UK Competition Litigation Quarterly Update: Q3 2025

The Court of Appeal has dismissed Phones 4u’s appeal in the long-running standalone litigation brought by the now-defunct retailer against Vodafone, EE, O2 and their respective parent companies after its collapse in 2014.  

As a reminder of the background to this litigation, the Phones 4u retail chain collapsed into administration in 2014. In December 2018, its administrators brought a claim alleging that the decisions to withdraw from Phones 4u by each of O2, Vodafone UK and EE were taken following collusion between those entities or their respective parent companies (then Deutsche Telekom, Orange, Telefonica and Vodafone). Each of the telecoms companies denied those allegations and argued strongly, amongst other things, that their respective decisions to withdraw from Phones 4u followed a robust and wholly independent commercial analysis.

In a judgment handed down in November 2023, the High Court rejected all of Phones 4u’s claims. Following a major litigation process spanning a number of years and culminating in a 35 day trial with nearly 40 factual witnesses, Mr Justice Roth found that none of the defendants was in breach of either UK or EU competition law as Phones 4u had alleged. 

Phones 4u sought to challenge this decision in a five-day hearing in front of the Court of Appeal in May 2025. Its grounds of appeal were varied and included both alleged errors of law and, to a certain extent, Mr Justice Roth’s findings of fact at first instance. 

Two key aspects of Phones 4u’s grounds of appeal centred on the Judge’s alleged failure properly to apply the law on collusion and public distancing, and on his alleged omission to deal with and/or properly recall certain material evidence against the background of the 15-month delay in handing down his judgment. On this first aspect, the Court of Appeal heard submissions from the Competition and Markets Authority (as intervener), as a reflection of the important points of principle raised by certain of Phones 4u’s arguments in respect of the application and enforcement of competition law in the UK. On this second aspect, the judgment provides useful guidance on the approach to be taken by appellate courts to delayed judgments, confirming that the extent to which such a delay is prejudicial will depend on the specific circumstances of any given case.

In its judgment handed down on 11 July 2025, the Court of Appeal rejected unanimously Phones 4u’s appeal in its entirety. The judgment contains important guidance on what constitutes a concerted practice and on the high bar claimants must meet in making out a collusion claim, particularly one based on adverse inference, which Phones 4u failed to meet. The Court of Appeal’s decision marks a clear and comprehensive victory for the mobile network operators in what has been, in the Court of Appeal’s words, “a complex, hard-fought case” involving a number of serious – and unproven – allegations against senior executives of the defendants.     

The latest progress report published by Phones 4u’s administrators confirmed that they will be not be applying for permission to appeal to the Supreme Court. The Court of Appeal’s decision therefore brings to an end one the of the largest standalone competition cases in English court history, over ten years since Phones 4u’s collapse in 2014. 

The Court of Appeal’s judgment can be found here, and you can read more about our involvement in this high-profile litigation here.

(Case CA-2024-000204 – Phones 4U Limited v EE Limited & others)

The Competition Appeal Tribunal has held that the Mastercard and VISA scheme rules setting the multilateral interchange fees charged in the UK and Ireland by default on card transactions are anti-competitive, even in circumstances where they were capped by regulation or commitments given by the companies. The CAT agreed with claimants that the appropriate counterfactual was the absence of any MIF, rejecting the payment card companies' proposed counterfactuals involving MIFs being set bilaterally or unilaterally.

On 27 June 2025, the Competition Appeal Tribunal (CAT) handed down its judgment in the first of three trials in the ‘Umbrella Interchange Proceedings’.  

These proceedings brought together circa 2,100 claims using the CAT’s ‘umbrella proceedings’ procedure, which facilitates common issues in multiple claims being case managed and tried together (however, that number has since fallen following a series of settlements). The claimants are merchants who allege that the multilateral interchange fees (MIF) charged in the UK and Ireland were anti-competitive such that they were overcharged by paying them.

The MIF is paid by the merchants on card transactions between them and the ‘acquirer’ banks that they contract with to process customer payments. The MIF is set at a default value in accordance with the rules of the relevant scheme (which bind the merchants) in the absence of an agreed alternative fee. 

