The Competition Appeal Tribunal (CAT) has struck out a class action brought by Blur drummer, David Rowntree, as the proposed class representative (PCR) on behalf of a class of songwriters against the Performing Right Society (PRS).[1]
This is a significant judgment for the UK’s collective actions regime, with the tribunal taking the unusual step of striking out a collective proceedings order (CPO) claim, rather than affording the PCR the opportunity to remedy issues with the CPO application and repleading its case.
The case itself is another example of a claimant seeking to use the competition law collective proceedings regime creatively to bring an “opt-out” class action in respect of conduct which does not fall within the traditional boundaries of competition law. This point was not lost on the tribunal which – in striking out the claim – stressed the importance of the members of a proposed class having individual claims under competition law before being able to utilise the collective proceedings mechanism.
The judgment also canvasses interesting points regarding the proportionality (cost-benefit) test which the tribunal is required to apply at the certification stage. Although the tribunal did not rule on whether the PCR’s estimated legal fees were excessive (which included a funders’ fee that comprised a 6.5x multiplier and 30% annual compound interest on capital deployed), the judgment pointedly concluded that, “it may be that it is the revenue stream to the lawyers and the funder which is the principal incentive to the pursuit of these proceedings rather than the benefits to the class”. This was particularly the case given that any damages award would effectively need to be funded by the members of the class who are members of the PRS which operates on a not-for-profit basis, meaning that any net benefit of the claim (to the extent that it succeeded) would sit not with the class members but instead with the lawyers and funders bringing the claim.
This judgment comes at a time when the UK government is reviewing the opt-out class actions regime for competition law claims with a particular focus on funding arrangements,[2] and the tribunal’s comments in this judgment will not go unnoticed when assessing whether changes to the regime should be made.
Factual background
The PRS is a not-for-profit organisation which collects royalties for the public performance of music and distributes those royalties to its members (which include songwriters and music publishers).
PRS members assign their performing rights to the PRS, and the PRS agrees to use best endeavours to pay its members the royalties due to them. Royalties are distributed according to a written distribution policy. This claim relates to “black box” royalties, which are royalties collected by the PRS that can’t be matched with the correct songwriter or publisher. The PRS rules and distribution policy provide a mechanism for these unmatched royalties that have been collected to be distributed between its members. This mechanism is complex but – for the purposes of the strike-out application – the tribunal accepted that black box royalties were distributed in a similar proportion to matched royalties. The essence of the claim is the allegation that the distribution mechanism applied by the PRS is unfair (because it favours publisher members), and that songwriter members should be compensated for this unfairness.
The claim
The claim was structured as a CPO claim under section 47B of the Competition Act 1998. This is presently the only mechanism which permits a claimant to bring an opt-out class action before the English courts. A key feature of this regime is that claims may only be brought in relation to persons who have suffered loss or damage as a result of an infringement of competition law.
In the Rowntree case, in an attempt to fall within the scope of the CPO regime, the claim against the PRS (which, in essence, was that the PRS’s distribution rules were unfair) was structured as a claim for:
- Breach of the Chapter II prohibition against abuse of a dominant position – i.e. alleging that:
- The PRS is dominant in the market for the administration of performing rights royalties for songwriters and publishers.
- It has abused that dominant position by imposing unfair trading terms on its members that permit the distribution to publishers of black box royalties which are owed to songwriters.
- Breach of the Chapter I prohibition against anti-competitive agreements – i.e. alleging that the agreements between the PRS and its members and/or its royalty distribution decisions are anti-competitive.
The defendants resisted the CPO application on four grounds:
- That it had no reasonable prospect of success.
- That it did not pass the Pro-Sys v. Microsoft test (i.e. that there were deficiencies in the PCR’s expert methodology and counterfactual).
- That the claim did not satisfy the cost-benefit test.
- That there were conflicts within the proposed class, including with the class representative himself.
The certification application was first heard in February 2025, but the hearing was adjourned because the tribunal was not satisfied that there was sufficient evidence to assess the size of the claim and therefore the cost-benefit analysis. The parties were given the opportunity to submit further evidence on this point, and the hearing was reconvened in June 2025. By this point, the PCR had changed legal representatives, but an application to delay the hearing on this basis was rejected and the hearing went ahead as scheduled.
Grounds for strike-out
The tribunal has the power to strike out (or give summary judgment) in respect of a CPO claim at the certification stage. The grounds for strike-out are well-established – the PRS needed to demonstrate that the claim had no reasonable prospect of success.
The PRS argued that summary judgment should be ordered on the basis that section 47B does not apply to the claim. It argued that the songwriters, individually, have no claim under competition law against the PRS and consequently cannot have a claim against the PRS as a class. In the claim form, the PCR described the abuse as, “PRS is imposing unfair trading terms on its songwriter members through its policies that permit the distribution to publishers of performing rights royalties owed to PRS songwriter members”.
The tribunal seized on the use of the word “owed” in the claimed abuse and noted that – although the people who are potentially “owed” black box royalties cannot be identified – the class is drawn to include all songwriter members of the PRS, and it is not clear why those class members can claim to be “owed” black box royalties. Most songwriter members of the PRS have their work properly identified, and the associated royalties are therefore appropriately distributed – i.e. they have already been paid what they are “owed”. The tribunal concluded that the PCR had failed to explain why – notwithstanding the fact that the class members are not owed black box royalties – it is unfair and abusive not to pay them these royalties or a greater share of them. The tribunal noted that black box royalties could be redistributed in many ways, some of which may be considered preferable to others but – just because one manner of distribution may be considered preferable to another – this does not mean that exercising this choice constitutes an abuse of a dominant position.
On this basis, the tribunal concluded that the claim did not have a reasonable prospect of success as a breach of competition law under either limb of the claim.
