Court of Appeal of England and Wales · [2022] EWCA Civ 1077
In London & South Eastern Railway Ltd & Ors v Gutmann, the Court of Appeal did not finally decide liability.
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This appeal came from the Competition Appeal Tribunal's decision to certify two collective competition claims brought by Justin Gutmann. The claims were against train operating companies on the South Eastern and South Western franchises.
The passengers in scope were Travelcard holders. A Travelcard covers travel within the relevant TfL zones. If a passenger then travels beyond those zones, the extra ticket should usually cover only the part outside the zones already paid for.
The dispute centred on Boundary Fares. These are supplementary fares intended to work with a Travelcard. The claim said the operators failed to make Boundary Fares sufficiently available, or failed to use their best endeavours to ensure general customer awareness of them, so many passengers bought full fares instead.
The allegation was commercially simple. Customers who had already paid for the inner part of the journey through the Travelcard were said to have paid again for that same part when buying a full fare for the whole trip.
The Court of Appeal recorded that the claims related only to journeys out of London, not into London. The class was estimated at about three million individuals. The average claim per journey was about £5, and the total claim against the operators combined was about £93 million.
That scale explains why the case matters beyond rail. A repeated low-value pricing issue can become major litigation if it affects a large customer base and can be pursued collectively.
Practical sense check
The Court of Appeal was not deciding whether the operators were liable after a full trial. It was deciding whether the Tribunal had been right to let the claims proceed collectively and to refuse to end key parts of the case early.
That distinction matters. This was a certification and strike-out appeal. The court was deciding whether the claims were arguable and suitable for collective proceedings, not whether the pleaded abuse had been proved.
What the court focused on
The methodology point was especially important. In collective competition claims, the class representative must explain how common issues will be answered and how loss will be assessed. The operators argued the methodology was not detailed enough.
The court had to decide how much detail is needed at this early stage, before full disclosure and before trial evidence is complete.
The aggregate damages point was also central. If liability and loss had to be proved customer by customer, a claim of this size would be much harder to run. The operators argued that section 47C(2) did not allow that kind of top-down treatment for liability issues.
The court had to decide whether the collective redress regime could work without checking every represented person's position individually.
The Court of Appeal dismissed all the appeals. It upheld the Tribunal's decision to grant collective proceedings orders and to refuse strike out or reverse summary judgment.
In practical terms, that meant the claims were allowed to continue as opt-out collective proceedings and the operators did not succeed in knocking out the key allegations at this stage.
On aggregate treatment, the court held that section 47C(2) could permit liability issues, including causation and proof of some loss, to be handled on an aggregate basis rather than by checking every individual class member one by one. That was a major point because it affects whether a mass consumer claim is workable at all.
The court also upheld the Tribunal's approach to methodology. At certification stage, the claimant did not need to present a finished trial model or every detailed survey design. The methodology had to explain the proposed approach and identify available data sources.
The court rejected the argument that the claim should fail because some class members might have suffered only very small losses. It said collective redress exists in part to vindicate claims where many consumers each lose a small amount.
In a top-down aggregate exercise, there was no need to strip out claims simply because some losses were small. Concerns about overcompensation or no-loss claimants could be dealt with later through evidence and adjustments at trial if needed.
Just as importantly, the court did not decide that the operators had in fact abused a dominant position. It decided that the allegations about Boundary Fare availability, customer awareness, third-party channels and the treatment of discounted fares were arguable and should be tested properly at trial.
That is the right way to read the judgment. It is a procedural win for the claimant, but a significant one.
Key takeaways
One of the operators argued it could not be liable for failures by independent third-party ticket sellers to inform customers about Boundary Fares or to respond properly to enquiries. The court did not accept that this point should end the claim at an early stage.
Instead, it held that the issue was arguable and should be explored at trial. That was true whether the third parties were acting as agents or whether the position had to be analysed in some other way.
The court also accepted it was arguable that if Boundary Fares had been widely available and offered through the operators' own outlets, that could have influenced the behaviour of competing third-party sellers as well. In other words, the operators could not necessarily treat third-party channels as someone else's problem.
The judgment also notes that the Travelcard Agreement required operators to provide and honour Travelcards, and that this background might be relevant at trial when looking at how sales responsibility was structured.
The court discussed arguments about the Rail Delivery Group and the contractual web governing third-party sales. It was not persuaded that those arrangements automatically answered the claim. It also noted that no detailed legal prohibition had been shown that would stop a train operator from taking steps to ensure third parties honoured Travelcards.
