Waterside: Is the CAT’s Cost-Benefit Approach Squeezing the Life Out of Smaller Collective Actions?

The Competition Appeal Tribunal’s refusal to certify the proposed salmon cartel collective action in Waterside Class Limited v Mowi ASA and Others [2026] CAT 32 is one of the clearest signals yet of the emphasis the CAT is placing on the cost-benefit analysis and its readiness to refuse certification where it considers the numbers do not add up for class members.

While the objective is laudable, the judgment raises important questions about the future viability of ‘smaller’ collective actions, the wider objectives of this still-maturing regime and the direction in which it is heading.

The Waterside Decision

The standalone claim was pursued on an opt-out basis on behalf of consumers who purchased salmon from retailers, alleging that the proposed defendants – major producers of Atlantic salmon – unlawfully colluded to increase prices between April 2013 and February 2019.  The class was estimated at between 35 and 44 million people. 

Following a certification hearing, the Tribunal identified a series of concerns, focussing on disproportionate costs, the likely low take-up by class members and the Proposed Class Representative’s (PCR) failure adequately to address these matters which, taken together, led it to refuse the Collective Proceedings Order (CPO).  Notably, the CAT stopped short of striking the claim out altogether.

At the heart of the judgment sits a close assessment of the cost-benefit balance of the proposed proceedings.  The PCR’s litigation costs budget of £15.75 million plus VAT – rising to approximately £21 million plus VAT once provision for After-the-Event (ATE) insurance deposit premium was included – was described as “inexplicably high”.  This was particularly so given the existence of parallel proceedings brought by Asda and Tesco on essentially the same facts, which could (depending on their outcome) establish the existence of a cartel and measure any overcharge.  The Tribunal was critical of the PCR’s failure to explore potential cost synergies, such as sharing counsel, disclosure, and expert witnesses with the Asda and Tesco claimants, and of its apparent assumption at the outset that it would need to prepare all aspects of the case independently.

In terms of likely take-up by the class, the Tribunal drew heavily on Gutmann v First MTR Southwestern Trains [2025] CAT 72 (Gutmann (Stakeholder Entitlement)), where, against a settlement of up to £25 million, only 7,290 valid claims were made, representing just £216,725 – take-up of approximately 0.9%.  Applying comparable assumptions, the CAT concluded that take-up in Waterside was likely to be “swamped” by the sums returned to lawyers and funders.  Such an outcome, the Tribunal stated, would not be in the public interest.

The PCR submitted, by reference to Mastercard v Merricks [2020] UKSC 51, that a negative cost-benefit analysis was not an independent bar to certification.  Lord Briggs observed in Merricks that in many cases “the selection of the fairest method [of distribution] will best be left until the size of the class and the amount of the aggregate damages are known”.

The CAT drew a distinction – Lord Briggs was addressing the interests of the class inter se rather than the threshold question of whether damages will reach the class at all.  Moreover, in Gutmann v First MTR Southwestern Trains [2021] CAT 31 (Gutmann (CPO)), the analysis was only “slightly” against certification.  In any event, given the Tribunal's subsequent experience, “it is unclear whether the same result would have been reached today”.  Where an assessment of the evidence indicates that the cost-benefit balance is “plainly against” continuation of the proceedings, the Tribunal held, “it would not ordinarily be appropriate to certify those proceedings”.  This suggests a recognition of the cost-benefit analysis as a potentially decisive factor on certification where the imbalance is sufficiently stark.

The Tribunal also refused to authorise the PCR, echoing its reasoning in Riefa v Apple Inc [2025] CAT 5, where the CAT emphasised that a class representative must demonstrate sufficient independence and robustness to act in the interests of the class.  Ms Heal, the PCR’s sole director, had not adequately addressed the cost-benefit balance in her evidence, nor had she explained what cost synergies might be achieved through coordination with the Asda and Tesco proceedings – a failure which, in the Tribunal’s view, demonstrated that the PCR had not adequately acted in the interests of class members.

The Tribunal was additionally troubled by Ms Heal’s remuneration of £300 per hour (up to £316,950 in total), describing the trend towards class representatives “self-authorising fees of this magnitude” as “undesirable” and indicating that remuneration should ordinarily be in line with public sector pay.  The Tribunal also took issue with the fact that certain contingent entitlements – including a 50% solicitor success fee, a 30% counsel success fee and contingent ATE premia of up to £19.4 million – only came to light following direct questions from the Tribunal. The CAT described this as “wrong, and potentially misleading”.

Rather than striking out the claim, the Tribunal invited the PCR to reformulate and re-apply, signalling openness to more creative distribution mechanisms – potentially in cooperation with retail outlets – and suggesting that a scheme could be devised with the potential to return close to 100% of damages to the class.

Waterside in Context

Viewed alongside other recent CAT decisions, Waterside can be seen as forming part of a trend towards stricter scrutiny of the economic viability of collective proceedings at the certification stage.

In Gutmann (Stakeholder Entitlement), the Tribunal confronted the uncomfortable reality of a settlement in which the overwhelming majority of the recovery went to lawyers and funders rather than to the class.  The CAT concluded that “outcomes which appear to be predominantly for the benefit of stakeholders rather than class members or charity are not in the public interest” and made clear that, going forward, “far more work needs to be done on the likely level of take-up at the stage of settlement approval, and in appropriate cases at the earlier certification stage”.  The Tribunal also signalled that future Litigation Funding Agreements (LFAs) should specify how unclaimed damages might be allocated to charity or cy-près destinations to avoid stakeholder-dominated recoveries.

