PlayStation owner Sony has become the latest target of collective proceedings aimed at tech giants. The case is also another example of the Competition Appeal Tribunal’s ‘claimant-friendly’ jurisdiction status for competition litigation.
“The game is up for Sony PlayStation,” consumer champion Alex Neill said, after launching an application notice to commence opt-out collective proceedings in the UK against the multinational conglomerate on 22 August 2022. “With this legal action I am standing up for the millions of UK people who have been unwittingly overcharged. We believe Sony has abused its position and ripped off its customers.”
In a market where competition against big tech seems ever-more difficult, many see collective proceedings as a potentially vital tool for holding abusers of dominant positions to account. Increasingly, however, the Competition Appeal Tribunal (CAT) – which received Neill’s application in summer 2022 – is garnering a reputation as a ‘claimant-friendly’ jurisdiction for competition litigation and could potentially become a key player in this latest group litigation against a gaming industry behemoth.
Basis for collective action
Listed as Alex Neill Class Representative Limited, the applicant for these collective proceedings has sought to combine standalone claims for loss and damage caused by digital restrictions imposed by the proposed defendants, named as Sony Interaction Entertainment Europe Limited and others. The application notice, which was made under Section 47B of the Competition Act 1998 and Rule 75 of the Competition Appeal Tribunal Rules 2015 (S.I. 2015 No. 1648) alleges that Sony abused a dominant position in breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU), as well as the Competition Act’s Chapter II prohibition.
The application includes three main allegations against Sony:
- First, it alleges that Sony has not permitted the use of other third-party operating systems or applications that enable users to play games.
- Second, game developers and publishers are compelled to sell digital games and associated add-on content through the PlayStation Store.
- On top of this, Sony has allegedly charged an excessive and unfair commission of 30% on all purchases completed via the PlayStation store.
Overall, the applicant contends that the proposed defendants have abused their dominant position by unlawful – and therefore anti-competitive – conduct according to Section 18 of the Competition Act, as well as the other articles named above.
“Gaming is now the biggest entertainment industry in the UK, ahead of TV, video and music and many vulnerable people rely on gaming for community and connection,” Neill said. “The actions of Sony are costing millions of people who can’t afford it, particularly when we’re in the midst of a cost-of-living crisis and the consumer purse is being squeezed like never before.”
The proposed class
According to the claim form, the proposed class is “all PlayStation users domiciled in the UK, or their UK-domiciled personal representative who, during the relevant period, made one or more ‘relevant purchases’.”
The ‘relevant period’ to which the form refers began on 19 August 2016 and will continue until the date of any final judgment or earlier settlement of the proposed collective proceedings. ‘Relevant purchases’ are any purchase of digital games or add-on content from the PlayStation Store, for which a payment to access or download in the UK was/ is required. The Tribunal is also considering if individuals domiciled outside the UK are eligible for proceedings on an opt-in basis.
According to estimates, the applicant is representing around 8.9m class members, known as the proposed class. Seeking damages of between £67 and £562 per individual member, the applicant is claiming collective losses of up to £5bn, which excludes simple interest at the rate of 8% per annum.
Suitability of the class representative
Described on the class action’s dedicated website as “a consumer champion with nearly 20 years’ worth of experience leading consumer campaigns and achieving change for UK consumers,” Alex Neill is the sole director of the collective proceedings’ applicant – Alex Neill Class Representative Limited, a not-for-profit special purpose vehicle.
As with any applicant within a collective proceeding, Alex Neill Class Representative Limited has had to give evidence of its compliance with the CAT’s pre-conditions, set out in Rule 78. These include confirmation of a lack of material interests in conflict with the interest of the proposed class members, as well as evidence that no other applicant has sought to act as the class representative in respect of the same claims.
In addition, the applicant provided the Tribunal with a litigation plan. This sets out, among other things, the method for bringing collective proceedings, its procedures for governance and consultation, and an estimate and details of costs, fees, or disbursements, including litigation funding that the applicant has already secured.
On 14 December 2022, a hearing of the first case management conference took place where counsel for the applicant and leading counsel for the defendants made their submissions on directions as well as inner and outer confidentiality rings.
Following the hearing, the CAT determined that England and Wales hold the proper forum for hearing the application. The defendants were ordered to provide their comments on the draft notice of the CPO application and hearing once they receive the litigation funding documents from the applicant. These include litigation budget, Litigation Funding Agreement dated 14 July 2022 between Woodsford Litigation Funding 15 LLP, Woodsford Group Limited and the applicant, the Priorities Agreement, the Deed of Adherence, the CFA and the ATE insurance policy. Once the applicant then publishes the notice of CPO application and hearing, anyone with interest will have six weeks to object to the CPO application and/ or Alex Neill Class Representative Limited being as the representative of the class or even ask for permission to make submissions at the CPO Application hearing.
Given that the CAT listed the CPO application hearing and/ or any application made pursuant to Rule 41 or Rule 43 of the Tribunal Rules on 7 June 2023 with a time estimate of three days, the following directions were made:
- for the defendants to file and serve their response to the CPO application, by 4pm on 28 February 2023;
- for the applicant to reply by 4pm on 14 April 2023;
- all responses and replies can be accompanied with any expert and factual evidence;
- both sides’ skeleton arguments to be filed and served by 4pm on 30 May 2023;
- for the applicant to file an agreed electronic bundle for the hearing by 4pm on 23 May 2023 and an agreed electronic authorities bundle by 4pm on 31 May 2023.
* Original article of 10 January 2023 updated with latest case updates on 21 February 2023.