On 26 May 2017, the Competition Appeal Tribunal (CAT) issued its judgment on the liability of the Law Society of England and Wales (the Law Society) in a claim brought against it by Socrates Training Limited (Socrates) finding the Law Society liable for a breach of its dominant position in contravention of both UK and EU Competition Law.
This is the first judgment under from the Competition Appeal Tribunals (CAT) Fast Track Procedure, a procedure that was introduced on 1 October 2015 and designed to enable the efficient and cost effective facilitation of less complex private antitrust matters.
In 2015, the Law Society started to require specific accreditation to law firms providing residential conveyancing services, which included anti money laundering (AML) and Mortgage Fund training. By making it a requirement, law firms were left no choice but to comply as the Law Society insisted that the accreditation was obtained from them. Socrates, a provider of services for accreditation which included AML and Mortgage Fund training, brought a claim in April 2016 alleging that by the Law Society insisting that accreditation be obtained from them exclusively, competition law was infringed as it made it difficult, if not impossible, for other service providers to compete. Evidence of this adverse effect was proved by the fact that several of Socrates customers had communicated to them that they would no longer be using their services, but would instead be using the Law Society so as to receive the necessary and recognised accreditations.
The Fast Track Procedure
A case must meet certain criteria before it is approved for the Fast Track Procedure, which include, that the hearing must take no more than three days, that it must commence within six months and that costs must be capped. It was decided by the CAT that this case met the criteria and therefore should be put through the fast track procedure, meaning that in accordance with CAT rules 58(2)(b), the amount of costs recoverable was capped at a level determined by CAT.
There are advantages and disadvantages to the cost capping system. A major advantage is that the parties can be aware of any adverse cost risks which would allow them to make an informed decision about whether or not to continue. A disadvantage to the system however is that costs can be capped at a number that is below the actual costs incurred, meaning that the damages that the winning party receives may not actually cover their expenses. In this case, costs were initially capped at a figure lower than that reportedly incurred, but were later increased to over the expected costs. However, this increase is not something that will occur in all cases, so the possibility of receiving damages that do not cover the actual costs incurred is very real.
Although competition law matters are generally complex by nature, and the system was designed to deal with less complex private antitrust matters, it is predicted that the number of cases passing through the system will increase. There have already been several smaller private claims brought under this procedure and although they were settled before running their course, it is evidence of early successes for the procedure which was aimed at allowing smaller private claimants to bring a claim and leave feeling satisfied with the results.