Supreme Court Reshapes UK Competition Class Actions Landscape

In only its third decision on the rapidly evolving UK competition class action regime, the UK Supreme Court's decision ([2025] UKSC 48) in the FX class action (Michael O'Higgins FX Class Representative Ltd v Barclays Bank Plc and others) marks a pivotal moment for the regime. By overturning the Court of Appeal (CoA) judgment ([2023] EWCA Civ 876) and restoring the Competition Appeal Tribunal's (CAT) refusal to certify the claim on an opt-out basis ([2022] CAT 16), the Supreme Court has reaffirmed the CAT's gatekeeper role, emphasised the importance of the strength of a claim to certification on an opt-out basis, and clarified that the regime requires a balancing between considerations of access to justice and the protection of defendants from unmeritorious opt-out claims.

This judgment will have significant implications for future collective actions, particularly those involving large or sophisticated claimants, and sets important boundaries on the use of other regulatory findings as evidence.

Key Takeaways

The Supreme Court judgment raises important points of principle which relate to both the class action regime as a whole, as well as specifically on the question for the CAT under CAT Rules 2015, Rule 79(3), as to whether to certify a claim on an opt-in or an opt-out basis:

• Access to justice and vindication of rights not absolute considerations: these factors must be balanced against the need to protect defendants from the burden, and settlement pressure, of unmeritorious opt-out claims.
• Gatekeeper role of the CAT reaffirmed: The Supreme Court emphasised the CAT's broad discretion and its crucial gatekeeper function in certification decisions. We therefore see this as a 'reset' of the certification stage of collective proceedings with the role of CoA more limited.
• Strength of claim matters: the strength of the claim is an important factor in determining whether proceedings should be brought out on an opt-in or opt-out basis. It is not an answer that something may turn up in disclosure, the strength must be apparent on the face of the claim before embarking on an expensive and burdensome disclosure exercise can be justified.
• Objective assessment of practicability: The CAT was entitled to assess whether opt-in proceedings were practicable for the class as a whole and opt-out proceedings may be harder to certify for claims brought by large, sophisticated entities.
• No presumption in favour of opt-out: The CAT must strike a balance between facilitating access to justice (and deterring breaches of competition law) protecting defendants from oppressive litigation. The CAT has to consider the competing interests of both parties).

Background

The European Commission Decisions (16 May 2019)

The collective proceedings in this case against various banks were brought following-on from European Commission decisions in 2019 (Case AT.40135-FOREX (Three Way Banana Split) C(2019) 3631 final and Case AT.40135-FOREX (Essex Express) C(2019) 3621 final)), which found that certain banks had participated in two separate breaches of EU competition law in foreign exchange (FX) spot trading of eleven currencies, through the exchange of commercially sensitive information in chatrooms. The two decisions were settlement decisions under which the banks admitted to the infringing conduct in exchange for a reduction in fines.

Two separate decisions were issued by the European Commission in relation to the separate, so-called Sterling Lads, infringement on 5 July 2022, in relation to communications taking place between certain individual traders in a private chatroom. This included a settlement decision against certain banks (Case AT.40135-FOREX (Three Way Banana Split) C(2019) 3631 final) and an ordinary decision (i.e., a lengthy and detailed decision which is the product of a full, contested investigation - Case AT.40135-FOREX (Essex Express) C(2019) 3621 final) against Credit Suisse. The claims did not concern the Sterling Lads infringement (with the Sterling Lads decisions being adopted after the CAT's judgment (31 March 2022)) and Credit Suisse was not a proposed defendant to the proposed collective proceedings.

The collective proceedings regime

Under the current legislation, collective proceedings may only be pursued, if the CAT makes a Collective Proceedings Order (CPO) authorising claims to be brought that meet certain statutory certification criteria. Any CPO made by the CAT must specify whether the proceedings are to be opt-out or opt-in collective proceedings, with that decision being governed by Rule 79(3) of the CAT Rules 2015. Rule 79(3) gives the CAT a broad discretion take account of matters it thinks fit, but expressly refers to the following factors: the strength of the claim; and whether it is practicable for the proceedings to be brought as opt-in collective proceedings, having regard to all the circumstances (including the estimated amount of damages that individual class members may recover).

