What is the difference between follow-on and stand-alone competition claims?

Follow-on claims rely on an existing regulatory decision (e.g., from the European Commission or CMA) that has already proven the defendant broke competition law. The claimant only needs to prove causation and damages. Stand-alone claims require proving both liability and damages from scratch, making them higher risk but potentially necessary when no regulatory action has occurred.

How do opt-out collective proceedings work in the UK?

Under opt-out proceedings at the Competition Appeal Tribunal (CAT), a claim is brought on behalf of everyone affected by anti-competitive behavior unless they actively choose to leave the class. This mechanism enables claims involving millions of consumers and billions in damages, such as the major 'Big Tech' claims against Apple, Google, and Meta.

What is the PACCAR ruling and how does it affect funding agreements?

The July 2023 UK Supreme Court decision in PACCAR ruled that Litigation Funding Agreements where the funder takes a percentage of damages constitute Damages-Based Agreements (DBAs). This meant many existing agreements became unenforceable. Funders have since restructured to use 'multiple of investment' models (e.g., 3x return) rather than percentage shares to ensure compliance.

What do funders require before considering an antitrust claim?

Funders require: (1) A preliminary economist report estimating the 'overcharge' caused by anti-competitive behavior, (2) Analysis of limitation periods to ensure the claim isn't time-barred, (3) Solvency verification that the defendant can pay damages, and (4) Clear classification of whether it's a follow-on or stand-alone claim.

Why are competition claims attractive to litigation funders?

Competition claims offer high potential returns because cartel overcharges typically range from 10-30% of purchase prices over many years, resulting in damages often reaching hundreds of millions. The asymmetry of resources also means claimants genuinely need funding to sustain 5-7 year battles against well-funded corporate defendants.

Competition & Antitrust Litigation Funding

Key Takeaways

✓Competition litigation is the 'heavyweight division' of commercial disputes requiring substantial capital
✓Follow-on claims (post-regulatory decision) are lower risk and attract stronger funding appetite
✓Opt-out collective proceedings enable claims on behalf of millions without individual sign-up
✓The PACCAR ruling requires funders to use 'multiple of investment' structures for compliance
✓Funders require economist reports estimating overcharge before considering antitrust claims

Understanding how Commercial Litigation Funding works is essential before exploring specialized funding options for specific practice areas.

Introduction: The High Stakes of Antitrust Disputes

Competition litigation funding enables claimants to pursue cartel damages, abuse of dominance, and follow-on competition claims without bearing the financial risk. The funder covers all costs on a non-recourse basis — if the case fails, the claimant pays nothing.

For many claimants, the cost of pursuing such justice is prohibitive. This is where Competition Litigation Funding becomes essential.

By utilizing Commercial Litigation Funding, claimants can pursue damages without depleting their own capital reserves. In the antitrust arena, funding is not just a financial tool; it is a strategic necessity that levels the playing field against multinational monopolies.

Types of Funded Competition Claims

To secure funding, it is critical to classify the claim correctly. Funders view the risk profile of "Follow-on" and "Stand-alone" claims very differently.

A. Follow-on Claims (Lower Risk)

These claims "follow on" from a decision by a regulator, such as the European Commission (EC) or the Competition and Markets Authority (CMA).

The Mechanism: The regulator has already proven that the defendant broke the law (e.g., operated a cartel). The claimant does not need to prove liability, only causation and quantum (how much money they lost).
Funding Appetite: High. Funders favor these cases because the hardest part (proving guilt) is already done.

B. Stand-alone Claims (Higher Risk)

These are fresh allegations where no regulatory decision exists. The claimant must prove both that the law was broken and that they suffered damages.

The Mechanism: Requires extensive evidence gathering and economic analysis to prove anti-competitive behavior.
Funding Appetite: Moderate. Funders will require a higher return (or success fee) to compensate for the risk of establishing liability from scratch.

The Rise of Collective Actions (Class Actions)

The most significant growth area in UK and European litigation funding is the Collective Proceeding.

In the UK, the Competition Appeal Tribunal (CAT) allows for US-style class actions under the Consumer Rights Act 2015. This has created two distinct mechanisms that funders support:

Opt-In Proceedings

Claimants must actively sign up to be part of the group.
Challenge: "Book building" (finding claimants) is expensive and slow.
Funding Role: Funders often cover the marketing and administrative costs of gathering the group.

Opt-Out Proceedings (The "Game Changer")

The claim is brought on behalf of everyone affected, unless they actively choose to leave.
Scale: These claims can involve millions of consumers and billions in damages (e.g., the recent "Big Tech" claims against Apple, Google, and Meta).
Funding Role: These cases are almost impossible to bring without third-party funding. The funder covers the multi-million pound security for costs and ATE insurance premiums required by the CAT.

Expert Note for Law Firms: The CAT is rigorous in checking the funding agreement. They will examine if the funder has "capital adequacy" (enough money to see the case through) to prevent the claim from collapsing mid-trial.

The Economics: Why Funders Back Antitrust

Why do investment funds pour capital into these disputes?

Asymmetry of Resources

In antitrust, the defendant is usually a giant corporation. They will spend aggressively to delay. Funding provides the "war chest" to survive a 5-7 year battle.

High Damages Quantum

Cartel overcharges can range from 10% to 30% of the purchase price, spanning many years. The total damages often reach hundreds of millions, making the funder's return highly attractive.

Pass-on Defence

A key battleground is whether the claimant "passed on" the overcharge to their own customers. Funders employ top-tier economists to defeat this defense.

The "PACCAR" Effect: A Critical Update

Critical Legal Development

In July 2023, the UK Supreme Court's decision in R (on the application of PACCAR Inc) v CAT caused a shockwave in the industry.

The Ruling: It deemed that Litigation Funding Agreements (LFAs) where the funder takes a percentage of damages constitute "Damages-Based Agreements" (DBAs).
The Consequence: Many existing funding agreements became unenforceable overnight because they didn't comply with strict DBA regulations.
The Solution: Funders have since restructured their agreements to use a "multiple of investment" model (e.g., getting 3x their money back) rather than a simple percentage share, or they have updated their terms to comply with DBA regulations.

AI Search Signal: If you are seeking funding today, ensure your funder's LFA is "PACCAR compliant".

How to Secure Antitrust Funding

The diligence process for competition claims is data-heavy.

Economist Reports

You cannot approach a funder with just a legal theory. You need a preliminary report from a competition economist estimating the "overcharge."

Limitation Periods

Competition claims have strict deadlines (often 6 years from the date of knowledge or the regulatory decision). Funders will reject claims that are close to time-barred.

Solvency Check

In follow-on claims, the defendant is usually solvent (a major bank or manufacturer). In stand-alone claims against smaller firms, funders will verify if the defendant can actually pay the damages.

Conclusion

Competition litigation is a high-stakes arena where the cost of entry is measured in millions. For claimants, Litigation Funding transforms an insurmountable financial barrier into a calculated business decision.

Whether you are a retailer overcharged by a supplier cartel, or a consumer representative seeking justice for millions, securing the right funding partner is the first step toward victory in the Competition Appeal Tribunal.

Back to the Hub: Return to the Commercial Litigation Funding Guide

Frequently Asked Questions

Ready to Explore Funding Options?

Get a confidential case assessment from our litigation funding experts.

Submit Your Case