Meta successfully resists certification in data privacy collective action

22 February 2023

In an early victory for Meta, the Competition Appeal Tribunal has refused to certify a collective claim brought on behalf of some 45 million consumers by proposed class representative Dr Liza Lovdahl Gormsen (the PCR). Less than three weeks after the certification hearing, the Tribunal has held that the PCR “unequivocally failed” to satisfy one of the tests for certification. Rather than reject the claim outright, the Tribunal has given the PCR six months to file additional evidence setting out a “new and better blueprint leading to an effective trial”. 

The following features of the judgment are particularly notable:

  • Consumer protection-based claim? It has been suggested that the presence of a bespoke collective regime for competition claims may encourage attempts to formulate consumer protection claims as competition infringements in order to take advantage of that regime. The Tribunal appears to acknowledge this phenomenon in Gormsen, describing part of the claim (the Unfair Trading Conditions claim) as “extraordinarily difficult to pigeonhole as an abuse of a dominant position…These allegations seem to us not to be competition law infringements at all… (emphasis in original)”.
  • Multiple causes of action. The claim was brought in respect of three alleged abuses of dominance, which the Tribunal referred to as the “Unfair Data Requirement” abuse, the “Unfair Price” abuse and the “Unfair Trading Conditions” abuse. The nature of the alleged abuses and the counterfactual with reference to which any loss would need to be established varied significantly from claim to claim. However, the Tribunal found that the loss methodology put forward by the PCR’s expert related only to Unfair Price and was not directed at all to the other alleged abuses. The allegations of unfair (or excessive) pricing therefore became the main focus of the Tribunal’s judgment.
    Pro-Sys v Microsoft. Following on from the recent decision in McClaren, the Tribunal reemphasised the importance the Canadian “Pro-Sys test” being satisfied to establish a “blueprint” for how the claim can ultimately be tried. The Tribunal described its purpose as being to “minimise the related risks of the (i) parties throwing away unnecessary costs; (ii) the Tribunal’s time being wasted; and (iii) a matter coming to trial in an unmanageable form”. In this case, the Tribunal held that the Pro-Sys test was “comprehensively not met” and identified a number of issues in the PCR’s economic methodology which it considered had not been adequately addressed.
  • Methodology to assess unfair pricing. The Tribunal recognised that framing unfair pricing cases is not straightforward, particularly in the circumstances of this case: 1) which involves two sided markets (on the one side, Meta is selling social media services (Facebook) to consumers and on the other side, Meta is selling advertising services to persons selling other products who wish to access Facebook users); and 2) where there is no monetary consideration paid by Facebook to users. Whilst the Tribunal was sympathetic to arguments that the United Brands test for unfair pricing is a broad and flexible test, the Tribunal found that at this stage the PCR’s methodology for assessing an unfair price had not been sufficiently set out to enable the claim to be tried.
  • Application stayed, not dismissed. Like in Foreign Exchange, the only other unsuccessful CPO application since Merricks, the Tribunal has given the proposed class representative a second bite of the cherry.  Rather than dismissing the application outright, the Tribunal has stayed the claim for six months to enable the PCR to file additional evidence to satisfy the Pro-Sys test. However, the Tribunal indicated this would require: “a root-and-branch re-evaluation, and mere tinkering with the methodology will not do”.

This action had (and still has) the potential to be the most significant development in data privacy claims since the Supreme Court’s Lloyd v Google judgment in November 2021. The Tribunal’s verdict on the application is clear and the brakes are on, for now.  But with lessons for the PCR and those involved in in the rapidly developing world of competition collective actions more broadly, this is unlikely to be the last we will hear of this claim.