Experts are invariably instructed in competition litigation proceedings. Typically, each of the parties instructs at least an economist, however, as we discuss below, it is becoming the norm for experts in other fields to be instructed alongside the economists. Experts are increasingly assuming a central role in these cases, and this reflects a firm steer from the UK’s specialist Competition Appeal Tribunal (“CAT”) that they do so.
Frequently, expert evidence is strongly influential for the determination of the substantive issues in these cases. However, in several recent cases the CAT has been directing the parties to facilitate an ‘expert-led’ approach from an early stage in litigation, crafting procedure and process with the experts first in mind.
The evidence of experts in competition collective actions in the CAT, which are actions brought on behalf of a class by a representative party, is pivotal for the advancement of the actions from the outset, as the CAT looks to the class representative’s expert to set out a ‘blueprint’ to trial. Recent cases have stressed the importance of the expert evidence for the CAT’s determinations as to whether these actions proceed to trial.
The CAT, quite rightly, has high expectations for experts, including what they need to do to fulfil their overriding duty to assist the court, and it has been grappling in recent cases with what the expert’s duty of independence entails, and how to case manage, and ultimately evaluate at trial, the evidence of experts that adopt divergent views.
This article considers these developments and makes some suggestions as to how the CAT, which is in the process of drafting updated procedural rules and a new practice direction specifically on expert evidence, might seek to capture some of the learnings from recent cases and best practice as part of this.
THE CORE DUTIES OF A COURT-APPOINTED EXPERT
Where a party is granted permission to adduce the evidence of an expert, certain duties and obligations must be adhered to by the expert, the instructing party, and their legal representatives. These are derived from case law however they have been partially codified in court rules and practice directions.
The most important duty owed by any court-appointed expert in English civil litigation is their duty to “help the court on matters within their expertise”, and this duty overrides any obligations the expert owes to the party instructing it (CPR rule 35.3). The expert should assist the court by “providing objective, unbiased opinions” and should not “assume the role of an advocate” (CPR Practice Direction 35 paragraph 2.2).
It is also critical that the evidence of an expert is the “independent product of the expert uninfluenced by the pressures of litigation” (CPR Practice Direction 35 paragraph 2.1). Not only must an expert be independent, they must also be seen to be independent. They must provide full and timely disclosure of any actual or potential conflicts of interest, or other matters that may affect their independence as soon as possible. Conflicts of interest might include a personal or other connection with the instructing party (such as separate and/or previous instructions) or a financial interest in the outcome of the case.
An expert’s evidence should “consider all material facts, including those which might detract from their opinions” (CPR Practice Direction 35 paragraph 2.3). Tying in with this, experts are obliged to ensure that they have access to all relevant information held by the parties. Experts must identify in their expert reports the material which they have relied on and the substance of all facts and instructions which are material to the opinions expressed or upon which those opinions are based.
The case law also emphasises that experts should operate on a level playing field and that the experts have a part to play to avoid a situation of information asymmetry arising. For example, experts are under a duty to ensure that the same information has been disclosed to each expert in the proceedings.
Serious breaches of the rules governing expert evidence may result in the court withdrawing its permission for the party to adduce evidence from the expert. However, this is an extreme outcome. In most cases, failure to comply with the rules will inform the court’s appraisal of the credibility of the expert witness and the weight to be attached to their evidence, rather than affecting the admissibility of the evidence.
The judgment of the CAT in Royal Mail Group Limited and BT Group Plc v DAF Trucks Limited [2023] CAT 6 is instructive as to how the CAT will approach non-compliance with these rules. This was a landmark cartel damages action in respect of the European Commission’s trucks cartel, in which the authors acted for the successful claimants. The CAT considered that the expert instructed by DAF, the defendant, had displayed a “lack of candour” in relation to work they had previously undertaken for DAF, as well as a “remarkable lack of curiosity” in their approach to one of the core issues in the claim: whether it was plausible that the cartel could have had any effect on the prices paid by the claimant (i.e. the theory of harm). The CAT held that this undermined the expert’s credibility and meant that they needed to “treat [his evidence] with caution”, rather than “accepting it at face value”. We consider this important judgment in relation to the role and use of expert evidence in competition litigation in further detail below.
HOW EXPERT EVIDENCE IS DEPLOYED IN COMPETITION LITIGATION
Traditionally, written expert evidence is sequenced to follow on from the provision of disclosure and the exchange of factual witness statements. There are no standard directions concerning the sequencing of expert evidence, however experts are typically directed to exchange reports either simultaneously or sequentially. Experts will usually produce at least one report responding to the report of their opposite number.