The core issue in the proceedings being determined in this first trial was whether the rules that set the default MIF applicable to transactions constituted an infringement of Article 101(1) TFEU. On this, the CAT agreed with the claimants that the scheme rules imposed a floor on the MIF payable by merchants that constituted an anti-competitive restriction. 

The CAT was unanimous that in the periods prior to the MIF being capped by the introduction of the EU Interchange Fee Regulation introduced in 2015 (IFR) and/or certain commitments given by the payment card companies to the European Commission, the imposition of the MIF by default was a restriction of competition by object. The CAT was also unanimous that the post-IFR interchange fees also constituted a competition law infringement. However, the CAT was split 2-1 on whether the default MIF constituted a by-object infringement even when it was capped - the majority held that the capped MIF was not a by-object infringement, but went on to find that it was an infringement by effect. 

The judgment establishes that the claimants were overcharged, subject to possible exemption of the restriction under Article 101(3) and issues of pass-on, as to which see below.

A key focus of the trial was a “battle between counterfactuals”: what would have happened but for the rules setting the default MIF? The panel was unanimous in rejecting the counterfactuals advanced by the payment card companies, namely that fees would have been set through negotiation between issuer and acquirer banks, or that, in the absence of such bilateral agreement, the issuer banks would have imposed interchange fees unilaterally (subject to any cap). The CAT agreed with the claimants that the realistic counterfactual was one where there was no MIF at all. 

Judgment is awaited in the second trial, in which the CAT will determine whether and to what extent the MIF was passed on (i) by acquirer banks to merchants (an argument which the claimants rely upon for establishing loss), and, in turn, (ii) from merchants to card users (and thereby mitigating the merchants’ loss). 

It also remains to be decided whether the scheme rules that set the default MIF can be justified by the defendants as falling within the Article 101(3) exemption for restrictions of competition that produce economic benefits that outweigh the anti-competitive effects. That issue will be considered in a third trial.  

The CAT’s judgment can be found here.

(Case 1517/11/7/22 (UM) – Umbrella Interchange Fee Claimants v Umbrella Interchange Fee Defendants)

The UK Government has launched a call for evidence to inform a review of the opt-out collective proceedings regime for competition claims in the Competition Appeal Tribunal. The call for evidence is comprehensive, focussing on access to redress, funding, scope and certification of cases, alternative dispute resolution, settlement, damages and distribution. The Government is also using this review to gather evidence on whether the regime is striking the right balance between consumer redress and the potential burden that the increased exposure to litigation can present for businesses.

On 6 August 2025, the UK Government launched a call for evidence on the opt-out collective actions regime for competition claims brought in the Competition Appeal Tribunal (CAT). The procedure enables claims to be brought by a ‘class representative’ on behalf of a class of persons said to be affected by anti-competitive conduct without requiring individual class members to take any active steps to participate in the proceedings. Over fifty such cases have been brought since the regime was launched in 2015, and the aggregated headline claim value of the active cases exceeds £100 billion.  

In launching the review, the call for evidence references the CAT’s significant caseload, how the value of claims has far exceeded initial expectations, and the unexpected makeup of cases, both in terms of the majority of cases being standalone and the range of cases certified. We understand this latter point to refer to attempts made (with mixed success) to shoehorn claims that might more naturally be framed as consumer law, data protection and environmental claims into the opt-out regime as competition claims.

The call for evidence poses 31 questions in total, grouped around access to redress, funding, scope and certification of cases, alternative dispute resolution, settlement, damages and distribution. 

The review will consider relevant aspects of the recently-issued final report of the Civil Justice Council (CJC), which proposed wide-ranging reforms to litigation funding. The report included various recommendations for the regulation of funding of collective proceedings brought on behalf of consumers in particular. For further information on the CJC’s report, please our article here. The call for evidence highlights particular aspects of the CJC’s report that the Government appears particularly interested in, including whether the way litigation funders’ share of settlement sums or damages awards is approached currently is fair and proportionate, whether funding agreements are fair and transparent for class members, and how conflicts of interest between litigation funders, class representatives and class members should be managed. 

