Railways Face £98M Class Action Over 'Unfair' Ticket Prices
Law360, London (March 9, 2021, 5:20 PM GMT) -- A consumer rights expert urged a specialist competition tribunal in London on Tuesday to allow a £98 million ($136 million) lawsuit against three train operators accused of forcing passengers to pay double for their journeys to go ahead as a class action.
The companies that run the Southeastern and South Western rail networks overcharged millions of travelers in a "widespread, systematic and ongoing" abuse of their dominant market position, lawyers for Justin Gutmann, the former head of research at Citizens Advice, alleged at the
Competition Appeal Tribunal.
Gutmann, who also spent eight years working for London Underground, is seeking a collective proceedings order to represent millions of rail passengers who were allegedly forced to pay twice from October 2015 onward for tickets bought for travel beyond the subway zones covered by their travelcards, which cover journeys across the whole of London.
Stagecoach South Western Trains Ltd., First MTR South Western Trains Ltd. and London & South Eastern Railway Ltd. are accused of an abuse of dominance by failing to offer travelcard holders the chance to pay "boundary fares" for the distance between the outer limit of their ticket's coverage and their final destination.
Gutmann's lawyer, Philip Moser QC, argued that the companies failed to "live up to their special responsibility" to take sufficient steps to prevent passengers from being charged twice for the part of their journey that would have already been covered by their travelcards.
"The consumer is wholly dependent on being quoted the cheapest prices, based on a system of such complexity that using the term Byzantine might be unfair to the ancient Byzantines," Moser said.
On average, boundary fares on the train operators' networks are £5.09 cheaper than the corresponding full journey fare, according to court documents.
The proposed class of claimants includes anyone who owned a Travelcard at any time from October 2015 and also bought a rail fare from a station within the zones of their travelcard to a destination outside those zones.
Affected passengers who live in the U.K. will be automatically included in the claim unless they choose to opt out. Those who live overseas will also be eligible to join the claim, but must choose to opt in.
A spokesman for Southeastern said the company does not comment on ongoing legal proceedings. South Western and Stagecoach declined to comment.
The CPO application is the first to be heard after the U.K. Supreme Court adopted a
more lenient test in December for deciding whether an antitrust suit merits collective status. That ruling revived a proposed £14 billion suit against
Mastercard over the credit card company's allegedly unfair swipe fees.
Moser said that, in light of the Supreme Court's confirmation that "the core purpose of collective proceedings is to vindicate the rights of consumers and to provide access to justice where individual claims are likely to be impracticable or disproportionate, the present claims are prime example of the types of claims for which the collective proceedings regime were designed."
If granted, the opt-out class of rail passengers will be the first to merit collective status under a collective proceedings order, known as a CPO. The order was introduced in 2015 under the Consumer Rights Act to help individuals recover money lost through violations of competition law.
The case is also the first to be brought without the benefit of an underlying regulatory decision, breaking new ground for the certification process.
The CPO application hearing is set to last four days and will include an attempt by the train operators to strike out the claims.
Moser said the applications for strike-out and reverse summary judgment should be refused because there are numerous disputes between the two sides that require further evidence and because the law on the collective proceedings regime is a developing area.
Justin Gutmann is represented by Philip Moser QC, Stefan Kuppen and Alexandra Littlewood of Monckton Chambers, instructed by
Hausfeld LLP.
First MTR is represented by Tim Ward QC and James Bourke of Monckton Chambers.
Stagecoach is represented by Sarah Abram of Brick Court Chambers.
London & South Eastern Railway is represented by Paul Harris QC, Anneliese Blackwood and Michael Armitage of Monckton Chambers.
The cases are Justin Gutmann v. First MTR South Western Trains Ltd. and another, case number 1304/7/719 and Justin Gutmann v. London & South Eastern Railway Ltd., case number 1305/7/7/19, in the United Kingdom Competition Appeal Tribunal.
--Editing by Joe Millis.
Update: This story has been updated to add "no comment" from all three train companies.
