Why it is becoming easier to sue big tech in the UK

Silhouette of business people negotiating at meeting tableGetty Images

The UK is seeing a rise in people suing companies, including some of the best known names in technology, en masse.

Research by Thomson Reuters shows the amount of damages being sought in what are known as class actions leapt from £4bn in 2021 to £26bn in 2022.

Apple, Google and Sony are among those being pursued for alleged breaches of competition law.

Lawyers say it is largely down to a 2021 change in the law that encourages collective proceedings.

Single claimants could now bring legal actions on behalf of potentially huge numbers of people without their express mandate or even knowledge, unless they specifically opted out, Pinsent Masons LLP partner Alan Davis told BBC News.

“In Europe, only two other jurisdictions – the Netherlands and Portugal – offer the possibility of such ‘opt-out’ class actions, which explains the increasing popularity of the UK as a venue,” he said.

Toby Starr, of legal firm Humphries Kerstetter, said the rise of technology companies in the past decade plus “the exposure of millions of people to the behaviour of these giant corporations” was another reason for the increase.

Anti-competitive behaviour

Thomson Reuters competition lawyer Warsha Kalé said: “With this kind of class action gaining popularity, corporates have to be wary of acting in what could be seen as an anti-competitive way.

“Fines for anti-competitive behaviour in the UK can already be as much as 10% of a businesses’ worldwide turnover.

“Now, a business can pay that fine and then find themselves facing a separate class action composed of tens of thousands, or even millions, of customers.”

Sony is facing a £5bn legal action over claims it abused its market position to overcharge customers buying digital games or in-game content via the PlayStation store.

Apple faces a £1.5bn claim over allegations it abused its monopoly power by overcharging customers through the App Store.

Meanwhile, online publishers last year filed a £13.6bn legal action against Google, and its parent company, Alphabet, over claims it abused its dominant position in online advertising, depriving website owners of revenue.

‘Massive cost’

The UK’s Competition Appeals Tribunal (CAT) first set a precedent to allow opt-out legal actions, after a £14bn class action against Mastercard, over claims high fees led to people paying too much in shops.

The threshold had been set at a “relatively low level”, Mr Davis told BBC News.

“In effect, this has resulted in a proverbial opening of the ‘floodgates’ – more than 20 collective proceedings are currently at various stages before the CAT and a significant number have now been certified by the CAT to proceed to trial on an opt-out basis,” he said.

There are some constraints though, as Mr Starr points out, including “the judicial resources available, the massive cost of these cases and the absence, outside of competition law, of the legal machinery to assess damages for large numbers of people”.


Leave a Reply

Skip to toolbar