A hearing to decide whether a £1bn class action can proceed against major banks that were fined for rigging the foreign exchange market has opened in the Competition Appeal Tribunal (CAT).
Barclays, Citigroup, JP Morgan and RBS were fined more than €1bn by the EU’s competition watchdog in 2019 after a five-year investigation revealed market rigging between 2007 and 2013. The banks now face a group claim brought by pension funds, asset managers, hedge funds and corporates from around the world who were affected by the forex cartels. UBS is also named in the claim.
The CAT heard that the claim was suitable for collective proceedings and for an aggregate award of damages. It also heard that economist Michael O’Higgins – outgoing chair of the Local Pensions Partnership – would be a suitable class representative.
For the claimants, Daniel Jowell QC argued that the claim should be allowed to go ahead on an opt-out basis, meaning anyone domiciled in the UK who entered into relevant foreign exchange trades would be included. He stressed that the Consumer Rights Act 2015 is not designed solely to benefit consumers, but also small businesses harmed by anti-competitive behaviour.
Drawing on the Supreme Court’s decision in Mastercard & Ors v Walter Hugh Merricks, Jowell noted that, at certification stage, CAT hearings do not usually involve a merits test and that, for a certification to be granted, it is not necessary to establish that all members of the proposed class have suffered loss.
‘It couldn’t be established [in the Merricks claim] that all members of the class had suffered loss. It is distinctly possible – if not probable – that many members of class may not have been harmed, but benefited from multi-lateral interchange fees,’ he said.
In December, the Mastercard group action brought on behalf of 46 million credit and debit card holders received the green light from the Supreme Court. It is expected that the decision will make it easier for group damages claims to proceed to trial.
The forex claim against the five banks is being funded by Therium Capital Management. The CAT must decide whether to issue a collective proceedings order, allowing the action to proceed to the next stage of litigation.
The hearing continues.
This article by Jemma Slingo was originally published by the Law Society Gazette.