ESG Enforcement Tracker

Key facts:

On 7 March 2025, the Competition Appeal Tribunal dismissed a class action that was brought against six water companies in connection with sewage pollution.
With the first claim registered on 2 August 2023, Ms Carolyn Roberts, as the Proposed Class Representative (PCR), brought six claims against water companies on behalf of customers who had allegedly been overcharged for the provision of sewerage services by the respondent water companies. These claims which were managed were the first collective proceedings brought with such a strong environmental focus before the Competition Appeal Tribunal.

In the proceedings, Ms Roberts argued that the water companies had committed an abuse of dominant position in breach of section 18 of the Competition Act 1998 in relation to the provision of misleading information to the water companies’ regulatory bodies – the Environment Agency and Ofwat – about the number of pollution incidents that had occurred.

Ofwat operates a “stick and carrot regime” for water companies. Financial incentives are offered to companies that out-perform their targets and performance commitments and, in particular, if they out-perform their targets, they are permitted to charge their customers more for the sewerage services that they provide. Some of these targets relate to specific categories of pollution incidents. Ms Roberts argued that owing to underreporting to the regulators of pollution incidents customers may have been overcharged somewhere between £800 million and £1.5 billion.

A case management conference (CMC) took place on 19 March 2024 during which the Tribunal ruled on the future conduct of the proceedings.
Further to the Tribunal’s CMC order, a hearing took place between 23 and 25 September 2024 to deal with Ms Roberts’ applications for Collective Proceedings Orders to determine whether the claims would proceed to trial.

Judgment was handed down by the Competition Appeal Tribunal on 7 March 2025. It was held that the claims brought for abuse of dominance fell within the statutory exclusion of other remedies as set out in section 18(8) of the Water Industry Act 1991; the price control mechanism imposed by Ofwat was an essential ingredient to the losses allegedly suffered and so the claims were ousted by this provision. The unanimous judgment made clear that had this not been the case, the Collective Proceedings Orders would have been granted.

The Tribunal also noted that the position would have been different had the claim been brought on the grounds that the prices charged by the water companies themselves constituted an abuse in the form of excessive and unfair pricing.