On 7 March 2025, the Competition Appeal Tribunal (the “CAT”) handed down its judgment refusing to certify the proposed collective proceedings brought by Professor Carolyn Roberts (the “PCR”) in respect of alleged abuse of dominance claims against Anglian Water Services Limited, Anglian Water Group Limited and five other major English water and sewerage companies (“WASCs”). The CAT found that the PCR’s claims were excluded by the operation of section 18(8) of the Water Industry Act 1991 (the “WIA”) and refused to grant the collective proceedings orders (“CPOs”). The judgment marks one of only two instances where the CAT has refused to certify an application for collective proceedings outright.

This article considers the key findings in the CAT’s judgment and the implications for future cases.

We note that Linklaters acts for Anglian Water in these proceedings.

Overview of the PCR’s claims

The PCR applied for CPOs on behalf of the WASCs’ respective household customers, alleging that the WASCs (as statutory monopolists in their respective regions) had abused their dominant position by under-reporting pollution incidents to the regulator, Ofwat. Ofwat’s regulatory regime includes a price control framework, which permits the WASCs to charge higher prices if they meet certain performance commitments with respect to pollution incidents. In her CPO applications, the PCR claimed that the WASCs’ alleged under-reporting allowed them to charge their customers higher prices than they would have been permitted to charge if the pollution incidents had been reported accurately, in contravention of the Chapter II prohibition in section 18 of the Competition Act 1998.

A hearing took place from 23-25 September 2024 in respect of certification and two preliminary issues which the WASCs argued meant that the claims were excluded.

The CAT’s judgment

The key issue – section 18(8) WIA

The WIA establishes the regulatory framework for the supply of water and sewerage services in England and Wales. Crucially, section 18(8) provides a statutory ouster such that where any act or omission leads to a contravention of a WASC’s condition of appointment, the only remedies in those circumstances are those provided for under the legislative and regulatory regime unless the remedies sought are “otherwise than by virtue of its constituting, or causing or contributing to, such a contravention”.

Applying the legislation and the Supreme Court’s authoritative interpretation of section 18(8) from the recent Manchester Ship Canal case (“MSCC”), the dispositive question for the CAT was whether the contravention of the appointment conditions under the WIA was an “essential ingredient” of the PCR’s claims. After considering the relevant authorities, the CAT answered in the affirmative, finding that section 18(8) of the WIA operates to exclude the PCR’s proposed claims.

Central to the CAT’s decision was the basis on which the PCR claimed damages. The damage allegedly suffered by the class, and the remedy sought, arose only as a result of the WASCs’ alleged misreporting, which fed into the prices set by Ofwat and allowed the WASCs to charge their customers higher prices. The PCR’s pleaded case did not put forward another basis for claiming damage other than the alleged contravention of the price control regime. On that basis, the CAT held that “the failure to supply accurate information for the statutory regime of price control under the WIA is an essential ingredient” of the PCR’s claim for breach of statutory duty under the Competition Act 1998 (see [43]). Since the claims were caught by the section 18(8) ouster, the only remedy in those circumstances if the allegations were made out would be by way of an enforcement order by Ofwat.

The CAT considered that this was a “clear application” of section 18(8) of the WIA (see [51]). Further:

• The CAT took comfort that any customers who had been overcharged could obtain redress through Ofwat’s enforcement powers. The CAT also noted that Ofwat’s processes are better suited to determine any under-reporting of pollution incidents than adversarial litigation.
• The CAT considered that its approach reflects Parliament’s intention in establishing the regulatory regime for privatised WASCs. Responsibility for ensuring compliance with the appointment conditions rests primarily with Ofwat, and private claims can only be brought where there is a breach of a subsequent enforcement order.

The competition law issue

The CAT’s decision in respect of section 18(8) of the WIA was determinative and, subject to any appeals, brings the claims to an immediate end. However, the CAT also considered the other arguments before it, including the WASCs’ argument that, as a result of the statutory framework, competition law does not apply to the supply of sewerage services to household customers. The CAT did not accept the WASCs’ argument for the following reasons:

• Having considered relevant EU authorities, the CAT explained that “where the conduct of the statutory monopolist could affect competition in another market (in which it did not itself compete), the prohibition of abuse of dominance could still apply” (see [72]). Had the WASCs been engaging in conduct that enabled them to charge higher prices, as alleged, the CAT observed that this conduct would have affected the prices charged to non-household customers in the retail market (i.e. a competitive market in which the WASCs themselves do not compete), where water and sewerage services are supplied to retailers by the WASCs using the same price control regime that is used for household customers. It therefore found that the abuse of dominance prohibition does apply.
• The CAT drew a distinction between a scenario in which prices are fixed by Ofwat and the factual matrix before it, in which the WASCs are given some autonomy with respect to pricing. The CAT emphasised that the WASCs were not charging prices set by the regulator, and that instead it was the autonomous decision of each WASC to set the prices that it did.

The requirements for certification

Had the claims not been excluded under section 18(8) of the WIA, the CAT decided that it would have granted the CPOs. The CAT found that the authorisation conditions (concerning funding and the PCR’s suitability according to Rule 78 of the CAT Rules) and eligibility condition (as to whether the claims in question are “eligible” to be brought on a collective basis according to Rule 79) would have both been satisfied:

• Although certain funding issues had been raised by the WASCs, these were largely resolved ahead of the certification hearing. The CAT itself also raised comments and questions in respect of the PCR’s funding arrangements, but these were resolved by amendments made by the PCR and her funders shortly after the hearing.
• The CAT rejected the WASCs’ arguments that the PCR’s experts had failed to put forward a credible methodology for part of the claim period because they failed to take account of the lower performance benchmarks that Ofwat would have applied had the WASCs all reported more pollution incidents (given the importance of relative performance in setting those benchmarks). The CAT found that this issue was “a matter for argument at trial” and, in light of the “low threshold” for certification established by various authorities, that there was “manifestly a workable methodology”.

Key takeaways

The PCR has publicly indicated that she will seek permission to appeal against the CAT’s decision on section 18(8) of the WIA. This is perhaps not surprising, given the significance of the outcome in otherwise bringing the claim to an end. In the meantime, the CAT’s confirmation that the alleged under-reporting of pollution incidents is excluded by the statutory regime will no doubt be welcome news to the WASCs in England and Wales.

When considering the judgment’s broader implications, it is important to keep in mind that the specific nature of the highly regulated water sector gave rise to the claims’ ultimate undoing before the CAT. In light of that context, the judgment is unlikely to signal a sweeping change of the tide in the CAT’s developing case law regarding certification. However, it may serve as an important warning to funders and claimant lawyers: Where proceedings are brought in sectors which already provide a bespoke and complex regulatory framework, including customer redress, there is a prospect of further arguments rising to the surface which mean that claims are excluded and cannot proceed.