Although the claim failed at this point, the tribunal went on to consider the other three arguments advanced by the PRS.
No credible methodology for assessing damages – the Pro-Sys v. Microsoft test
The tribunal applied the Pro-Sys v. Microsoft test which is essentially a common-sense test – assessing whether the expert methodology that the PCR is required to file with the claim is sufficiently credible or plausible that it offers a realistic prospect of establishing loss on a classwide basis.[3] Although this is not a statutory test, it has been widely applied by the tribunal at the certification stage.
The tribunal accepted that at this stage it should only be “wielding a broad axe”, and allowances should be made for imperfections in the methodology presented by the PCR that can be addressed going forward. However, it found that, in this case, the PCR (and his expert) had failed – even in general terms – to identify a plausible counterfactual (i.e. describing how black box royalties would be distributed absent the claimed infringing conduct), and the tribunal also refused certification on this basis.
The tribunal stated that – had the application for strike-out and summary judgment not succeeded – it would have been receptive to a submission that the PCR should be given the opportunity to formulate its counterfactual in light of further information that had been provided by the PRS during the course of the hearing. In previous cases, this has allowed PCRs to amend their case and obtain certification at the second attempt[4] or replead as an opt-in claim.[5]
Proportionality – the cost-benefit test
The tribunal considered the costs and benefits of continuing the collective proceedings.[6] The PCR estimated the legal costs of bringing the claim as being “a little under £18m”. It also disclosed a funding arrangement which provided for a fee to be paid to the funder of capital deployed (i.e. drawn down) plus 6.5x capital deployed plus 30% annual compound interest on capital deployed.[7]
The PRS invited the tribunal to rule that these returns are excessive and inconsistent with the cost-benefit of the proceedings. The tribunal, however, declined to rule on this point, taking the view that the funder’s fee should be scrutinised at the time of distribution rather than at certification. However, it did consider the fee to be a relevant factor when assessing the overall cost-benefit of the proceedings.
In this context, the tribunal pointedly stated, “we are alert to the fact that where preparation of class actions are initiated by lawyers, rather than members of the class – as in this case – it may be that it is the revenue stream to the lawyers and the funder which is the principal incentive to the pursuit of these proceedings rather than the benefits to the class”.
The claim was for the portion of the black box royalties which in the counterfactual would have gone to the songwriter class, rather than the publishers. But the claim had not attempted to quantify this figure. However, at the second certification hearing, the PCR provided the tribunal with data which showed that black box revenues in total amounted to around £55 million. The PCR’s view in response was that the figure could be much greater, in the order of £200 million.
Regardless of the actual sum, the tribunal expressed concern about who is going to pay damages and a costs award which (if the claim succeeds) could be up to a further £18 million. It concluded that it was likely that the PRS – as a not-for-profit organisation – would have to divert revenues away from its members to pay damages. It stated pointedly, “the central problem is that the class is, in a manner of speaking, suing itself.”
The judgment concluded that – in the circumstances – there was doubt that the cost-benefit of the proceedings favoured certification, not least because the class could find itself contributing to the costs of the litigation, the funders fee and any payment of damages, and that the principal beneficiaries may be the legal advisers and funder rather than the class. The tribunal also expressed concern that the funder’s fee might reasonably be expected to be as much as, or more than, sums awarded in damages.
The authorisation condition – possible conflict of interest
The tribunal also considered whether the PCR would act fairly in the interests of the class and did not have a conflict with the class.[8] The PRS argued that redistributing money from publishers to songwriters may benefit some songwriters (including the PCR, himself a songwriter) more than others. The tribunal rejected this argument as speculative.
Interestingly, the tribunal called the PCR to the witness box to explain his decision to switch solicitors at a late stage on the basis that this could shed light on whether he meets the suitability test to act as class representative. Although the PCR passed the test in this case, this is a cautionary tale for PCRs that procedural decisions they take may be scrutinised by the tribunal when assessing suitability.[9]
Conclusion
Although this case was rejected on its facts, the tribunal’s reasoning is informative as to how it might consider future cases. For defendants, the judgment is encouraging both as a precedent for striking out a CPO claim at the certification stage and given the remarks made by the tribunal in respect of the cost-benefit test that needs to be met for an opt-out claim to be certified. It also shows the importance of ensuring that the PCR is properly challenged on how the case is framed, including the appropriate counterfactual and distribution of damages at an early-stage precertification, as these issues will be carefully scrutinised by the tribunal before certifying the claim. For potential PCRs, the case is a timely reminder that the tribunal will be sceptical of claims that are not obviously in the interests of the proposed class and which may have a dubious competition law basis.
[1] The judgment is available at Rowntree v. Performing Right Society Ltd and PRS For Music Ltd [2025] CAT 49.
[2] Discussed in more detail in our “On the Record” post, UK government reviews opt-out class actions regime – a decade in – time for a change?
[3] Established in the Canadian Supreme Court decision in Pro-Sys Consultants Ltd v. Microsoft Corp [2013] SCC 57 and adopted by the Supreme Court in Merricks v. MasterCard Inc [2020] UKSC 51.
[4] Including in Gormsen v. Meta [2023] CAT 10.
[5] O’Higgins v. Barclays [2022] CAT 16.
[6] Competition Appeal Tribunal Rule 79(2)(a).
[7] Note that the fee was banded based on time but – if the claim proceeded to trial – the time involved would mean that the fee would almost certainly fall in the highest band stated above.
[8] Competition Appeal Tribunal Rules 78(1) and (2).
[9] This follows the tribunal’s judgment in Christine Riefa [2025] CAT 5 in which the tribunal held that the PCR failed this test on the basis that she did not understand the funding arrangements, was reliant on her legal advisors and lacked sufficient independence or robustness to act fairly in the interests of the class.
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