Judgment (CPO Application)

Judgment of the Tribunal in connection with two applications by the Applicant, Mr Justin Gutmann, for a collective proceedings order (“CPO”) pursuant to s. 47B(4) of the Competition Act 1998 (the “CA”). One case concerns the practice of the train operating companies (“TOC”) on the south-western rail franchise (“the SW franchise” or “SWF”) and the other concerns the practice of the TOC on the south-eastern rail franchise (“the SE franchise” or “SEF”), in both cases during the period 1 October 2015 to the date of final judgment or earlier settlement of the claims.

Since there was a change in the TOC operating the SW franchise in the relevant period, there are two respondents to the first application: First MTR South Western Trains Ltd (“First MTR”), which has held the franchise since 20 August 2017, and Stagecoach South Western Trains Ltd ("Stagecoach"), which held the franchise from 4 February 1996 to 20 August 2017.  The SE franchise has been held since the start of the relevant period until the date of the application by London & South Eastern Railway Ltd (“LSER”) and it is accordingly the sole respondent to the second application.

In both cases, the Applicant alleges that the Respondents abused a dominant position, contrary to the Chapter II prohibition under the CA, by failing to make so-called Boundary Fares sufficiently available and/or to use their best endeavours to ensure general awareness among their customers of Boundary Fares, so that customers who held Transport for London ("TfL") Travelcards and took journeys beyond the outer zone covered by their Travelcard would not purchase a fare covering the totality of their journey (i.e. from point of origin to point of destination, referred to as a "full journey" fare), but only a Boundary Fare to supplement their Travelcard.  A Boundary Fare is a form of extension ticket for use in conjunction with the Travelcard for travel from the outer boundary covered by the Travelcard to the destination.

The Tribunal: (i) rejected the summary judgment/strike out applications advanced by the Respondents; (ii) authorised the Applicant to act as the class representative in both proceedings; and (iii) found that the claims raised common issues and are suitable to be brought in collective proceedings.

In relation to (i), the Tribunal held that the Applicant’s case on abuse was reasonably arguable. If the charging of unfair and excessive prices, or the use of unfair trading terms, by a dominant company can constitute an abuse, the Tribunal did not regard it as an extraordinary or fanciful proposition to say that for a dominant company to operate an unfair selling system, where the availability of cheaper alternative prices for the same service is not transparent or effectively communicated to customers, may also constitute an abuse.

In respect of (ii), having regard to the considerations set out in rule 78, the Tribunal was satisfied that it is just and reasonable for the Applicant to act as the class representative in the two actions.  He accordingly satisfied the authorisation condition.

Finally, in relation to (iii), the Tribunal concluded that the following common issues arise in the claims of the proposed class members against each Respondent:

1. whether the Respondent held a dominant position at the relevant time;

2. if it held a dominant position, whether it abused that position:

(a) to the extent that Boundary Fares were not available from the Respondent outlets; and

(b) to the extent that Boundary Fares were not available for all discounted fares, in particular Advance Fares; and

(c) to the extent that where Boundary Fares were available, there was a widespread failure to mention or explain this to customers;

3. whether if Boundary Fares were available for all the Respondent’s outlets and/or made known more widely, independent third party sellers would themselves have offered Boundary Fares and/or made them known to customers;

4. whether a customer who was aware of a Boundary Fare and had the opportunity to purchase it, would have done so; and

5. whether a customer failed reasonably to mitigate their loss by not purchasing a point-to-point fare from the last station covered by their Travelcard to their destination.

As regards the additional hurdle under rule 79(1), the Tribunal held that the claims are brought on behalf of an identifiable class of persons, and that overlaps substantially with the consideration under rule 79(2)(e). Accordingly, this requirement was satisfied.  Subject to the question of passengers purchasing season tickets, the Tribunal did not consider that the class is defined too broadly save for one qualification. Since the class is defined in terms of rail fares purchased, it should exclude point-to-point fares purchased for use in conjunction with a Travelcard.

The Tribunal also explained that it will hear submissions as to the appropriate domicile date and the wording of the CPOs at a further hearing.