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This article was originally published in TL4 Competition Magazine Issue 5: Riding The Rapids – Q2’s Competition Law and Litigation Update.

In October 2023, the UK’s Competition Appeals Tribunal (“CAT”) consolidated two separate, competing actions against Google. The two multi-billionpound claims relate to losses suffered from Google’s dominant position in
the advertising technology (“ad tech”) market and were originally brought as separate claims by individual class representatives Charles Arthur and Claudio Pollack. Having been amalgamated, they will now proceed as one.

The combination of two previously competing claims was a first for the CAT, which would otherwise have been required to determine which of the two carriage claims would be the most suitable to be certified and proceed to trial.

As these claims were the first-ever amalgamation in the CAT, they created some interesting issues around duplicated resources. While the amalgamation of these matters is a first, the CAT’s endorsement of the approach means it may not be the last time we see this tactic used by practitioners.

What Drove The Decision To Amalgamate?

CAT practitioners know the risk posed to a competition damages action by a competing claim. Ultimately only one claim can proceed to certification and beyond. The CAT continues to develop its nuanced and flexible approach to carriage. For example, in the Hunter and Hammond carriage dispute (an opt-out claim against Amazon for abuse of dominance in connection with its ‘buy box’ feature) the CAT ruled that whilst the competing Hunter claim was “not hopeless”, it simply came “second [to Hammond] in a hard-fought race”. Rather than dismissing the Hunter claim (as Amazon would have liked), it was stayed, with the CAT noting that ‘access to justice’ required the court to keep the alternative application alive, so that it could be revived if necessary. Just as with the CAT’s decision to keep the Hunter claim ‘alive’, amalgamation might provide a similar – but even more desirable -solution from the perspective of the claimant classes and broader access to justice principles. Two (or more) competing actions, with legal teams and experts having prepared the cases, voluntarily join to create a wider, better-resourced, and potentially better-financed claim.

While it may sound idyllic to unify in the pursuit of justice, the process of amalgamation – even While it may sound idyllic to unify in the pursuit of justice, the process of amalgamation – even before it is proposed to the tribunal – is likely to be a complex exercise, which requires careful consideration, negotiation, and management by stakeholders across all the potential claims.

Such a process is likely to include not only the class representatives but also law firms, chambers, funders, insurers and many other litigation support services. Based on TheJudge’s experience of amalgamating the insurance arrangements in the ad tech claims, we explore the level of detailed negotiation and reorganisation which is necessary. Warning – it’s not for the faint of heart!

Amalgamation of Insurance Cover

Competing class representatives typically acquire distinct After-the-Event (ATE) insurance policies. Coverage commonly spans from £15 – £30 million, distributed among several insurers. The premium arrangement typically includes a non-refundable portion of the premium to be paid upfront to insurers. Where two matters are amalgamated there’s a high likelihood of excessive coverage, potentially doubling what would be deemed reasonable.

While additional coverage may seem advantageous, it may not always be the case, as it’s in the interest of all parties to maximise potential distributions to the affected class of claimants.

Over-insuring may lead to an unnecessarily large premium reducing the claim proceeds. Therefore, in most instances, the optimal approach would be to consolidate the two separate policies and coverages into a single
policy with a limit more suitable for a single-class representation.

Amalgamation in Practice

The consolidation of two insurance policies is challenging. It would be uncommon to have exact matching premium structures. There must be careful negotiation with insurers as the most likely result is that all insurers will
be asked to reduce their coverage to make the policy viable and proportional for the amalgamated claim to proceed. There will be internal and external factors affecting insurers’ willingness and ability to do so. This is not helped by the fact that most single Managing General Agents (MGAs) will bind coverage for their participation across multiple insurers. (Bottom line: there are likely to be far more moving parts and stakeholders than meet the eye). There is also the matter of effectively renegotiating terms to get to the ideal position of having all insurers subject to common premium structures going forward to avoid any potential friction further down the line.

When working to consolidate insurance coverage, careful attention should be paid to upfront premiums already paid versus those that are contingent upon success. If one insurer has been paid a larger premium upfront, reducing the amount of cover already paid for would not make sense, and it will be better to reduce any cover which relates to a contingent premium as this is more likely to have pro rata reduction on premium and maximise claim proceeds.

Can You Plan For a Potential Amalgamation?

Should practitioners wish to leave the chance of amalgamating open, it might be wise to have it in mind when negotiating with insurers. It may be possible to build into the terms a prorata reduction in coverages and
premium rates that take effect in the unlikely event that the claim is involved in a carriage dispute and amalgamation presents the best way forward. It’s an area in which an experienced ATE broker could provide a huge amount of value to the legal team.

Conclusion 

Time will tell whether amalgamation is added to the procedural tool kit of CAT practitioners to mitigate the risk of losing carriage. However, it is not a process to be embarked upon lightly. In the ad tech matters the Tribunal commented that “where a carriage dispute is resolved by agreement…between… rival applications… this Tribunal will be slow to second guess that agreement”.

Is it preferable, and in the best interests of claimants, to join forces rather than have no part in the case at all? It certainly seems to be a win for access to justice, where firms and other legal service providers are willing to put the work in to make it happen.

 

Robert Warner 

robert.warner@thejudgeglobal.com

+44 (0) 203 882 7577

Rober Warner, Director of the London Office of TheJudge, has over 17 years of experience in the litigation insurance industry and specialises in arranging insurance and funding for complex cross-border litigation, arbitration, and collective actions.