The CAT ruling (31 March 2022) (see our blogpost here)

The proceedings were brought on an opt-out basis, seeking damages for loss allegedly caused by the anti-competitive conduct in the Three Way Banana Split and Essex Express decisions. At the certification stage the CAT decided, on balance, that the claim should instead proceed on an opt-in basis, based on the two specific factors articulated by the CAT Rules 2015 as being especially relevant to the opt-in v opt-out issue, namely the strength of the claims and whether it was practicable for the claims to be brought as opt-in proceedings.

On the strength of the claims the CAT said that, as a general rule, the weaker the case, the less justification there is for certifying on an opt-out basis. It noted that the claims pleaded in the applications were weak and were without substance in terms of the pleaded causes of action.

In relation to practicability, the CAT held that the class members were large and sophisticated entities that could afford to bring proceedings, and that if they did not do so, this was a deliberate decision on their part.

The Court of Appeal judgment (9 November 2023) (see our blogpost here)

On appeal, the CoA confirmed that the CAT did have jurisdiction to choose between opt-in and opt-out in this way even where the class representative was only seeking opt-out. However, the CoA overturned the CAT's decision, on the basis that it had erred in its consideration and conclusion on the two key factors of strength and practicability, and that instead opt-out proceedings should have been certified.

On the strength of the claimpoint, the CoA noted that there is no predisposition for or against opt-in or opt-out and that in most cases the merits will be a neutral factor. According to the CoA it would be wrong to treat strength as a sliding scale with a weaker case going to opt-in and a stronger case to opt-out. The CoA agreed with the applicants that the CAT had erred by treating what was effectively a provisional determination on the merits (as it chose not to strike-out the claims) as determinative in the opt-in v opt-out context.

On the practicabilitypoint the CoA referred to the largely unchallenged evidence of the proposed class representative that explained the possibility that certain class members (a large portion of the class were SMEs) would be reluctant to litigate as well as incurring the costs of opting in to litigate. There would be no proceedings except on opt-out terms, which was a powerful factor in favour of opt-out. The CoA also noted that access to justice is not the only consideration and that other purposes of the regime are to facilitate rather than impede these claims and to act as a deterrent to anti-competitive conduct.

The CoA also relied upon the Sterling Lads ordinary decision against Credit Suisse as supporting the strength of the claims against the defendant banks and in being indicative of the material that could be expected to show up in disclosure in due course.

Grounds of appeal to the Supreme Court

On appeal to the Supreme Court, the appellant banks raised four issues. Namely, that the CoA was wrong to: (1) find that the CAT erred in relying on its view that the claims were weak as afactor weighing against opt-out proceedings; (2) find that the CAT erred in its assessment of the practicability of bringing opt-in proceedings; (3) hold that the principles of "facilitating the vindication of rights" and deterring future wrongdoers are factors which weigh in favour of opt-out proceedings in general, or in the circumstances of this case; and (4) to treat the Sterling Lads ordinary decision against Credit Suisse as admissible on a strike-out and to rely on that decision in its own judgment.

The Supreme Court's judgment

In its 18 December 2025 judgment, the Supreme Court found in favour of the appellant banks on all grounds of appeal, reinstating the CAT's original decision and overturning the CoA's judgment.

Policy considerations and background of the collective proceedings regime

The Supreme Court's analysis was grounded in its review and interpretation of the policy considerations and legislative history which underly the UK collective proceedings regime. The collective proceedings regime was first introduced by the Enterprise Act 2002, which amended the Competition Act 1998 (CA98) to allow collective proceedings to be brought by a "specified body" – the Consumers' Association – on behalf of a group of named individual consumers, on an "opt-in" basis (ie requiring each potential class member to actively join the case). That regime was not a success (in that there was very limited take up), which, in the years to follow, led to a number of reviews and consultations in the UK (and in Europe more generally). A decade later, in January 2013, the Department for Business, Innovation and Skills published a response to its April 2012 consultation, with a decision to introduce a limited collective actions regime for competition law on an "opt-out" basis (i.e., including all members of a defined class as claimants, unless they choose to opt out), limited to proceedings in the CAT. The proposed regime envisaged a set of strong safeguards, including strict judicial certification of cases so that only meritorious cases are taken forward. These proposals went through a legislative process as the Consumer Rights Bill, which became the Consumer Rights Act 2015 when it received Royal Assent on 26 March 2015.

