British Airways Cartel Case May Trigger U.S.-Style Class-Actions in U.K.

British Airways Plc and other carriers accused of fixing cargo prices could face U.S.-style class-action suits in the U.K. for the first time if a court eases rules on customers joining together to sue, lawyers say.

A victory in the appeal by two flower shippers who were denied the right to form a group to sue British Airways “has the potential to mushroom dramatically,” by making it cheaper and faster to seek damages in Britain against companies that collude to inflate prices, antitrust lawyer Frances Murphy said.

“Some might refer to such a ruling as an Americanization of the English civil procedure,” Murphy, who leads the antitrust practice at Jones Day LLP in London and isn’t involved in the case, said in an interview. If the request is granted, it could lead to “protracted litigation with indirect purchasers, all claiming to have suffered some degree of loss.”

The Court of Appeal, which is expected to rule tomorrow, could allow direct and indirect customers of British Airways to join the same class in suing -- a group that could run into the hundreds of thousands. The decision comes a week after British Airways and 10 other carriers were fined a total of 799.4 million euros ($1.08 billion) by the European Union following a three-year probe of the cartel.

Pleaded Guilty

In 2007, the London-based company pleaded guilty in the U.S. to related charges and was fined $300 million.

While civil suits by groups of customers are common in the U.S., the cases are rare in the U.K. and haven’t been done on the scale sought in this case, said Becket McGrath, a competition lawyer with Edwards Angell Palmer & Dodge LLP.

A ruling in favor of the flower shippers “would show that it’s possible to adopt a class-action model in the U.K. without waiting for legislative changes,” McGrath said. “It would be a significant means of aggregating claims and making litigation worthwhile.”

British Airways’ spokesman Tony Cane declined to comment specifically on the case by the flower shippers, Emerald Supplies Ltd. and Southern Glass House Produce Ltd.

“We will continue to contest any class actions brought by cargo customers,” Cane said in an interview.

If the customers win their appeal and are allowed to form a class to sue the airline, the court would be loosening a rule that has been around for more than a century and bringing the U.K. closer to the U.S. in terms of recovery for customers, said Jonathan Hitchin, a lawyer at Allen & Overy LLP in London.

‘Suffered’

“In some cases, the class could be enormous,” Hitchin said in an interview. “It would demonstrate that there is a widely available remedy for those who have suffered as a result of cartel behavior.”

The flower shippers appealed after an April 2009 ruling by Judge Andrew Morritt in the High Court in London, who denied their request because the proposed group was too ill-defined and had too many potential conflicts.

“The grounds on which the High Court chucked the request are not convincing,” McGrath said.

Scott Campbell, a lawyer from the firm Hausfeld & Co. LLP who represents clients suing British Airways, said that about 200 customers want to be represented by the flower companies. He said the potential class “must be in the hundreds of thousands of individual claims.”

British Airways in July asked the court to add Air France- KLM Group, Cathay Pacific Airways Ltd. and 30 others as defendants to protect itself against payments it may be ordered to make in the case. The court is still considering the request.

Emerald Action

“This very much makes the Emerald action the hub of cargo cartel litigation in the EU,” Campbell said in an e-mail, referring to the name of one of the flower companies.

British Airways isn’t the only carrier facing civil cartel claims. Air France and its Dutch Martinair unit were sued in September in the Netherlands for as much as 500 million euros over the carriers’ alleged involvement in the cartel.

About 300 shipping customers, including Royal Philips Electronics NV and Ericsson AB, joined the Dutch case claiming that they paid too much for services in Europe from 2000 to 2006, according to Claims Funding International Plc, the Dublin- based company that organized the case.

The European Commission said last month it is considering expanding the use of group lawsuits for customers affected by antitrust violations in all of the EU’s 27 nations.

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.