Following the conclusion of the expert reports process, the experts usually meet to discuss the issues addressed by their evidence and prepare an agreed joint statement. This joint statement typically sets out those issues on which the experts agree and disagree. The preparation of joint expert statements is governed by additional rules which limit the role of lawyers in the process.
In a series of recent cases, (Mark McLaren Class Representative Ltd v MOL (Europe Africa Ltd, Volkswagen AG v MOL (Europe Africa) Ltd, the Trucks Second Wave Proceedings, the Umbrella Interchange Fee Litigation, and Merricks v Mastercard Incorporated) the CAT has eschewed the traditional case management directions outlined above in favour of the novel approach of requiring the parties to exchange ‘Positive Cases’, setting out their position on the issues in the proceedings, followed by ‘Negative Cases’, in which the parties are expected to set out why the opposing’s party’s case is wrong, overstated, misconceived or not to be relied upon for some other reason. The CAT envisages that the expert evidence will form the central pillar in each case.
Where claims proceed to trial, it is common for a significant proportion of the trial timetable to be devoted to the expert evidence. The experts may be directed to give their oral evidence at trial concurrently in a process known as a ‘hot tubbing’. There are different variants of the hot tub model but it will usually be in addition to, rather than instead of, cross examination. In a hot tub, the experts line up to take turns answering questions put to them by the Tribunal panel, and each expert may be asked to respond to the evidence of the other. This process therefore requires the Tribunal (and particularly the economist on the three-member panel, where applicable) to commit a significant amount of time to preparing the questions to put to the experts.
The parties will usually prepare and agree a formal protocol for the giving of expert evidence at around the time of the pre-trial review for the CAT’s approval. This will address (amongst other things) practical matters such as at what times the experts will be subject to the ‘purdah’ rule, which prevents them from communicating with anyone regarding the case during breaks in them giving evidence, and may identify the topics on which the experts will be questioned.
THE SPECIAL ROLE OF EXPERTS IN COLLECTIVE ACTIONS
Competition collective actions brought on behalf of a class only proceed to trial if they are certified by the CAT, and in that context, as the CAT observed in David Boyle v Govia Thameslink Railway Limited [2023] CAT 63, the expert is placed “centre stage” as the CAT looks to them to produce an expert methodology in support of the class representative’s application for certification. It therefore falls to the expert to set out a ‘blueprint’ as to how they intend to develop their evidence through to trial. In a single brief report, the expert is to articulate the theory of harm said to arise out of the (alleged) infringement, how the expert proposes (on a class-wide basis) to demonstrate how the infringement of competition law was causative of loss, and how that loss will be quantified.
If the respondent to the collective proceeding order application opposes certification, then they may, subject to the permission of the CAT, adduce responsive expert evidence attacking (for example) the feasibility of the class representative’s expert’s intended approach.
Where there are rival proposed collective actions being put forward by different class representatives (known as a ‘carriage dispute’), the expert evidence of the respective proposed collective actions is likely to play an important part in the CAT’s determination as to which of them should proceed. This was the case in Hunter / Hammond v Amazon.com, Inc [2024] CAT 8, a carriage dispute between rival class representatives Julie Hunter and Robert Hammond, both of whom were proposing claims alleging an abuse of a dominant position by Amazon in relation to the ‘Buy Box’ on its online marketplace. In its ruling resolving carriage in favour of Mr Hammond’s application, the CAT noted that the applicants’ respective methodologies were very different and that the expert evidence represented “a key differentiator” between them, with that of Mr Hammond’s expert being “clearly and distinctly better – more suited – to articulating and resolving the claims”.
Expert evidence therefore plays a pivotal role in the advancement of collective competition claims, and it does so from the outset of the proceedings.
LITIGATION AS AN EXPERT-LED PROCESS
In the context of cases where the Positive and Negative Case approach outlined above is directed, the CAT has stressed the importance of the proceedings being ‘expert led’.
For example, in a ruling in the Trucks Second Wave Proceedings [2024] CAT 2, the CAT has directed that a ‘lead economic expert’ for each of the parties are to “take the lead” in determining the material they require to address the issues in dispute and developing this in the Positive Cases, which shall compromise all the material on which the respective parties rely to make good their case. Further, the CAT held that there will be “no disclosure” in the conventional sense. Instead, consistent with the expert-led approach, it is intended that the experts make requests for data or information of the parties in the lead up to the exchange of Positive Cases.
