DMCC Act: Private enforcement & competition litigation

Competition litigation is on the rise.  

Data from litigation analytics firm Solomonic (here) charts a substantial increase in the overall volume of competition claims from 14 in 2014 to a peak of more than 200 in 2022. While the bulk of these claims relate to the various Interchange and Trucks proceedings, categorising the claims by subject matter shows a different trend, with the majority of cases over the last few years relating to issues in the technology sector.  

These ‘big tech’ cases often involve novel issues that have the potential to expand the horizons of competition law. For example, the Competition Appeal Tribunal has described the collective proceedings brought against Meta as raising an abuse of dominance claim in “an unfamiliar and novel context, namely data or information abuse on or involving Facebook” (here). Similarly, the collective proceedings against Apple, alleging a novel abuse in relation to software Apple used to slow the performance of certain iPhones to protect battery life, are framed as impacting “consumer welfare” and undermining competition on the merits (see here). 

The DMCC Act therefore appears timely. As other articles in our Spotlight series have explained, the DMCC Act establishes a digital markets competition regime, with new powers for the CMA (see here and here). It also contains provisions relating to private enforcement, which will be particularly relevant to litigation relating to ‘big tech’.   

While some of the provisions of the DMCC Act, such as the power to award exemplary damages (discussed here), and the ability of the Competition Appeal Tribunal to grant declaratory relief, affect competition litigation generally, others envisage new DMCC-specific litigation. 

Follow-on claims 

Section 102 of the DMCC Act provides that a ‘CMA breach decision’, will be binding on the courts. As explained earlier in this series, the CMA can act against a firm with strategic market status (SMS) to: 

• impose conduct requirements tailored to specific issues arising for the relevant firm; 
• make pro-competition orders (which could include structural or behavioural interventions); and/or 
• accept commitments from a firm as to its conduct. 

These are defined as ‘relevant requirements’ in the Act. If the CMA finds that an SMS firm has breached one of these requirements and issues a decision to that effect, claimants will be able to rely on that decision before the courts. The claimant would therefore only need to litigate to prove its actual damage / losses suffered due to the conduct of the SMS firm (although even this can be challenging, particularly when it comes to seeking indirect losses, or for example trying to quantify the value to be attached to data).  

Standalone claims   

Section 101 of the DMCC Act also establishes that SMS firms owe a duty to anyone affected by a breach of a ‘relevant requirement’. It provides a statutory basis for individuals to bring a claim against an SMS firm even where the CMA itself has not issued a breach decision, although the claimant would need to prove both that a breach had occurred and that it had caused them loss. 

Is a wave of new claims likely? 

We may well see a wave of new ‘DMCC claims’ if, as we expect, the CMA makes active use of its new powers. This seems likely not least because: 

In the post-Brexit era, the CMA has been seeking to expand its influence upon the world stage and has not been afraid to take contentious decisions (see for example this Financial Times article). 

The CMA will seek to keep up with the European Commission which has moved quickly with respect to its equivalent new digital markets regime, recently issuing preliminary findings against Apple and Meta and making initial inquiries of companies like X, Amazon, and others.   

The CMA is ready to hit the ground running, having been operating its Digital Markets Unit in shadow form since April 2021. It has indicated that it expects to start 3-4 SMS investigations within the first year of the new regime, with any conduct requirements expected to be put in place at the same time or shortly after a firm is SMS designated.   

If the CMA does quickly start to impose conduct requirements and pro-competition orders, or accept commitments from SMS firms, these requirements will provide the foundation for the private enforcement of DMCC claims. (Even a standalone claim will still require the CMA to have imposed a relevant requirement against an SMS firm, such that the claimant can seek to demonstrate that the requirement has been breached.) 

The precise operation of the new regime and the scope of any CMA findings and breach decisions will affect how challenging it will be to bring standalone, follow-on or hybrid claims under the DMCC Act. However, it seems likely that there will be appetite for such claims.  

The competition cases currently working their way through the courts are typically very expensive to litigate. Claims brought under the DMCC won’t face the same requirements to deal with traditional competition issues such as market definition and dominance, which may make the litigation more streamlined and cost-effective. This will be attractive to claimants (and perhaps more crucially, to litigation funders), and so we may well see a new wave of DMCC claims after the first CMA SMS investigations. 

PACCAR 

Speaking of litigation funders, it is also worth noting that an earlier draft of the DMCC Act sought to address the impact of the PACCAR judgment. In that case, the UK Supreme Court held that litigation funding agreements providing for returns to be calculated as a percentage of damages are ‘damages-based agreements’ (“DBAs”). This caused quite a commotion, as DBAs are prohibited altogether in opt-out collective proceedings and only enforceable in other cases if strict regulatory conditions are met (which would not be the case for many of the agreements underlying funded competition cases).    

The provision addressing this point, which clarified that litigation funding agreements are not DBAs, ultimately moved out of the DMCC Act and into the Litigation Funding Agreements (Enforceability) Bill. However, this Bill didn’t make it through the wash-up when the general election was called for 4 July 2024, nor was it mentioned in the first King’s Speech following that election. The impact of the PACCAR judgment on litigation funding arrangements therefore remains a live issue, although many litigation funding agreements have already been amended to ensure that they are enforceable. 

Consumer protection  

Finally, an amendment to the DMCC regime was debated last year which would have expanded the collective proceedings regime to encompass opt-out claims for breaches of consumer protection law. As that amendment did not make it into the DMCC Act, we are likely instead to continue to see cases which blur the lines between competition and consumer protection law, although it remains to be seen if any such cases will ultimately prove successful at trial.  

The forthcoming judgment in Gutmann v South Western Trains may shed some light on this issue. At the recent trial, counsel for the class representative suggested that if the defendants had breached consumer protection law, that would be a “clue” that they had abused their dominant position by overcharging rail passengers.