The cost of redress: the evolving role of cost–benefit analysis in certifying opt-out collective actions

Competition Litigation | 13/08/2026

Amongst the various factors to which the Competition Appeal Tribunal (the “CAT”) may have regard under Rule 79(2) in determining whether claims are suitable to be brought in collective proceedings is consideration of the ”costs and benefits” of those proceedings; in sum, the CAT may undertake an evaluative judgment regarding whether the benefits of the proceedings, including the compensation that class members stand to receive and the likelihood of that compensation being distributed to them, outweigh the costs of litigating the claim. Until recently, the costs-benefit analysis has not typically featured as a central point of contention at the certification stage.

However, in the wake of the disappointing distribution in Gutmann, where less than 1% of available settlement proceeds were distributed to class members, the costs–benefit analysis has become a more prominent point of contention.¹ Two recent certification judgments of the Tribunal, consider the point in detail, with differing outcomes for the proposed class representatives.

Waterside

In Waterside Class Limited v Mowi and others [2026] CAT 32, the proposed class representative ("PCR") initiated opt-out collective proceedings on behalf of UK consumers who purchased farmed Atlantic salmon products from grocery retailers. The PCR alleged that the defendant salmon producers had unlawfully colluded to increase the price of salmon, resulting in inflated costs for consumers downstream (the PCR alleged that retailers were overcharged on their purchase of the allegedly cartelised salmon, and that they passed on that overcharge to consumers in the form of higher downstream prices). The claim was brought on behalf of 35.6 million - 44.2 million consumers who were alleged to have suffered an overcharge of £1.97–£10.71 per individual.

Set against those modest, estimated individual losses, the Tribunal regarded the proposed costs of the litigation as being significant. The PCR’s budget included litigation costs of £15.75 million plus VAT; an after-the-event insurance policy with £5.26 million in deposit premiums and contingent premia up to £19.4 million (plus insurance premium tax); a funder’s fee of up to five times deployed capital; and substantial success fees for solicitors and counsel.² The CAT described the budget as “inexplicably high” and noted that the PCR had not considered cost-sharing with parallel claims being pursued by UK supermarkets against the same cartelists.³

The Tribunal refused to grant a collective proceedings order (“CPO”) in Waterside, principally on the basis of its analysis of the benefits of the proposed proceedings, relative to their cost. The Tribunal was particularly concerned about the PCR’s proposed distribution arrangements, which it considered similar to those that had underdelivered in Gutmann. As the Tribunal said at paragraph 48 of its judgment: “Here we are faced with a case where there is no evidence to support an expectation that the amount which will be returned to the class will be proportionate to and/or exceed the costs being spent, irrespective of whether account is taken of the funder’s fee”.⁴

It appears, following Waterside, that PCRs will be well advised to ensure that the distribution plan put before the Tribunal at the certification hearing includes a substantive, evidence-based estimation of the anticipated distribution rate, that can be considered alongside the quantum of the claim, and compared and contrasted with the anticipated costs of the proceedings, including deferred and contingent returns (the Tribunal stated in Waterside that it was “wrong, and potentially misleading” for deferred and contingent returns which the solicitors, counsel and insurers stood to earn not to have been presented as part of the CPO application).⁵

This chimes with the recent proposals made by the Department of Business and Trade (“DBT”) as part of its ongoing consultation on the opt-out collective action regime. The DBT has proposed that greater weight should be given to the cost-benefit consideration at certification, to ”guard against” claims which result in measly distribution. The need for a rigorous analysis of take-up on an application for certification is all the more acute where, as in Waterside and Gutmann, there is no realistic possibility of leveraging the defendant’s own infrastructure and data to notify and compensate class members directly.

The CAT was also critical of the PCR in Waterside for not having sought to cooperate with supermarket claimants, who had initiated separate actions against the same defendants, so as to achieve efficiencies in the conduct of the litigation and avoid duplicative costs. The CAT suggested that, in circumstances where the PCR’s interests converged with those of the supermarket claimants on the questions of liability and overcharge, and only diverged on pass-on, i.e., whether and to what extent the overcharge suffered by the supermarkets was passed through to consumers, the PCR “might piggy-back on the liability claim and keep only a watching brief until the question of pass-on is argued”⁶. The CAT noted that no plans had been made for cooperation between the PCR and the existing supermarket claimants. This was a further key factor the CAT considered as part of the cost-benefit analysis.