The call for evidence strongly emphasises the role for alternative mechanisms for consumer redress, which the Government considers should be the primary route for consumers being compensated. Although the regime introduced in 2015 enabled companies to develop redress schemes for competition law infringements, in practice those mechanisms have gone unused. The Government therefore asks respondents how such schemes and ADR could be made more attractive. 

Outside of the competition sphere, mass litigation can only generally be brought using procedures which require the active consent of each represented claimant. Since the call for evidence asks respondents whether the current scope of the regime is appropriate, the review is likely to be treated as an opportunity for claimant law firms and litigation funders to push for the regime to be expanded into other areas (such as consumer law, data protection and environmental claims) to advance that agenda.

However, the call for evidence expressly recognises the potential burden that the increased exposure to litigation can present for businesses, and how the aim of achieving redress for consumers needs to be balanced with limiting that burden to what is proportionate.  

The call for evidence closes on 14 October 2025. The Government has indicated that the responses will inform proposals to reform the opt-out collective proceedings regime, which will be subject to a consultation in due course. 

The call for evidence can be found here.

On 1 August 2025, the Court of Appeal handed down its judgment refusing the class representative, Justin Le Patourel, permission to appeal. This decision marks the end of the line for the first opt-out collective action to go to trial in the CAT.

In its judgment handed down on 19 December 2024, the CAT unanimously dismissed the collective action brought by Justin Le Patourel against BT, which alleged excessive and unfair pricing in relation to BT’s landline telephone services. You can read more about the CAT’s judgment in our previous article here.

Le Patourel, having been refused permission to appeal by the CAT, sought permission from the Court of Appeal, advancing four principal grounds of appeal. Following an oral hearing on 16 July 2025, the Court of Appeal refused permission in relation to all four grounds and upheld the CAT’s decision.

The grounds of appeal and the Court of Appeal’s decision on each ground are briefly summarised below: 

1. The CAT had erred by not drawing adverse inferences from BT’s failure to disclose certain cost data and by giving undue weight to BT’s expert evidence on indirect costs.

   The Court held that the CAT was within its discretion to evaluate the evidence and was not required to draw adverse inferences.

2. The appeal challenged the CAT’s approach to allocating costs, arguing that the CAT had, in reaching its conclusion on this issue, irrationally relied on an analysis developed by BT’s expert despite it having criticised that same analysis as being unreliable for a number of reasons.

   The Court found that the CAT’s reference to this analysis was limited and that it had in fact adopted its own balanced, pragmatic approach to the allocation of costs.

3. The CAT had erred in concluding that the prices charged by BT, which exceeded its cost of providing the service plus an appropriate return on capital employed, were justified and fair, and its decision was not adequately reasoned.

   The Court emphasised the margin of discretion that must be accorded to the CAT in making these kinds of determinations and concluded that the complaints were, in essence, challenges to the CAT’s factual findings, and the threshold for findings constituting an error of law was not met. The Court also held that the CAT’s decision was adequately reasoned, and it would place an unreasonable burden on the CAT to require more.

4. The fourth ground of appeal concerned the CAT’s finding that it could not award compound interest.

   The Court deemed this ground academic given the dismissal of the first three grounds and therefore declined to consider it.

The Court of Appeal’s decision strongly affirms the broad discretion afforded to the CAT, particularly in complex economic areas like cost allocation and assessing the ‘economic value’ of a service.  The Court emphasised that challenges relating primarily to the weighing of evidence do not typically amount to an appealable error of law, and it could not interfere with the CAT’s determinations on points such as these absent any irrationality or error of law.  The decision is therefore a reminder of the high bar for any party appealing an evaluative assessment made by the CAT in its judgments.

The fact that the Court decided to hold an oral hearing, as opposed to determining the application for permission to appeal on the papers in the usual way, is also noteworthy.  The Court acknowledged that the appeal raised complex issues and clearly considered it necessary to consider detailed written submissions and hear oral argument before reaching a decision that could confirm the failure of the first collective action in which a final trial judgment has been handed down.