In Spottiswoode v Nexans France [2024] CAT 31, the CAT described it as “axiomatic that, in order for collective proceedings to fulfill their primary objective of compensating members of the Class, there must be an effective method of distribution”.  The PCR argued that it was premature to consider distribution until damages had been awarded.  The Tribunal disagreed, but rather than declining to certify on grounds of a lack of an effective distribution plan, it directed the PCR to report on distribution proposals within three months.

In Rowntree v PRS [2025] CAT 49, the CAT refused certification on various grounds, including concerns about the cost-benefit of the proceedings, noting that class members might ultimately end up as the paying party. 

In McLaren v MoL [2026] CAT 6, the Tribunal observed that “collective proceedings are intended to benefit class members rather than just stakeholders” and that “the Tribunal will necessarily be mindful to avoid outcomes where class members receive little or nothing, and stakeholders become the main beneficiaries”.  The CAT also emphasised that low take-up does not justify paying the remaining settlement sum to stakeholders; instead, the Tribunal expects consideration of alternative distributions, such as directing a proportion to charity.

A Laudable Objective – But at What Cost?

The CAT’s focus on ensuring benefits flow primarily to consumers rather than to lawyers and funders is laudable.  The Tribunal’s analysis of the quantum of damages likely to be distributed directly to class members, weighed against the costs of bringing the proceedings, is plainly both relevant and important in this regard.  The CAT is right to take steps to avoid outcomes such as in Gutmann and to require PCRs and their legal teams to pay closer attention at the outset to how they plan to distribute any damages awarded in practice.

The question moving forward, however, is whether the CAT’s approach to the cost-benefit analysis risks becoming overly narrow and thereby inadvertently undermining the wider objectives of the regime.  In addition to the primary objective of compensating class members, there are at least two secondary objectives which should form part of the analysis.

First, there is the possibility of class members benefitting indirectly through cy-près distributions to appropriate charitable organisations or consumer funds that support consumer initiatives or access to justice more broadly – a mechanism the CAT itself has repeatedly endorsed.  In other jurisdictions, such as Portugal, where it would be disproportionately burdensome or costly to identify and compensate individual consumers directly, settlements routinely include payments to consumer funds which co-finance consumer protection initiatives.  If the regime recognises these as a legitimate and desirable destinations for unclaimed sums, it would seem logical (within reason) to weigh those distributions on the ‘benefit’ side of the ledger when assessing certification.  Plainly, it would help the CAT to do this if the PCR is able to identify appropriate organisations in its certification or settlement application.

Secondly, and perhaps more importantly, there is the broader economic value of private competition enforcement.  Collective proceedings exist not only to deliver individual damages payouts, they serve also as a deterrent, holding dominant players to account for abusive and anti-competitive conduct.  Plainly, the deterrent effect benefits consumers – the more effective the enforcement mechanism, the fewer the illegal actions that cause them harm.  This supports not only the effective functioning of competitive markets – a recent independent report by Flint Global suggested that the net benefits of the regime range from £3.5-10.5 billion per year – but also the rule of law.  The deterrent effect is all the more important in the absence of effective regulatory oversight.  To allow wrongdoing to go unpunished is to allow ill-gotten gains to remain in the hands of the wrongdoer, thereby implicitly encouraging further wrongdoing.

In the jurisprudence and wider policy debate prompted by recent reviews by the Ministry of Justice and Department for Business and Trade, there is an undercurrent of anxiety about the UK regime evolving into something resembling the US class actions system.  The CAT's observation in Waterside that “a problem with many class actions is that they offer enormous and irresistible commercial benefit to the lawyers and funders, whereas the commercial benefit to individual members of the class is relatively small” and its concern that this “can distort the incentive to pursue such proceedings” speaks to that underlying concern. 

But the UK and US systems differ materially in their inherent risks and rewards.  In the UK’s opt-out regime, there are no percentage-based lawyer fee arrangements, no punitive damages awards of the kind that can inflate US class action settlements, no jury trials and the loser-pays costs regime provides a significant check on unmeritorious claims.  The CAT’s own supervisory jurisdiction, which it has shown itself increasingly willing to exercise, provides a further layer of protection.  The risk of a runaway US-style system emerging in this jurisdiction appears, at present, to be low.

More fundamentally, of course, the collective proceedings regime exists precisely to allow claims to be brought on a collective basis which may not be economically viable to pursue individually.

Looking Ahead

If these wider factors are excluded from the analysis, and given that the costs of bringing collective proceedings are, if anything, trending upward, one foreseeable consequence is that ‘smaller’ collective actions will cease to be economically viable.  Only claims of sufficient scale to justify large litigation budgets, and with realistic prospects of meaningful take-up, will attract the interest of the litigation funders on whom the regime depends.  Claims involving consumer harm with modest individual losses – very much within the ambit of claims the collective regime was designed to facilitate – may be squeezed out.

For lawyers and funders in this space, the message is increasingly clear: a credible plan for getting damages into the hands of class members must be presented at certification, and the cost budget must be proportionate in that context.

It is encouraging that the CAT has allowed the PCR in Waterside a second chance and it will be interesting to see whether the PCR is able to meet the challenge laid down by coming up with a more creative and effective approach to distribution.  The CAT has scheduled a directions hearing for the first available date after 13 May 2026, at which the PCR is expected to indicate whether it intends to re-apply.

More broadly, the challenge for the regime is to find a sustainable equilibrium: one that protects against proceedings which serve primarily as a vehicle for professional stakeholder enrichment, without raising the bar so high that the collective proceedings regime becomes, in practice, available only to the largest claims.  In a world increasingly dominated by giant global corporations, it is to be hoped that the CAT keeps in mind the wider role that private enforcement can play in maintaining a healthy, competitive ecosystem.