proceedings includes—
All persons who, at any point during the Relevant Period purchased or paid for a rail fare for themselves and/or another person, which was not a season fare or a Boundary Fare or a fare for the portion of their journey from the last station covered by their Travelcard to their destination, where:
a. the person for whom the fare was purchased held a Travelcard valid for travel within one or several of TfL's fare zones (the “ Zones”); and
b. the rail fare was for travel in whole or in part on the services of the Defendant(s) from a station within (but not on the outer boundary of) those Zones to a destination beyond the outer boundary of those Zones (including fares for return journeys).
Whereby:
“Relevant Period” shall mean the period between 1 October 2015 and, in Case No. 1304/7/7/19, the date of final judgment or earlier settlement of the Claims, or, in Case No. 1305/7/7/19, 2am on 17 October 2021;
“Travelcard” shall mean a Transport for London (“ TfL”) zonal ticket; and
“Boundary Fare” shall mean a fare valid for travel to or from the outer boundaries of TfL's fare zones, intended to be combined with a Travelcard whose validity stretches to the relevant zone boundary.”
The CAT ordered certification upon an opt-out basis. It directed that every person falling within the description of the class domiciled in the United Kingdom on the 19 th October 2021 should be included in the collective proceedings. Any person falling within the class could opt out of the proceedings according to a process set out in the order.
As explained in greater detail below, the defendants unsuccessfully sought to strike out the applications and/or obtain reverse summary judgment. The CAT refused permission to appeal.
The proceedings concern Travelcards available for combinations within zones 1 – 6:
i) Peak Day Travelcards are valid for travel at any time of day and are available in two combinations covering either zones 1 – 4 or zones 1 – 6;
ii) Off-peak Day Travelcards are valid for travel at any time after 9.30am on weekdays and at any time at weekends and public holidays but are available only for zones 1 – 6;
iii) Seven day or longer Travelcards are valid for travel at any time and are available in any combination of two or more adjoining zones.
The arrangements for the provision and honouring of Travelcards are governed by a Travelcard Agreement signed on the 15 th October 1995 (the “ Travelcard Agreement”). This is (for practical purposes) between TfL and the TOCs. This is a complex arrangement which has been subject to a series of subsequent amendments, modifications and restatements. The full terms of these arrangements were placed before the court subject to a confidentiality ring. It is unnecessary to delve into the detail. It suffices to record that in recital (B) to the Travelcard Agreement it is recorded that upon implementation of the restructuring of the passenger rail industry as contemplated by the Railways Act 1993:
“…the Operators will be operating passenger rail services and will be required to provide and honour Travelcards”.
(Emphasis added)
The arrangements include complex terms governing the apportionment of total revenue generated by the...
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