Or Brook

The CAT’s judgment in Or Brook Class Representative Limited v Alphabet Inc and others [2026] CAT 65 also considered the cost-benefit analysis, in determining the PCR’s application for certification. The PCR had initiated opt-out collective proceedings against Google on behalf of a class of advertisers who had used Google’s search advertising services. The proceedings overlapped with the opt-out collective action brought on behalf of consumers in Stopford v Alphabet. There was, in other words, a comparable situation to that considered in Waterside; two parallel claims brought at different levels of the supply chain.

The defendants (Google) sought to rely on Waterside in critiquing the PCR’s proposed distribution arrangements; raising, once again, the spectre of the disappointing distribution outcome in Gutmann. However, the CAT was not persuaded that the case was analogous to Gutmann.

The CAT accepted the PCR’s submission that Google is likely to have data for a “really material subset” of proposed class members, and “a good, direct means of individual communication” to reach them.⁷ It concluded that it should be possible to provide direct compensation to class members “with no significant effort on their part at all” and found the points of distinction drawn by the PCR’s claim administrator, Epiq, between Gutmann and the present case to be “highly material [and] persuasive”.⁸ In contrast with Waterside, Tribunal held that “the prospective value of the aggregate damages is much higher than the costs (large though they are) and overall, the cost benefit analysis is well in favour of certification”.

Unlike in Waterside, the PCR in Or Brook had put forward evidence on savings that would be achieved through cooperation with Ms Stopford. Whilst the Tribunal was underwhelmed by the quantum of those savings, against the backdrop of a substantial litigation budget of c. £30 million, it did not regard this as a barrier to certification. On the contrary, the Tribunal indicated that it intended post-certification to make joint case management directions in both the Stopford and Or Brook proceedings which would explicitly limit the resources which the PCR and Ms Stopford may each devote to common issues, as part of its ongoing supervisory role in managing the costs of the proceedings as a whole. In contrast to Waterside the CAT did not posit any possibility or expectation that Dr Brook might “piggy-back” on Ms Stopford’s claim.

The emerging lesson: heightened scrutiny of costs-benefit at certification

Given these judgments, and the clear indication in the DBT’s proposals, practitioners can expect heightened scrutiny by the CAT of the cost-benefit criterion at the certification stage. PCRs should ensure there is clear evidence before the Tribunal as to the benefits of the proceedings for the proposed class, which should include well-considered distribution proposals and, where appropriate, an estimate of the anticipated distribution rate. On the costs side of the ledger, whilst Or Brook indicates an appreciation from the CAT that complex, collective proceedings against well-resourced defendants are necessarily expensive, the CAT expects PCRs to scrutinise their litigation budgets and seek efficiencies wherever possible. Where the same claim is brought by classes at different levels of the supply chain, it expects class representatives to work together to avoid duplicative costs.

¹ See Justin Gutmann v First MTR Southwestern Trains Limited and another [2025] CAT 72 (Gutmann (Stakeholder Entitlement)).
² Waterside Class v Mowi and others [2026] CAT 32 [2026] 4 WLUK 628; paragraphs 40-42.
³ Waterside Class v Mowi and others [2026] CAT 32 [2026] 4 WLUK 628; paragraph 38.
⁴ Waterside Class v Mowi and others [2026] CAT 32 [2026] 4 WLUK 628; paragraph 48.
⁵ Waterside Class v Mowi and others [2026] CAT 32 [2026] 4 WLUK 628; paragraph 41.
⁶ Waterside Class v Mowi and others [2026] CAT 32 [2026] 4 WLUK 628; paragraph 39.
⁷ Or Brook Class Representative Limited v Alphabet Inc and others [2026] CAT 65; paragraph 54.
⁸ Or Brook Class Representative Limited v Alphabet Inc and others [2026] CAT 65; paragraph 54-58.