Background
David Alexander de Horne Rowntree, a songwriter member of the Performing Right Society Limited (PRSL) and drummer of the band Blur, sought to bring a collective opt-out action on behalf of songwriter members against PRSL and its subsidiary PRS for Music Limited. PRSL is a non-profit collective management organization with approximately 175,000 members (165,000 songwriters and 10,000 publishers) that collects and distributes performing rights royalties after members assign their copyright in musical works to the society.
The dispute concerns “black box royalties”—royalties that PRSL receives but cannot match to the correct songwriter or publisher due to incomplete information from licensees or data defects. Under PRSL’s distribution rules, these unidentified royalties have been distributed pro rata between writers and publishers according to their proportions in identified royalties. The appellant alleged this distribution method constitutes an abuse of PRSL’s dominant position in violation of the Chapter II prohibition under the Competition Act 1998, claiming that a larger proportion of unidentified royalties logically belong to songwriters given the greater number of songwriter members and data reporting issues disproportionately affecting them.
The Competition Appeal Tribunal struck out the claim and refused to certify it for collective proceedings. The appeal raises two primary legal issues: whether the class definition must be limited to persons actually “owed” the unidentified royalties, and whether the distribution method is sufficiently arguable as an unfair trading practice to permit the claim to proceed.
The Court’s Holding
The Tribunal found a fundamental mismatch between the proposed class (all songwriter members over a defined period) and those who could actually claim to be “owed” black box royalties. The appellant’s claim rested on the premise that these royalties belong to unidentified songwriters, yet no evidence showed that every class member suffered loss or was owed royalties; the class included songwriters whose works may never have been performed or matched. The Tribunal held that the common issues requirement was not satisfied where the class was not drawn to describe those sharing the relevant common feature.
On the substantive competition claim, the Tribunal found no coherent allegation of abuse. While the pro rata distribution method might be subject to different preferences, mere disagreement with a chosen redistribution method does not establish unfair trading practices under competition law. The Tribunal emphasized that black box royalties could lawfully be distributed in multiple ways—to neediest members, to charities, in equal portions, or pro rata—and the selection of one method over another did not inherently constitute abuse. Additionally, the appellant’s expert failed to propose a realistic damages methodology, particularly regarding unknown works where it remained unknowable what proportions were attributable to writers versus publishers. The Tribunal also noted the availability of alternative dispute resolution through PRSL’s internal governance procedures, which no class members had attempted before pursuing costly litigation.
Key Takeaways
- A collective proceedings class must be defined to encompass those who share the alleged common harm; a mismatch between class definition and actual claimants supports dismissal at the certification stage.
- Competition law does not prohibit an undertaking from selecting one lawful distribution method over alternative methods merely because some members prefer the alternative; this preference alone does not establish abuse of dominance.
- Collective proceedings will not be certified where expert evidence fails to propose a credible and realistic methodology for assessing aggregate damages, especially where key facts remain unknowable.
- Courts consider proportionality in opt-out proceedings, including availability of alternative mechanisms; internal governance procedures may be preferable to costly collective litigation for intra-organizational disputes.
Why It Matters
This decision establishes important principles governing the certification and conduct of collective proceedings under UK competition law. It clarifies that class actions require tight alignment between class definition and the alleged harm, preventing certification where members lack a common interest in the claimed injury. For collective management organizations and similar membership-governed entities, the judgment provides significant protection against broad-based challenges to distribution policies, requiring claimants to articulate a coherent legal theory of abuse rather than mere disagreement with chosen allocation methods.
The judgment reflects judicial concern about the proportionality of opt-out collective proceedings, particularly where funders’ fees and litigation costs risk exceeding any recovery to class members. By emphasizing the availability and appropriateness of internal governance procedures, the decision signals that courts will scrutinize whether collective litigation is genuinely necessary or whether organizational democracy and member representation offer adequate alternative remedies. This has significant implications for how litigation against membership organizations is structured and for the balance between external judicial scrutiny and internal governance mechanisms.