The CAT has heard from the experts at regular case management meetings in the Trucks Second Wave Proceedings, in a variation of the ‘hot tub’ procedure often used at trials, to elicit the experts’ views on case management issues and to justify (or argue against) requests for data or information. The CAT has stressed that it places considerable value in hearing from the experts in this way directly, as opposed to through legal submissions.
THE BROADENING SCOPE OF EXPERTISE
In competition cases, evidence from at least one expert in competition economics will normally be put forward by each party. However, evidence is increasingly being sought from experts in other disciplines, such as behavioural economics, forensic accounting, corporate finance, tax, as well as relatively niche fields such as IT and mobile security, payments systems, the app industry, and computer science.
Further, in the context of considering whether to approve settlements in collective actions, the CAT has considered independent expert evidence from a competition law practitioner with expertise in settling competition damages claims opining on the merits of proposed settlements from the perspective of the class members.
However, parties are not given a free hand to adduce whatever expert evidence they wish. Expert evidence “shall be restricted to that which is reasonably required to resolve the proceedings” (CPR rule 35.1 and CAT Guide paragraph 7.65). The CAT’s governing principles also apply when it is considering making directions giving permission for expert evidence (the equivalent of the ‘overriding objective’ under the Civil Procedure Rules), which provide that the CAT will seek to ensure that the case is dealt with justly and at proportionate cost.
Accordingly, the party seeking to adduce expert evidence must demonstrate to the court that there is a “recognised expertise governed by recognised standards and rules of conduct capable of influencing the Court’s decision on any of the issues which it has to decide and the [proposed expert] has a sufficient familiarity with and knowledge of the expertise in question to render his opinion potentially of value in resolving any of those issues” (Evans-Lombe J in Barings v Coopers & Lybrand [2001] PNLR 22).
The party must also show that the evidence of the expert is reasonably required. This condition is straightforward to meet in cases where the Tribunal considers the evidence necessary to resolve the issues in the case, however, in appropriate cases (considering a range of factors, including the value of the claim and proportionality), the condition may also be met if the evidence would be of assistance to the Tribunal (even if not necessary).
Where permission to adduce expert evidence has been granted, the parties and expert need to give careful consideration to the appropriate volume of material – a point recently stressed by the CAT in Royal Mail:
“We received thousands of pages of detailed experts’ reports on all of the issues before us. There were central, important issues on the Overcharge and Supply Pass On where the size of the reports could be justified. But there were other subsidiary issues […] where we considered that there was disproportionate time and money spent on complicated analyses that were less justified. Not only does this increase the overall costs of these proceedings but also it is highly burdensome on the Tribunal, and we would urge parties in other similar cases to exercise some restraint and sense of proportion in the preparation of their expert evidence.”
In that case, the experts had submitted 48 reports in total on various issues: overcharge, theory of harm, pass-on, loss of volume, complements, leasing, financing losses and tax. The steer from the CAT is that the parties and experts should adopt a proportionate approach when preparing expert evidence, bearing in mind the importance of the issue in the overall context of the case (including, where applicable, the impact of the issue to the value of the claim).
In relation to collective proceedings in particular, the Court of Appeal has emphasised the role of the CAT exercising its case management responsibilities to ensure cases proceed efficiently to trial and “potentially sprawling cases do not absorb an unfair amount of judicial resource” (McLaren v MOL) [2022] EWCA Civ 1701). In the same vein, in the context of determining applications for the grant of permission to adduce expert evidence in Coll v Alphabet Inc [2023] CAT 47, the CAT asked the parties to produce a non-binding outline of the trial timetable so that it could “gauge the impact of the expert evidence sought on the time likely to be required for the trial”.
MANAGING THE WORKLOAD
Against the backdrop of the increasing significance of experts in complex, high-value competition litigation claims, the question arises as to whether the burden can be shared between multiple experts.
Of course, the reality is that experts in these cases are rarely one-man bands, rather they are typically a senior individual within a consultancy supported by a team that will (subject to the expert’s supervision) carry out much of the work, such as assembling datasets from disclosed data, constructing models and conducting analyses. However, the expert is responsible for the evidence they put forward and is the person who will ultimately be called as a witness at trial to explain and defend any and all aspects of their evidence.
The CAT grappled with these issues in Coll, where the class representative successfully argued that they should be granted permission to adduce evidence from two experts in competition economics to divide up the work between them. However, in granting permission, the CAT emphasised that such an order will only be made in exceptional circumstances, and it gave short shrift to the idea that an expert simply having “a lot of work on” should have much bearing on the decision.
