The Supreme Court has handed down an important judgment[1] in the combined FX competition collective actions, meaning that going forwards the Competition Appeal Tribunal (“CAT”) will be more stringent about certifying cases on an opt‑out basis. The CAT will now pay particular regard to the merits of the claim and practicability of bringing the claims on an opt‑in basis when assessing whether to certify a claim on an opt-out basis.
Background
The claim before the Supreme Court sought damages for alleged losses arising from FX traders’ information exchanges in the “Three Way Banana Split” and “Essex Express” chatrooms, in relation to ‘G10 FX spot trading’. These were anti-competitive agreements to exchange one of eleven different currencies at fixed rates, where the exchanges were usually settled two days later. The core conduct was the subject of two separate infringement decisions by the European Commission (the “Decisions”). Furthermore, the Decisions were reached through a settlement process, whereby the addressees of the decision – which were the defendants in the litigation in the CAT – admitted their participation in the anti-competitive conduct.
The class representative brought claims on behalf of two categories of claimants. Class A comprised persons who had transacted directly with one or more defendant during the period within the scope of the Decisions. Class B comprised persons transacting with parties other than the defendants or addresses of the Decisions and therefore advanced an “umbrella” theory, contending that non-addressees of the Decisions adjusted their behaviour owing to the conduct of the addressees thereby causing harm to members of class B.
At first instance, the Tribunal raised significant concerns about causation. For example, the Decisions identified specific trades as being the subject of unlawful information exchanges, but class A encompassed persons the subject of trades where no unlawful information exchange had been identified. Importantly, the pleaded case did not explain how that category of persons suffered harm. The Tribunal observed that allowing the case to proceed “is going to involve all parties in enormous expenditure of cost and time, and considerable court time” and considered striking out the claim. It decided against that course and certified the claim to proceed but on an opt-in basis, rejecting the class representative’s request that it be certified on an opt-out basis and even though the class representative said that if the claim was only certified on an opt-in basis it would not continue.
The claimants appealed and the Court of Appeal set aside the Tribunal’s decision on the opt-in/opt-out issue and held that the proceedings could proceed on an opt-out basis. The defendant banks appealed to the Supreme Court.
The issues on appeal
The main issues considered by the Supreme Court were:
- the appropriateness of considering merits as a factor when deciding to certify a claim on an opt-out basis;
- whether the Tribunal’s assessment that opt‑in proceedings were practicable was correct; and
- access to justice and deterrence in respect of opt‑out proceedings.
Strength of the claims is not neutral and can properly weigh against opt‑out
The Court of Appeal had ruled that when considering whether a claim should be certified on an opt-in or an opt-out basis, “[g]enerally, the strength of a claim will be [a] neutral [factor]” and “in most cases merits will be a neutral factor”. The Supreme Court disagreed, saying that “these assertions are unwarranted”. The Supreme Court confirmed that merits are a relevant factor in assessing whether a claim should be certified on an opt-in or an opt-out basis. It observed that merits need to be assessed on a sliding scale, and the lower the merits the less justification for certifying on an opt-out basis.
The Supreme Court also disagreed with the Court of Appeal’s finding in the Le Patourel case[2], that it is inconsistent to conclude that a case can meet the strike out standard and still be very weak, owing to the high threshold for strike out.
The Tribunal’s assessment of practicability
The Supreme Court held that the implication of rule 79(3)b) of the Competition Appeal Tribunal Rules 2015 (the “Rules”) is that where “it is practicable for… proceedings to be brought as opt-in proceedings, then generally they should be”. This engages Rule 4 of the Rules which requires that the Tribunal must deal with cases “justly and at proportionate cost”, including to facilitate equal footing between parties, saving expense, proportionality, fairness, and the allocation of Tribunal resources in light of other cases. Thus, where opt-in is practicable, “it is unlikely to be proportionate to confer upon [the class] the additional advantages associated with the opt-out procedure and unlikely to be reasonable to expect the defendants to have to face the additional commercial pressures to settle the claims regardless of their true merit which that would involve.”