Again, that was not a final finding of responsibility. It was a reason not to strike the point out before trial.
Practical sense check
The operators also argued that they should not have to offer Boundary Fares in all cases, especially where discounted fares such as Advance Fares were available. Their position was that a discounted fare did not have to be combined with another discount.
The court was not prepared to strike out that part of the claim. It agreed with the Tribunal that a Boundary Fare was arguable as something different from a discount.
The court said a Boundary Fare could more appropriately be viewed as the fare for the part of the journey not already paid for. That matters because it changes the commercial framing. The issue is not simply whether a customer is asking for two discounts.
It may instead be whether the price properly reflects an existing prepayment. If a Travelcard holder and a non-holder are charged the same through fare, it was arguable that the Travelcard holder is in substance paying more because that customer has already paid for the inner leg.
The court also recognised that some promotional fares might justify a different result. The claimant had accepted before the Tribunal that some deeply discounted promotional fares might be proportionate exceptions. The example mentioned was a "Kids for a Quid" fare.
But the court agreed that these points could be dealt with at trial and, if necessary, reflected later in any aggregate damages calculation. So the judgment did not create a blanket rule.
Key points
A big part of the appeal was about the claimant's methodology. In collective proceedings, the class representative must show a workable way to answer common issues and estimate loss. The operators argued the proposed approach was too incomplete, especially because surveys would play an important role.
The Court of Appeal backed the Tribunal's approach. At certification stage, the expert had to explain the methodology and identify available data sources, but did not have to produce a fully designed survey or a finished trial model.
The court described demands for much more detail at this stage as disproportionate. It accepted that properly constructed surveys of relatively small samples can be used to obtain representative evidence, including in public transport settings.
That matters for businesses defending collective claims. A claimant does not need to prove every detail before the case gets through the gate. If the overall approach is credible, the claim may still be certified.
The court also rejected the idea that the methodology had to strip out claims because some losses might be tiny. It said that collective redress exists partly to vindicate small consumer losses that would not be worth pursuing individually.
In a top-down aggregate exercise, the court saw no logic in calculating a large aggregate award built from many small claims and then cutting it down simply because some of those claims are small.
Practical sense check
This case is most useful for businesses with market power that sell layered products or services. Think about situations where a customer has already paid for one element and then buys another connected element later. The legal risk in this judgment comes from the allegation that the system did not properly reflect that earlier payment.
The court's reasoning also shows that transparency and availability matter. A lower or adjusted price can exist in theory but still create risk if customers are unlikely to find it or understand it.
The judgment refers to ticket counters, ticket vending machines, online sales, mobile apps, telephone-based services and third-party vendors. That makes it a strong reminder that pricing compliance is operational. It depends on how the customer journey actually works across channels.
If your business has a pass, credit, membership, bundle or prepayment model, review whether the later price properly recognises that entitlement and whether customers are clearly told how it works.
Practical sense check
The operators lost this appeal, but the underlying dispute was not finally resolved here. The court's job was to decide whether the claims were arguable and suitable for collective proceedings. It said yes.
That makes the case important less for a final statement of liability and more for what it says about collective redress, aggregate damages and the kinds of pricing conduct that may be arguable in a dominance case.
For business owners, the durable lesson is that a pricing system can be challenged not only because of what it charges, but because of how it channels customers into paying that amount. If a valid entitlement is hard to use, poorly explained or inconsistently honoured, that can become the centre of the dispute.
And if the issue affects a large customer base, the fact that each loss is small will not necessarily protect the business from a substantial claim.
No. The court did not make a final finding of liability. It decided that the claims were arguable, should not be struck out or summarily dismissed at this stage, and were suitable to proceed as collective proceedings.
It is an add-on or supplementary fare intended to be used with a Travelcard. If the Travelcard already covers the first part of the journey within the TfL zones, the Boundary Fare should cover only the part beyond the outer boundary.
Because the alleged loss per passenger was small, but the class was very large. The judgment records an estimated class of about three million people, average losses per journey of about £5 and a total claim of about £93 million.
No. The court did not lay down a general rule in those terms. It held that, on the pleaded facts, it was arguable that failing to make Boundary Fares sufficiently available and failing to ensure general awareness of them could amount to abuse by a dominant undertaking.
One issue was whether the operators could face liability where tickets were sold through third parties. The court held that those arguments were arguable and should be explored at trial rather than dismissed at the certification stage.
The court agreed that it was arguable a Boundary Fare should not simply be treated as a discount. It could instead be seen as the fare for the part of the journey not already paid for. Whether and how that applies to discounted fares was left for trial.