The decision spells the end of the road for the claim.  The outcome highlights that, although collective actions may be subject to a low threshold for certification by the CAT, claims remain subject to the usual rigorous interrogation when they proceed to a full trial on the merits.

The Court of Appeal’s judgment can be found here.

(Case CA-2021-000748 – BT Group Plc & others v Justin Le Patourel)

The CAT has now refused to certify collective proceedings for a third time, in a case which had been brought by the proposed class representative (PCR), Dave Rowntree (the drummer in the band Blur) against the Performing Rights Society Limited (the PRS).  

The PRS is the collective management organisation for the UK’s music industry. It collects and distributes performing rights royalties for music copyright works to its members. Part of PRS’s role is to work out who is owed royalties, based on music usage. In some cases, it cannot match the music to the person who is owed the royalty – this might happen if it has missing or inadequate data about songs or songwriters. 

The complaint at the heart of Rowntree’s case was about the PRS’s approach to distributing these unmatched “Black Box” royalties.

The PRS distributes Black Box royalties on a pro rata basis; this results in their being distributed in the same proportion as matched royalties. This was said, by Rowntree, to be unfair and an abuse of dominance because more of the Black Box royalties are owed to songwriter members of the PRS membership than are owed to publisher members of the PRS. The alleged unfairness was not the failure to match royalties, but the failure to distribute the Black Box royalties to songwriters appropriately.

The claim was struck out in its entirety. Key to PRS’s application for summary judgment/strike out was the contention that because individual songwriters did not have claims against the PRS, songwriters as a class also did not have a claim against the PRS. The CAT agreed and concluded that the writers who receive unmatched Black Box royalties as a result of them being redistributed have no entitlement to those royalty revenues collected by PRS. The people who might be owed Black Box royalties are those who could not be identified by the PRS (and therefore could not be paid). But the PCR’s proposed class had not been drawn to describe the songwriters who could not be identified but all songwriter members of the PRS.

It followed that the PSR’s application for summary judgment and strike out succeeded.

The CAT found that there were further problems with the Rowntree application. The CAT expressed concerns about whether the cost-benefit of the proceedings favoured certification, noting that the class may in effect find itself contributing to the costs of the litigation, including any payment of damages, if the claim is successful, as a proportion of PRS’s revenues (from which royalties are paid to members) could end up being diverted to meet those costs.

The Tribunal also expressed concerns about the estimated size of costs as a proportion of damages, and was unconvinced by the PCR’s argument that the Tribunal should have regard not just to the size of the damages claim but also to the impact a successful claim would have on distribution of future revenues. The Tribunal emphasised that there were other ways that concerns about the fairness of the distribution mechanics could potentially be addressed, such as by making representations to PRS’s governing bodies (which had not been attempted).  

The judgment should also provide a steer to prospective PCRs on the requirement to show a “blueprint to trial” – the PRS argued that Rowntree’s application failed to do so. The CAT has previously indicated that the test for certification does not require the PCR to provide answers to exactly how the case will be tried, but the PCR must have a plausible methodology for reaching those answers. The PRS’s position was that the application failed to meet this standard because the PCR had failed to specify a counterfactual. In other words, the application did not do enough to explain how the Black Box royalties should be distributed, but for the alleged abuse.

On this, the CAT agreed with the PRS. The expert report which Rowntree relied on in support of his application suggested that data might be used to work out the expected distribution to writer and publisher members. But this was insufficient, the CAT held, as the PCR had not gone far enough to present “a plausible approach” to identifying how sums should be paid to songwriter members in the counterfactual.

Interestingly, the CAT clarified that had the application not failed for the other reasons described in this article, it would have been open to affording the PCR a further opportunity at formulating its counterfactual and therefore make out its blueprint to trial. Even if there are imperfections in it, the CAT needs to see a methodology based on a counterfactual. That methodology must be plausible and not merely hypothetical. 

The CAT’s judgment can be found here.

(Case 1634/7/7/24 – Mr David Alexander de Horne Rowntree v (1) Performing Rights Society Limited and (2) PRS for Music Limited)

You can read about the previous two collective action cases which were defeated at the certification stage in our Q1 Quarterly Update here.