American-style class actions have arrived in the UK, and the railway’s fares and ticketing system is fast becoming a major target. Litigation is currently underway against four separate train companies, which could be liable for hundreds of millions in damages.
The new type of ‘opt out’ class action enables mass consumer rights challenges at the Competition Appeals Tribunal (CAT). Previously, such cases took place on an ‘opt-in’ basis, requiring the sign up of a group of claimants. Now, it’s possible to undertake an action on behalf of a prospective ‘class’, where a defined group of people are included by default and entitled to compensation if the case is successful. Under this system, a single individual can represent potentially millions of people.
As predicted in the Financial Times, and across the legal press, 2022-23 is sure to be a big year for class actions. There are currently lawsuits underway against four train operating companies for ‘abuse of market dominance’ in their fares and ticketing practices.
The Boundary Fares Claim
The first ever ‘opt out’ class action against the railway was certified in October 2021, alleging breaches of competition law against the South Eastern and South Western rail franchises in relation to the sale of ‘boundary fares.’ The £93 million claim was cleared to go forward in July 2022, following a failed appeal by train companies:
On 22nd March 2023, the CAT Tribunal certified a further, £73 million boundary fares claim against Govia Thameslink Railway (GTR), combining the three claims into one. It also ruled against the Department for Transport’s bid to intervene in support of the train companies:
The boundary fares claim alleges an ‘abuse of market dominance’ by Southeastern, South Western and GTR, in failing to make cheaper ‘boundary fares’ available to London Travelcard holders. It argues that train operators have been overcharging passengers who travel outside the Zone 6 boundary; effectively charging double for the portion of the journey already covered by their Travelcard. The damages go back to 2015, including: The Go-Ahead Group/Keolis (Southeastern and Govia Thameslink Railway); First/MTR (South Western Railway); and Stagecoach (South West Trains).
GTR – “unlawful” control of ticket prices
A further claim against GTR was launched in July 2021, and awarded a Collective Proceedings Order (CPO) in October 2022, permitting the case to go forward.
The GTR case alleges an abuse of market dominance in relation to ticketing and fares on the Brighton mainline and at Victoria station. GTR is the only train company in the UK to have ‘sub brands’ within the same company, and the case alleges that it has used Southern Rail, Gatwick Express and Thameslink to ‘unlawfully’ control ticket options, overcharging passengers by tens of millions.
High risk of further litigation
The certification of Justin Gutmann’s ‘boundary fares’ claim in October 2021 represented a historic precedent for consumer rights actions against the railway. With many other train operators crossing the London boundary, there is a high risk of further litigation in this area alone.
Legal commentators have long predicted that the new class action regime will be ‘potentially franchise-ending territory’ for train companies, but there is increasing concern that the taxpayer might be left to foot the bill. Despite years of warnings, the government and rail industry have failed to enact rail fare reform and currently continue with the questionable practices around the sale of ‘boundary fares’ and GTR’s use of sub-brands to control ticket prices.
[This page remains under editing as the legal actions progress. It was last updated on 22/03/2023]