Trucks: Conflict between new and used vehicle owners
The Competition Appeal Tribunal (CAT) has agreed to the creation of a “separate funding vehicle” within the same litigation funder as it approved an opt-in collective proceedings order (CPO).
Mr Justice Roth said the question was not “whether the separation of the funding arrangements is perfect” but whether the arrangements were “sufficient and adequate” to address the conflicts issue.
In June 2022, the CAT chose an opt-in collective action run by the Road Haulage Association (RHA) and backed by litigation funder Therium over another potential action to pursue a multi-billion-pound claim over a cartel that controlled the cost of trucks over 14 years.
The claim follows a decision by the European Commission to fine MAN, Volvo Group, Daimler, Iveco and DAF nearly €3bn (£2.6bn) for price fixing and other cartel activities between 1997 and 2011.
The CAT did not make the CPO pending the other potential class representative’s appeal, which the Court of Appeal rejected last year.
It largely dismissed the defendants’ appeal too except that it found the CAT’s approach to addressing the potential conflict of interest between claims for new and used trucks was inadequate.
In essence, while purchasers of new trucks have an interest in showing that none of the overcharge caused by the cartel was passed on when they resold their truck, purchasers of used trucks would want to show that it was.
The Court of Appeal said that, if the RHA could put in place “a Chinese wall and the necessary safeguards of the respective interests of the two sub-classes in place to eliminate the conflict”, he would not disturb the CAT’s decision to choose it as the class representative.
This has been done through the creation of RHA Used Trucks Ltd (RUTL), a separate company with its own legal representation and various other separations from the other group.
In last week’s ruling, Roth J said RUTL had made “sustained efforts to find a new funder that would fund the used trucks claims”.
As explained by Matthew Fidler, a partner at Leeds firm Tyr, RUTL’s solicitors, “the proposition was novel and challenging, as RUTL was seeking a funder who would take over funding for only part of the claimant class where the original funder would retain a financial interest for the common issues for all class members”.
This meant the new funder “had to be integrated into the remuneration arrangements” being concluded with Therium.
“Given the complexity of the situation, the requirements of funders in terms of legal and expert advice, and the tribunal’s deadline, this was particularly challenging.”
Two days before the extended deadline set by CAT for the RHA’s revised application for a CPO, 28 March 2024, a funder which had agreed heads of terms pulled out.
At this point, Therium “agreed to step in and provide a separate stream of funding to RUTL”.
The funding is coming from Therium Litigation Atlas, a “distinct entity” from Therium Litigation Finance and Therium RHA, funding the new trucks claims. Information barriers have been put in place, supported by undertakings from those involved not to disclose information, including Therium chief executive John Byrne, which is on the RUTL side.
The CAT said the concerns articulated by counsel for DAF were not sufficient to undermine the separation of decision-making put in place by Therium.
Among them was the argument that there would be a conflict of interest if there was a “significant overspend” on RUTL’s costs budget and it “had to come back to Therium and seek more money”.
Roth J said there was “no basis for supposing” that RUTL’s budget of just under £6m would be insufficient.
“The question before us is not whether the separation of the funding arrangements is perfect but whether the arrangements put in place are sufficient and adequate to address the conflicts issue in a realistic way.”
The CAT rejected the suggestion that Mr Byrne would have an interest in favouring the overall return of Therium over those of RUTL.
“Mr Byrne is a solicitor and, apart from his professional obligations, by reason of his position will have an interest in Therium’s overall reputation. Therium is a long-established litigation funder, established in 2009, and is a founding member of the Association of Litigation Funders.
“These factors are in our view likely to influence the approach of Mr Byrne as against any potential incentive to exercise his role in advising Therium Atlas to disadvantage the used trucks subclass which Therium Atlas is funding.”
The CAT said the Court of Appeal could not have been aware “of the practical difficulties” obtaining wholly discrete funding would cause.
Given the terms of the two funding agreements, separate funding vehicles and undertakings, it was satisfied that the steps taken by Therium were “sufficient and adequate” to address potential conflicts.
The CAT authorised RUTL as sub-class representative and made a CPO in favour of the RHA as class representative in the case. It is the first opt-in CPO approved by the tribunal.
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