In conducting its analysis of the policy considerations, the Supreme Court clarified that while "access to justice" and deterring anti-competitive behaviour (i.e., two anti-defendant policy considerations) are important goals underlying the regime, these must be balanced against the real risk of weak claims being used to pressure defendants into settling. As for deterrence, the Supreme Court in particular noted that the appellant banks had already paid substantial fines to the European Commission or were granted immunity from fines as a result of disclosing the existence of the anti-competitive conduct to the European Commission (para 140) and concluded that:

"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" (para 141)

The Supreme Court therefore disagreed with the CoA and held that while this access to justice dimension may be a factor the CAT should weigh, it is not the only factor, and should be balanced against the countervailing consideration of whether it is right for sophisticated businesses to free-ride and get the benefits from an opt-out class when they are perfectly capable of opting in to their own case.

The judgment has strong echoes of dissenting judgment in Merricks [2020] UKSC 51 (and the two dissenting judges in Merricks were on the panel for this judgment, with one of them, Lord Sales, being the presiding judge).

CAT (re)confirmed as gatekeeper

The Supreme Court was heavily critical of the CoA for interfering in the CAT's exercise of its discretion on the opt-in/opt-out test at the certification stage. The Supreme Court emphasised the wide case-management powers of evaluation and discretion of the CAT and the fact that it is a specialist body. The Supreme Court cautioned the CoA that it should not interfere simply because it might have arrived at a different conclusion if it had been conducting the exercise.

The Supreme Court's decision therefore appears to be a 'reset' at the certification stage, making the prospect of successfully appealing the CAT's exercise of its discretions more difficult, in particular where the CAT's decision is based on an assessment of the evidence before it and has balanced the various factors relevant to certification.

No error in law in CAT's assessment of claim as weak

The Supreme Court found that there was no error in law in the CAT's assessment of the claim as weak. The CAT carried out a detailed assessment of the merits of the claim and was entitled to consider that the option to bringing the claim as an opt-out claim should not be available to unmeritorious claims. The CAT rightly considered the weakness of the claim alongside various other factors and did not treat the strength of the claim as determinative of the opt-in / opt-out question.

The judgment confirms that there is a role for merits beyond the strike-out test and that the test under Rule 79(3) of the CAT Rules 2015 is not the same as the strike-out test. The Supreme Court made various comments indicating that it agreed with the CAT that the Evans claim was weak as pleaded, including describing the CAT's decision not to strike-out the claim as "generous".

The Supreme Court confirmed that the CAT can - and should - consider the merits of a claim when deciding on opt-out certification. Weak claims should not benefit from the leverage of opt-out proceedings, which can pressure defendants into settlement regardless of the claim's merits.

In doing so, the Supreme Court clarified that the strength of the claim is not a "neutral" factor, but a sliding scale: the weaker the claim, the less justification for opt-out certification.

Further, mere speculation that evidence in support of an alleged theory of harm may turn up, if defendants are "compelled to incur the major inconvenience and expense of a huge disclosure exercise is not a sufficient reason for subjecting them to that inconvenience and expense" (para 108).

The judgment also appears to suggest that this balancing could apply more generally where weak claims could lead to disproportionate cost (see e.g. para 93, which suggests that allowing very weak claims to proceed on an opt-out basis would be inconsistent with the CAT's obligations under Rule 4 of the CAT Rules 2015 to deal with cases justly and at proportionate cost). This could for example give the CAT greater case management powers at certification pursuant to the cost-benefit test (e.g. the CAT indicated in Consumers' Association v Qualcomm [2022] CAT 20, para 105, that, in principle, the cost-benefit analysis can in itself be a ground for concluding that claims are not suitable to be brought in collective proceedings – see also Mr David Alexander de Horne Rowntree v Performing Right Society Limited [2025] CAT 49 at [103]), and in turn less scope for the CoA to overturn with the CAT's exercise of those case management powers.

A further interesting comment from the Supreme Court comes at the end of para 165, where the Supreme Court appears to support the CAT's assessment that given the nature of the underlying infringement (which involved communications between certain individual traders), harm was likely to arise from specific transactions and not be susceptible to aggregation in collective proceedings.