Conversely, in another context, the CAT denied the multiple defendants in PSA Automobiles SA v Autoliv AB permission to rely on the evidence of separate experts for the assessment of alleged cartel overcharges, holding instead that the three separate defendant groups had permission only to adduce evidence from a single expert ([2023] CAT 66). The possibility of the defendants instructing a single joint expert was raised by the CAT of its own initiative, who considered it highly unsatisfactory for the Tribunal panel to have to consider three separate economic models from the three distinct defendant groups. This is another example of the CAT being concerned to ensure that expert evidence is confined to what is proportionate.
INDEPENDENCE IN THE SPOTLIGHT
As noted above, an expert’s duty of independence is of paramount importance. The CAT unpacked the requirements of this duty in detail in Royal Mail. The claimants had, in the words of the Tribunal, “mounted a full-scale attack” on the independence of one of DAF’s experts. The expert in question had responsibility for addressing (amongst other things) (i) the theory of harm and (ii) the measure of the alleged cartel overcharges.
DAF’s expert concluded (based on regression modelling) that there was no overcharge and argued this this was explicable on the basis that it was highly unlikely that there was sufficiently effective coordination amongst the cartelists that would enable higher transaction prices to be sustained in the UK. The claimants’ instructed expert, on the other hand, found that the cartel had caused an overcharge and considered this to have a plausible basis in economic theory and the known and admitted facts of the cartel.
DAF’s expert had disclosed, at a late stage in the proceedings (in a brief footnote to his first expert report), that he had previously advised DAF in relation to the European Commission’s investigation of the cartel, and that this had included him assisting DAF with responding to the theories of harm put forward by the Commission. Under cross-examination at trial, he confirmed that he had discussed with DAF its motivations for participating in the cartel, yet he had made no reference to this exchange anywhere in his evidence. The CAT found this amounted to a “lack of candour”.
There were many other questions that DAF’s expert accepted that he had not asked his client about, such as what use DAF had made of the huge amount of information obtained through its participation in the cartel, how the cartel worked, and whether the cartelists would have been able to assess the success of the cartel in raising prices. This was despite these being key issues in the expert evidence he had developed on theory of harm. The CAT strongly criticised the expert, holding that “[w]here there were relevant facts […] [he] was prepared to dismiss such evidence if it did not fit with his empirical analyses”.
The judgment serves as a salutary lesson for parties in respect of the instruction of experts, particularly in respect of the choice of experts and the disclosure of conflicts of interest (and other matters that may affect their independence).
On the first point, defendants in follow-on competition claims should carefully consider whether to instruct the same expert for both the regulatory investigation stage and subsequent civil litigation. Although the CAT in Royal Mail did not assert that DAF’s instruction of the same expert for both stages was intrinsically problematic, they did find that his role in the investigation stage “provided [him] with insights and access that […] [the CAT] could reasonably have expected him to use in order to assist them”, yet that did not happen.
The other key takeaway is that the CAT will take a dim view of an expert who fails to disclose potential conflicts or similar issues in an upfront and straightforward manner consistent with their duties. The CAT is likely to assume the worst of an expert that does not meet this standard.
EXPERTS TAKING DIVERGENT APPROACHES
There have been several instances recently of the CAT having to grapple with experts approaching their evidence in divergent ways.
MOL (Europe Africa) Ltd v Mark McLaren Class Representative Ltd [2022] EWCA Civ 1701 concerned the appeal from a judgment of the CAT granting a collective proceedings order in relation to claims following on from the European Commission’s Maritime Car Carriers cartel decision in respect of the deep-sea transport of vehicles. The parties’ experts had put forward competing arguments about two theories of pricing relevant to determining whether the alleged cartel overcharges were passed on to the consumer class. The Court of Appeal considered that the CAT had erred by failing to address this from a case management perspective as part of its role as ‘gatekeeper’ for collective actions, despite this clearly being the “pivotal dispute in the case”. Although the Court did not disturb the CAT’s determination on certification, it remitted this issue for the CAT to address how it expected the trial to proceed given this dispute. On remittal, the CAT directed the Positive and Negative Cases structure described above.
The CAT voiced similar concerns about experts adopting divergent approaches to their methodologies in its certification ruling in Alex Neill Class Representative Limited v Sony Interactive Entertainment Europe Limited & another [2023] CAT 73]. The CAT observed from reviewing the experts’ respective reports that they “see things very differently”. Noting the Court of Appeal’s comments in McLaren, the CAT directed a process for the experts to address several specified topics in short reports setting out, at a high level, their proposed approach, which it envisaged being followed by a hearing, likely to take the form of a hot tub led by the CAT. It stressed that the objective was to promote understanding, not to “resolve expert issues in advance of the trial”, although it would consider that possibility “if that opportunity arises and the parties wish us to do so”.
