Consumer champion's bid to sue salmon companies is thrown out
Tribunal blocks class action over concerns about costs vs benefits and representative's £300-per-hour fee, but leaves option for fresh case
A legal bid to claim millions of pounds in compensation for UK consumers who are said to have overpaid for salmon due to alleged price fixing by producers has been halted.
The Competition Appeal Tribunal refused to grant a Collective Proceedings Order (CPO) in Waterside Class Limited v Mowi ASA & Others, although it has left the door open for a revised application, reports financial law firm Macfarlanes.
The tribunal refused the CPO because it was not satisfied that the relevant costs and benefits justified continuing the proceedings, nor that it was just and reasonable for the applicant (Waterside) to act as the class representative.
'Consumer champion'
Waterside Class Limited was formed specifically to pursue collective action against salmon farmers Mowi and its subsidiary Mowi Holdings, SalMar, Lerøy, Scottish Sea Farms (owned by SalMar and Lerøy) and Grieg, which were accused of operating a cartel between 2015 and 2019.
Waterside’s sole director and representative is Anne Heal, a former director of regulatory affairs at BT (British Telecom), reported to be a passionate advocate for consumers. Its action claimed that the alleged cartel’s behaviour drove farmed Atlantic salmon prices up to 20% higher than they otherwise would have been over the course of the alleged conspiracy.
Macfarlanes reports that the tribunal acknowledged that collective proceedings were prima facie appropriate but declined to certify the claim at this stage on the basis that neither of the two relevant conditions for certification – eligibility and authorisation - were met.
High costs, low return
Regarding eligibility, the tribunal criticised Waterside for failing to provide an estimated level of class member (consumer) take-up, which it estimated at between just £7120,000 and £3.1m.
In contrast, Waterside’s proposed litigation costs budget stood at £15.75m (plus VAT), excluding an ATE insurance deposit premium of £5.26m to protect claimants from paying the opponent’s costs. Additionally – and as disclosed only following direct questioning at the hearing, which the Tribunal found troubling – a further 50% solicitor success fee, 30% counsel success fee, and up to £19.4m in contingent ATE premiums could be added to Waterside’s costs.
The tribunal found that it was “wrong, and potentially misleading, not to present these contingent sums, alongside other legal costs, on the application for certification”, wrote Macfarlanes.
The tribunal also took issue with Waterside’s failure to explore cost savings by coordinating with separate proceedings the Asda and Tesco, which similarly seek to prove the existence of the alleged cartel and measure the size of any overcharge.
£300 an hour
Regarding its decision not to authorise Waterside, it said the company had failed to produce a satisfactory litigation plan because it didn’t adequately balance the costs and benefits of the proceedings.
The tribunal also expressed concerns with Heal’s remuneration of £300 per hour in her role as director of Waterside, with projected total charges of up to £316,950.
“Class representatives self-authorising fees of this magnitude is undesirable and gives rise to a potential blurring of the lines between the interests of the class representative and the interests of the legal advisers and funders which they are required to scrutinise,” stated the tribunal.
Despite refusing certification, the tribunal declined to strike out the claim. It observed that there was scope for a significantly reduced costs budget, particularly if Waterside co-ordinated with the Asda and Tesco proceedings rather than pursuing its claim independently.
