The Competition Appeal Tribunal (“CAT”) has struck out a proposed collective opt-out action fronted by former Blur drummer, David Rowntree (“the Proposed Class Representative”) against (1) Performing Right Society Limited (“the PRS”) and (2) PRS For Music Limited (“PRSFML”, together with the PRS, “the Proposed Defendants”).

The Competition Appeal Tribunal has provided a useful judgment setting out some of the hurdles a proposed class representative is likely to face in obtaining a collective proceedings order (“CPO”) for opt-out proceedings.

Introduction

At a hearing earlier this year (which took place on 2 days in February 2025 and 1 day in June 2025), the CAT was asked to determine (a) an application for a CPO by the Proposed Class Representative (“the CPO Application”) pursuant to section 47B of the Competition Act 1998 (“the Act”) (albeit the Proposed Claim Representative sought that the CPO Application be adjourned to allow his new legal team to consider potential amendments to it) and (b) a strike out and summary judgment application by the Proposed Respondents (“the Strike Out / Summary Judgment Application”).

In unanimously rejecting the CPO Application and allowing the Strike Out / Summary Judgment Application the CAT made a number of important observations which we explain further below.

Background

The Proposed Defendants collect and distribute royalties relating to the public performance of musical works in which they have been assigned the “performing rights”. The PRS is a company limited by guarantee and exists only for the benefit of its members. PRSFML is a wholly owned subsidiary of the PRS, and it is the vehicle through which rights royalties are collected and distributed to the members of the PRS.

As at the date of the judgment, there were approximately 175,000 members of the PRS. Of these, c165,000 were songwriter members and c10,000 were publisher members. Members assign to the PRS their performing rights pursuant to standard form terms, and in return the PRS agrees to use its best endeavours to pay its members the royalties due to them (in accordance with the terms of the PRS constitution).

The proposed class was any person who was a songwriter member of the PRS between 9 March 2017 and the date the proceedings were issued in early 2024.

In high level summary, the potential claim related to music performance royalties collected by the PRS which cannot be matched with the correct songwriter or publisher owing to inaccurate or insufficient information. These are known as ‘Black Box’ royalties. The nub of the potential claim was said to be the unfairness in distributing Black Box royalties in the same proportions as matched royalties, because the proportion of writer royalties which are in the Black Box is higher than the proportion of publisher royalties in the Black Box. Accordingly, through a claim under section 47A of the Act, the Proposed Class Representative sought a re-allocation of royalties in the Black Box.

The adjournment of the CPO Application

The Tribunal refused to adjourn the CPO Application on the basis of the Proposed Class Representative having instructed new solicitors in May 2025 (i.e. when the CPO Application was part-heard). The CAT found the reasons for the adjournment given by the new solicitors “unsatisfactory”, and that it would have expected “substantive reasons” for the adjournment, with “draft amendments, or at the very least a proper explanation as to the nature and scope of those amendments and cogent reasons why a draft is not yet available”.

The Strike Out / Summary Judgment Application

The two main bases on which the Proposed Defendants sought summary judgment were:

(a) The Claim Form for the CPO does not articulate a claim to which section 47B of the Act applies; and/or

(b) No proper counterfactual has been described – i.e. no attempt has been made to explain how Black Box royalties should be distributed instead of the existing approach. The claim is therefore not suitable for aggregate damages.

In support of argument (a), the Proposed Defendants argued that because most of the writer members of PRS will have had the royalty payments to which they were entitled, the majority of the class would not have individual claims against PRS (put another way, the majority of members would not be entitled to anything in the Black Box royalties). The CAT agreed, concluding that the way the case was framed was that all writer members of the PRS would potentially be owed Black Box royalties, whereas the reality was that it would only be members who, for various reasons, cannot be identified and therefore paid.

Accordingly, it was not a common feature that all of the writer members were “owed” anything from the Black Box royalties. Whilst there may be other ways of distributing Black Box royalties, that does not mean the option currently used was unfair or abusive. There were therefore no facts which supported a claim for infringement of Chapter I or II of the Act, and the potential claim did not have a reasonable prospect of success. The Strike Out / Summary Judgment Application was therefore successful on this basis.

The CAT also went on to make various further points:

Aggregate damages

Although the Proposed Class Representative filed expert evidence which sought to explain the methodology that could be used to calculate damages, the CAT remained uncertain about how, as a matter of practicality, the correct allocation of the Black Box royalties could be established. This was particularly so in circumstances where, by their very nature, those royalties could not be allocated to a specific writer or publisher member of the PRS. The CAT found that the Proposed Class Representative had “not identified a sufficiently credible or plausible method of how damages are to be assessed”. It did not consider the defects to be capable of easy resolution, and it declined to make a CPO on this additional basis.

Proportionality

It is worth noting at this stage the slightly unusual feature of this case – that the members would, if a CPO order was made, be bringing a claim against an entity that they were all themselves members of (with the ability to influence the governance of the Proposed Defendants). Further, any award of damages or costs against the PRS may also impact the returns made to its members. The CAT paid “particular attention” to these factors.

Some attempt was made by the Proposed Class Representative to provide the CAT with a potential damages figure, and a figure of £55m was given by an expert as being a realistic estimate. However, the PRS did not accept the methodology for reaching this figure, nor that the amounts included were captured in the Proposed Class Representative’s pleaded case in any event. It followed that the CAT formed the view that it was “doubtful” that the cost-benefit of the proposed proceedings favoured certification, particularly when the circular nature of the claim (i.e. members claiming against a not-for-profit company of which they themselves were members) was borne in mind. As the CAT put it “the central problem is that the class is, in a manner of speaking, suing itself”.

Pursuant to its obligations to consider “the costs and benefits of continuing the collective proceedings”, the CAT also noted that the estimated costs of bringing the claim were said to be slightly less than £18m. Given the involvement of a litigation funder, its fee would be paid (albeit subject to the CAT’s approval) on a sliding scale of multiples against the amount funded, with the multiplier increasing from 4x to 6.5x of the amount invested depending on how long the proceedings took (with 30% compound interest applying in the event the proceedings took over 5 years to conclude).

Whilst the CAT did not consider it could rule on the appropriateness of such a fee at this stage, it did remind the parties (and their lawyers) that where the preparation of class actions are initiated by lawyers rather than members of the class in question, it may be that it is the “revenue stream to the lawyers and the funder which is the principle incentive to the pursuit of these proceedings rather than benefits to the class”.

Alternative approach

The CAT expressed some regret that the parties had seemingly been unwilling to explore any alternative resolution of the potential claim, including members making internal representations to those managing the PRS and its distribution committee. The CAT suggested that alternative ways of distributing Black Box royalties without “spending these eye-watering sums on lawyers and funders” might be of more benefit to the class members.

Conclusion

It is worth noting that the PRS submitted that Mr Rowntree was not suitable to act as a class representative, owing to various conflicts. However, on the basis that these conflicts were “not easy to grasp and appeared to be speculative” the CAT declined to make any order in this regard, and concluded that, whilst the matter “may need to be revisited”, Mr Rowntree was suitable to act as class representative if the case was to progress.

It remains to be seen whether the Proposed Claimant Representative seeks to appeal the CAT’s decision to the Court of Appeal. However, the judgment is a useful reminder of the potential hurdles a would be representative group will need to overcome, and the potentially significant expenditure that may need to be incurred at an early stage to prepare a feasible counterfactual scenario for damages purposes.