Automated Summary
Key Facts
The case involves a dispute over alleged anti-competitive practices by Sony in its PlayStation ecosystem. The Proposed Class Representative (PCR) claims Sony, through its dominance in gaming console, system software, digital game distribution, and add-on content markets, abused its position by imposing exclusive distribution restrictions (exclusive dealing), tying digital sales to PlayStation hardware/software (tying claim), and charging excessive commissions (excessive pricing). Sony contests the PCR's methodology, arguing it ignores two-sided market dynamics and counterfactual pricing scenarios. The Competition Appeal Tribunal granted a Collective Proceedings Order (CPO) but required the PCR to amend the class definition to exclude future claimants. The Tribunal also dismissed Sony's strike-out and summary judgment applications, finding the PCR's claims sufficiently pleaded and not legally flawed. Post-PACCAR litigation funding reforms were addressed, with the Tribunal approving revised funding arrangements as compliant with legal requirements.
Issues
- A critical issue was the validity of the PCR's proposed class definition, which included PlayStation users who had not yet made purchases. The Tribunal concluded that the class definition was defective and required amendment to terminate the Relevant Period at the date of the Claim Form's filing.
- Sony sought to strike out or obtain reverse summary judgment on parts of the PCR's claims, arguing the case was based on flawed legal reasoning (e.g., refusal to supply) and insufficient counterfactual evidence. The Tribunal rejected these applications, finding the PCR's claims had a realistic prospect of success and required trial.
- The primary issue was whether the Proposed Class Representative (PCR) satisfied the eligibility and authorisation conditions for a Collective Proceedings Order (CPO) under the Competition Act 1998. This included assessing the adequacy of the PCR's methodology, the suitability of the class representative, and the appropriateness of the class definition.
Holdings
- The revised litigation funding agreement (LFA) was found not to be a damages-based agreement (DBA) under section 58AA. The conditional payment structure based on future legal changes satisfied the Tribunal, and the funding arrangements did not create unmanageable conflicts or perverse incentives.
- The Tribunal granted the PCR's application for a Collective Proceedings Order (CPO) subject to amending the class definition to exclude future claimants. The PCR's class definition was found defective as it included PlayStation users who had not yet purchased digital games or add-on content by the claim filing date.
- Sony's strike out/summary judgment applications were dismissed. The Tribunal found the PCR's claims of exclusive dealing and tying were properly pleaded and not based on a refusal to supply abuse, with sufficient factual and expert evidence to warrant trial. The excessive pricing claim also had a realistic prospect of success.
Remedies
- The tribunal grants the PCR's application for a Collective Proceedings Order (CPO), allowing the proposed class action to proceed. However, the class definition must be amended to ensure the Relevant Period terminates at the date of filing the Claim Form. Sony's applications for strike out and reverse summary judgment are dismissed, and the parties are directed to follow a structured process for expert evidence and procedural steps.
- The tribunal directs the parties to follow a process where experts will submit short reports on key issues, potentially followed by a 'hot tub' hearing. A timetable is set for filing the Defence and Reply, aiming to expedite proceedings. The parties are invited to comment on the proposed process within 30 days.
- The tribunal dismisses Sony's applications for strike out and reverse summary judgment. Sony did not establish that the PCR's claims lack a realistic prospect of success, so the applications are denied. The case will proceed to trial on the merits of the exclusive dealing, tying, and excessive pricing claims.
Legal Principles
- The judgment references the Bronner Conditions (three-part test for refusal to supply abuses under Article 102 TFEU) in the context of Sony's contractual restrictions. The court also discusses the distinction between refusal to supply and independent abuse claims, emphasizing that not all access issues require Bronner analysis. Additionally, the tribunal addressed the enforceability of Damages-Based Agreements (DBAs) under section 58AA of the Courts and Legal Services Act 1990 post-PACCAR judgment, concluding that revised funding arrangements did not constitute DBAs due to conditional enforcement clauses.
- The court applied the 'broad axe' principle (judicial discretion to achieve practical justice with limited evidence) when evaluating the PCR's methodology for commonality and suitability in collective proceedings. This approach acknowledges that early-stage proceedings may lack full evidence but allows courts to proceed based on plausible assumptions.
- The tribunal proposed using a 'hot tub' procedure (simultaneous expert questioning by the court) to manage divergent economic expert reports. This aims to clarify key issues before trial and ensure experts address each other's positions directly.
Precedent Name
- Easyair v Opal Telecom
- Oscar Bronner v Mediaprint
- Pro-Sys v Microsoft
- IMS Health v NDC Health
- Microsoft v Commission
- Merricks v Mastercard
- Royal Brompton Hospital NHS Trust v Hammond
- Doncaster Pharmaceuticals v Bolton Pharmaceutical
- Google v Commission
- Tillman v Egon Zehnder
Cited Statute
- Competition Act 1998
- Courts and Legal Services Act 1990
- Treaty on the Functioning of the European Union (TFEU)
- Compensation Act 2006
- Competition Appeal Tribunal Rules 2015
Judge Name
- The Honourable Lord Richardson
- Derek Ridyard
- Ben Tidswell
Passage Text
- 182. A preliminary list of the issues which the Tribunal is likely to explore is as follows: (1) Market definition (2) Systems competition/primary v aftermarket sales (3) Two-sidedness (4) Exclusive dealing/Tying/Bundling abuse (5) Excessive pricing abuse (6) Profit share v wholesale supply issues
- 232. A 'refusal' to supply that warrants the application of the conditions set out in [Bronner] implies (i) that it is express, that is to say, that there is a 'request' or in any event a wish to be granted access and a consequential 'refusal', and (ii) that the trigger of the exclusionary effect - the impugned conduct - lies principally in the refusal as such, and not in an extrinsic practice such as, in particular, another form of leveraging abuse...
- We are therefore satisfied that the PCR has met the requirement for a sufficiently credible and plausible methodology in relation to this point, at least as far as necessary for the grant of a CPO. As noted by the Court of Appeal in Gutmann⁸, it is important to recognise that these proceedings are at an early stage and there is a degree of asymmetry between the knowledge of the PCR and its team and the knowledge of Sony, as owner of the PlayStation system. In that light, we are satisfied that Mr Harman has done enough in relation to this issue to adequately describe a credible and plausible methodology.