This is an evolution of sorts from the approach taken by the CAT in Dawsongroup Plc v DAF Trucks N.V. [2020] CAT 3, where it directed the parties to file short methodology statements summarising the method favoured by their respective experts to the estimation of the alleged overcharge and to pass-on, which the CAT hoped would inform disclosure in the case going forward.
EXPERTS TAKING DIVERGENT VIEWS
But how then does the CAT deal with experts that take divergent views at trial? In Royal Mail, the CAT evaluated in considerable detail the regression analyses put forward by the parties’ respective experts, which were central to their assessment of the alleged overcharge.
The CAT found that “big and difficult” issues arose from these analyses upon which “economic experts could reasonably disagree and on which there may not necessarily be a single correct answer”. To try to “‘score’ the experts point by point” on these issues would “be an exercise in spurious accuracy”, the CAT held. It instead made findings in broad terms as to which expert had the better of the arguments on these issues and wielded the ‘broad axe’, a judicial tool often used in the quantification of damages in which the court ‘does its best’ based on the available evidence, to resolve the significant spread between the overcharge calculated by the experts (ranging between 6.7% and 14.7% from the claimant’s expert and 0% from the defendant’s), holding that the appropriate figure was 5%. On appeal, the Court of Appeal endorsed the CAT’s approach as “precisely the sort of situation where wielding the broad axe is appropriate” ([2024] EWCA Civ 181).
However, the CAT considered that the experts could have done more to modify their positions and find common ground. In particular, it held that “there should have been more recognition, on certain issues, of the scope for a range of possible results and of the reasonableness of the other expert’s opinion” and “there were a number of instances where both experts might have been more transparent and realistic in identifying and accepting the existence of some of the limitations of their regression model results, and to have done so in their exchange prior to the hearing”.
On appeal of the CAT’s judgment, the Court of Appeal emphasised that the CAT is “entitled to expect experts to adjust their opinions, even to the detriment of their clients, in the light of evidence as it emerges” and that “[a]n expert whose heels remain firmly dug in, might find such obduracy taken into account, adversely, by the CAT in the final account”.
The CAT therefore generally expects to see, where appropriate, an evolution of the experts’ views in the expert process prior to trial and subsequently. In these regards, the joint expert statement, and the process leading to it, is intended to facilitate this by focussing the experts on identifying common ground. It follows that the issues in dispute that subsist at trial are often a subset of the matters in issue at expert report stage. In Royal Mail, the experts had by the time of the trial reached a substantial measure of agreement in the joint expert statements on some of the subsidiary issues in the case such as truck leasing, the measure of financing losses, and tax.
Where a “pivotal dispute” between the experts is apparent at an early stage (as in McLaren) the CAT might consider trying this as a preliminary issue. However, there are obvious challenges to how this would work in practice, not least that it may be unclear exactly what issues are likely to be controversial until the experts have exchanged expert reports (or Positive Cases), although the early exchange of methodology statements may preview issues. Even if it is possible to identify “big and difficult” issues at an early stage, there may be little incentive for the parties to seek to have them determined as preliminary issues in circumstances where the experts’ analyses will inevitably be provisional and subject to refinement, not least as factual evidence is assembled.
WHERE NEXT?
The CAT is in the process of drafting updated procedural rules and practice directions. This is an obvious opportunity for the CAT to codify its practices in relation to expert evidence and bring together in one place material that currently spans not just the CAT’s own rules and Guide to Proceedings but also case law and Part 35 of the Civil Procedure Rules.
In addition to this codification exercise, another way in which the CAT could seek to make it clearer to experts what is expected of them and emphasise the importance of their core duties would be to provide in its rules for a form of declaration to be certified by the experts in their expert reports, as it has done for factual witness statements. Although experts typically include a declaration of this kind in their reports, the content of these vary in practice and there would be utility in some standardisation. Perhaps it would help focus minds if this declaration was given by the expert as part of their appointment process?
The authors consider that now that several competition litigation cases have been tried, it is an apposite time for the CAT to consider what has worked well in the tried cases and what has not, and endorse best practice in its rules and practice directions as regards expert evidence. For example, the CAT might consider issuing a template protocol as to how expert evidence will feature at trial. It might also consider a standard requirement for the parties to focus at an early stage on articulating their expert’s methodologies.
At the same time, it is important that the rules and procedures permit flexibility, so as not to stifle further innovation in this important and developing area.