Competition court rejects £1.5 billion lawsuit against water companies

Competition Appeal Tribunal’s decision is a blow for consumers ahead of a significant price rise next week

The Competition Appeal Tribunal has blocked a £1.5 billion class action against six major UK water companies over sewage pollution. 

Environmental expert Professor Carolyn Roberts accused the firms of underreporting pollution to avoid penalties from the water regulator, Ofwat, leading to inflated bills for millions of customers. 

The tribunal’s decision is a blow for consumers ahead of a significant price increase next week. Professor Roberts and her legal team are now considering an appeal.

Court decision a barrier for compensation

The tribunal’s ruling hinged on section 18(8) of the Water Industry Act, which excludes certain private claims linked to price control mechanisms. 

Although the tribunal dismissed the water companies’ defense that competition law didn’t apply, it ultimately found the claim couldn’t proceed due to this statutory barrier. 

However, the tribunal acknowledged that if it weren’t for this exclusion, the case would have likely moved forward.

What this means for consumers

The decision means that customers of the six water companies won’t be automatically represented in a compensation lawsuit. The companies involved were: Severn Trent Water, United Utilities Water, Yorkshire Water, Northumbrian Water, Anglian Water, and Thames Water. 

However, the tribunal highlighted the role of Ofwat in directing companies to address consumer overcharging, which could potentially lead to reduced bills.

Professor Roberts is now considering an appeal, pointing to a recent Supreme Court ruling in Manchester Ship Canal v United Utilities, which clarified that statutory regulations do not always override competition law.

RPC lawyer and partner Zoë Mernick-Levene, who represented Roberts, described the case as a landmark environmental competition action. In response to the judgment, she said:

‘Disappointingly, the tribunal’s interpretation of section 18(8) means the claim cannot continue despite Professor Roberts’ wins on every other issue. However, we believe this interpretation does not align with the Supreme Court’s decision in Manchester Ship Canal v United Utilities. Professor Roberts is carefully considering grounds for appeal and remains hopeful the claim will ultimately proceed.’

Given that the tribunal would have otherwise approved the case, an appeal could provide an opportunity for the claim to proceed.

Tribunal’s willingness to approve the claim if not for statutory barriers

The tribunal indicated that if it were not for the statutory exclusion under section 18(8) of the Water Industry Act, it would have certified the case. It noted that the claim would bring ‘significant benefits’ to consumers and found that:

• Professor Roberts was well-qualified to act as the class representative and had an effective case management plan.
  
• The claims met the necessary criteria for collective proceedings and raised common issues affecting a clearly defined group of consumers.
  
• The objections raised by the water companies were largely dismissed, particularly regarding the expert methodology used to assess consumer overcharging.

Water bill rises increases pressure on consumers

This ruling comes as water companies prepare for a significant price hike from April 1, 2025. There will be a 26% rise in the national average bill, adding around £10 to monthly costs. Some regions will see increases of up to 47%.

With this increase, many consumers are calling for better regulation of the water sector to ensure fairness. And while this tribunal ruling marks a setback for Roberts and the millions of affected customers, the debate over sewage pollution reporting and water company accountability is far from over.

Independent Water Commission: a chance to get your voice heard

The Independent Water Commission is seeking public input to improve the water sector’s regulation and consumer accountability. 

This consultation presents an opportunity for domestic customers to voice their concerns about water pricing, pollution control, and service standards. 

Visit the Commission’s consultation page to have your say.cause any under-reporting could have affected the price they could charge customers.