In the FX claims the class was mixed: comprising both a significant cohort of sophisticated financial institutions and large commercial entities with sizeable claims, but also a very large tail of individuals and small entities with very small claims. The Supreme Court accepted that opt‑in was not practicable for the latter but that it would be unreasonable to allow financial institutions and entities with large potential claims to proceed with opt-out collective proceedings, and quoted the Tribunal’s reasoning which suggested this would be allowing the “tail to wag the dog”. Certifying opt-out proceedings in this context could unfairly benefit those larger commercial entities to take advantage of smaller entities not coming forward to claim their share, despite the benefit of the proceedings being exactly for those smaller entities.
The Supreme Court’s findings on practicability can be summarised as follows:
- Practicability is assessed by reference to what a reasonable claimant in the position of each distinct group would do. The Tribunal may analyse sub‑groups and then stand back to form an overall conclusion.
- There is no entitlement to opt‑out simply because opt‑in is unattractive or funding is difficult; the regime offers opportunities for collective redress but does not immunise claimants against ordinary litigation economics.
- Where large commercial operators stand to gain a leverage advantage from opt‑out by bundling themselves with smaller claimants who may not claim their share later, the Tribunal may properly refuse opt‑out.
Access to justice and policy aims
The judgment makes some important observations on policy issues, rejecting the suggestion that “facilitating the vindication of rights” and “deterring future wrongdoers” point in favour of opt‑out in general. Those policy aims must be balanced against the countervailing policy of protecting businesses from unmeritorious but burdensome litigation. The Tribunal’s starting point is neutrality between opt‑in and opt‑out, with no presumption either way.
The Supreme Court cautioned against using “access to justice” as being a fundamental argument in favour of opt‑out proceedings, observing instead that “access to justice is something to which both claimants and defendants are entitled”. This means the Tribunal, when determining the most appropriate form of proceedings, must consider access to justice holistically and not just from one perspective. It endorsed the Tribunal’s statement that opt‑out is not “a certification basis of last resort” triggered whenever opt‑in is unattractive or impracticable. Instead, it is a case‑management choice to be made “taking all of the material into account”, including the rights of both prospective claimants and defendants.
Practical implications
This decision of the Supreme Court is welcome news for defendants in opening up opportunities to resist certification on an opt-out basis. Going forwards, there will be a keen focus on merits at certification. The Supreme Court pointed out that there will be cases where the Tribunal is unable to make any assessment of the merits at the certification stage, but defendants should take steps in advance of certification hearings to assist the Tribunal in having the confidence to take at least an initial assessment on merits.
It is worth emphasising that the FX claims followed on from the Decisions, where defendants had admitted antitrust infringements. This is a strong starting point. But the Supreme Court – like the Tribunal before it – held that the class representative had failed to sufficiently show how the specific findings in the Decisions caused harm to a very wide class. The judgment emphasised that the class representative was supported by a team of very sophisticated lawyers and economists and so, to the extent that there was a good case on causation, it should have been possible to articulate it and that the class representative should have “constructed the strongest possible case that can plausibly be put forwards out of the [material available].” This is correct of course, but the team supporting class representatives also need to be mindful of the CAT’s recently published guidance on expert evidence (Practice Direction 3-2025: Expert Evidence) which, amongst other things, emphasises the duties of experts and their need to be “fair-minded”. Expert reports supporting applications for certification have frequently been many hundreds of pages long, but they are now limited to 50 pages owing to guidance published on 26 November 2025. For certain categories of cases, these developments will bring challenges for claimants and their supporting experts in articulating causation in a manner acceptable to the Tribunal to certify on an opt-out basis.
More broadly, the decision contains numerous promising observations on the impact of opt-out proceedings on defendants, recognising that certifying opt-out claims imposes huge costs and settlement pressure. In direct language, which ties into the government’s ongoing review on the use of opt-out claims, the Supreme Court stated, “The sophistication of the collective proceedings regime shows that it was not intended simply to provide a stick with which anyone who claims, however implausibly, to have suffered loss can beat infringing undertakings into paying them substantial damages. That does not enhance the proper enforcement of the competition rules. If clearly unmeritorious claims are allowed to proceed on an opt-out basis which involves an unjustified leverage advantage for claimants of the kind we have described, the result will not be due enforcement of the competition rules but over-enforcement, contrary to the public interest.”
[1] [2025] UKSC 48
[2] [2022] EWCA Civ 593