Practicability of opt-in proceedings is an objective assessment

In the present proceedings, the proposed two classes of class members, while not small (estimated at 40,000–80,000 members) included sophisticated entities with large individual claims (£50,000—£60,000 on average). There were a large number of small FX traders whose claims in total represented a "tiny fraction" of the claimed loss by value (para 123), contrasted with a small number of institutional or large traders whose aggregated damages represented the bulk of the proposed claim. The CAT in its judgment had held that the fact the proposed class representative's lawyers had previously sought to book build a claim (i.e., which would require claimants to actively choose to bring a claim, rather than merely participating in an opt-out class action) without success, was a product of proposed class members making a "deliberate decision not to participate" (para 381(9)). In the absence of evidence as to class members' motivations, the CAT had based this conclusion on the fact that it could identify no reason why it was not practicable for fairly large commercial entities and sophisticated potential litigants to join an opt-in claim.

In the Supreme Court's view, the CAT rightly considered the potential class in the round and that the question of practicability is to be assessed objectively and not considering the subjective views of the potential members. The CAT was entitled to conclude that it would have been practicable for properly motivated large, sophisticated claimants to bring an opt-in claim. While it would not be appropriate to only consider the large claimants, it is also inappropriate to be led only by the fact that it would not be practicable for certain smaller claimants to bring an opt-in claim; the class needs to be considered as a whole.

Vindication of rights not a trumping factor

The Supreme Court held that the CoA was wrong to hold that the principles of vindication of rights and deterrence of anti-competitive behaviour are strong factors that point in favour of opt-out proceedings as opposed to opt-in proceedings in every case. The Supreme Court clarified that while access to justice and deterring anti-competitive behaviour are important goals underlying the regime, these must be balanced against the risk of weak claims being used to pressure defendants into settling and the CAT is required to balance both in every case.

Admissibility of other relevant but non-binding regulatory decisions

The CoA had considered that an ordinary European Commission decision which is not addressed to any of the parties to the case (i.e., the Sterling Lads ordinary decision), could be admissible as evidence against the respondents who had settled with the European Commission and therefore were subject only to a short-form settlement decision (here, the Essex Express and Three Way Banana Split settlement decisions).

The Supreme Court disagreed and held that the Sterling Lads ordinary decision, which is not addressed to any of the parties to the case, was not admissible as evidence against the defendant banks who had settled with the European Commission and therefore were subject only to a short-form settlement decision.

This conclusion was reached by virtue of the rule in Hollington v Hewthorn ([1943] KB 587) (being a general rule of common law that findings made by one decision maker are not admissible as evidence of fact when those issues are in dispute before a different decision maker, based on a principle of fairness). The rule in Hollington v Hewthorn was effectively adopted by the CAT in the earlier CPO case of Consumers' Association v Qualcomm ([2023] CAT 9) in which the CAT concluded that a decision of the Korean competition authority addressed to the defendant could not be relied upon at trial as proof of the evaluative findings made by that foreign authority. The CoA had reached the view that the CAT need not be 'hidebound' by a 'common law rule of fairness' (i.e. Hollington v Hewthorn). The Supreme Court emphasised that the same principle of fairness that underpins the Civil Procedure Rules applicable in the High Court underpins the CAT's rules.

It is worth bearing in mind that the Supreme Court was dealing with what it considered to be an extreme case of whether reliance could be placed on a regulatory decision, as the decision at issue was not even addressed to the proposed defendants to the proposed collective action and they never had the opportunity to exercise their rights of defence in respect of it.

However, the Supreme Court's starting point (in particular para 152) is that the Hollington v Hewthorn principle applies in general before the CAT, and that principle is not confined to such extreme cases (Hollington v Hewthorn itself concerning a prior finding, in that case a criminal conviction, against the defendant). The effect of this is to bring the case law back closer in line with the reasoning in Qualcomm [2023] CAT 9, where the CAT held that it was not bound by the rule (but that it should nevertheless adopt the same principle), and that at a trial of collective proceedings it would not be appropriate to attach any weight to findings reached by other courts, tribunals or regulators, including where that decision was addressed to the same defendant (paras 22-23 Qualcomm [2023] CAT 9).

The Supreme Court did acknowledge that otherwise inadmissible prior findings can be relied upon at an interlocutory stage to identify the evidence that may be available at trial, but it did not view this as a novel suggestion or as inconsistent with the rule in Hollington v Hewthorn (which concerns the inadmissibility of the findings, on the basis that they constitute opinions).

In summary, the Supreme Court's decision is a watershed moment for UK competition class actions. It reaffirms the CAT's discretion, emphasises the need to protect defendants from the burden of weak claims, and sets a higher bar for opt-out certification—especially for claims involving non-consumer classes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.