£480M Payout Trial Begins: Millions of UK Smartphone Users Could Get Cash

A landmark legal battle that could see nearly 30 million UK smartphone users receive a share of a £480 million payout has begun today at the Competition Appeal Tribunal in London. Consumer champion Which? has launched a collective action lawsuit against US chipmaker Qualcomm Incorporated, alleging the technology giant abused its market dominance to overcharge for essential technology, with the inflated costs ultimately being passed on to consumers.

The case, formally titled Consumers' Association v Qualcomm Incorporated, is one of the most significant collective legal actions brought under the UK's reformed competition laws.

Two-Phase Trial Underway

The trial, which is scheduled to run for five weeks from today, October 6, will be split into two distinct phases.

The first phase will focus on establishing the core allegations: whether Qualcomm held a dominant position in the smartphone patent-licensing and chipset markets, and if so, whether it abused this position by engaging in anti-competitive practices.

Which? senior lawyer Lisa Webb noted that the case centres on the chipsets that enable devices to connect to 4G and 5G networks. The claim asserts that Qualcomm was able to charge manufacturers like Apple and Samsung inflated, unfair licensing fees, effectively operating a "patent tax" which resulted in consumers paying higher prices for their handsets or receiving lower-quality devices.

If Which? is successful in this first stage, a second trial will then proceed to focus on Qualcomm's specific conduct and the assessment of the total £480 million in damages sought for the affected class of consumers.

Who is Eligible for Compensation?

The class action is seeking damages for all UK consumers who purchased an Apple or Samsung smartphone during the "Relevant Period," defined as October 1, 2015, and January 9, 2024.

Key details on eligibility and potential compensation:

The Class: Approximately 29 million UK Apple and Samsung smartphone owners.

The Claim: The total compensation sought is estimated at £480 million.

Per Phone Payout: Individual consumers could be due an average of around £17 per phone if the action succeeds. Those who purchased multiple eligible devices during the nine-year period may be due more.

Inclusion is Automatic: This is an "opt-out" claim, meaning affected consumers who fall within the scope of the class are automatically included and do not need to take any action at this stage. Compensation, if awarded, would be automatic.

Exclusions: Purchases of second-hand or refurbished phones, as well as phones delivered outside the UK, are excluded from the current claim.

The Significance of the Action

Which? has framed this lawsuit as an essential step to secure redress for millions and to send a strong message to powerful corporations.

Which? chief executive Anabel Hoult commented that "This trial is a huge moment," demonstrating the ability of consumers, backed by Which?, to hold dominant companies accountable. The collective action mechanism is crucial, as it would not be "realistic for people to seek damages from the company on an individual basis."

Qualcomm has consistently denied the allegations, previously stating that the case "has no basis," but the commencement of the trial signals a pivotal moment in the proceedings. Comparable antitrust lawsuits against Qualcomm have also been filed in other jurisdictions, including Canada, and the corporation has previously faced penalties from the European Union for competition violations.

The full compensation process, even if the case is won, is expected to take several years to conclude. Consumers are advised to follow updates from Which? on the progress of the case.