Severn Trent Water first to face class action competition case based on environmental compliance

Severn Trent has become the first of six water and sewerage companies to face class action for overcharging customers because of alleged underreporting of sewage discharges.

Professor Carolyn Roberts, an environmental and water consultant represented by law firm, Leigh Day, is bringing the £330m opt-out case at the Competition Appeal Tribunal on behalf of 8m Severn Trent customers. All of the company’s customers will be represented unless they actively choose not to be.

Leigh Day said other cases will be brought against Thames Water, United Utilities, Anglian Water, Yorkshire Water and Northumbrian Water in the coming months, representing a total of 20m water customers. In all, if successful the cases could produce £800m of compensation payments for customers.

The legal claims allege that the six water companies have been abusing their dominant positions under competition law by underreporting the number of pollution incidents – defined as “discharges or spills of untreated sewage they made into rivers, lakes, coastal areas, and other waterways causing damage to the environment” – to the Environment Agency and Ofwat. This has resulted in them avoiding performance penalty payments which would have lowered customer bills.

Roberts said: “It appears that because of the serial and serious under-reporting at the heart of these claims, water companies have been avoiding being penalised by Ofwat. I believe this has resulted in consumers being unfairly overcharged for sewage services.”

Leigh Day partner and head of the competition practice, Zoe Mernick-Levene, commented: “These claims are hugely significant. Not only is compensation being sought for millions of customers who have, and continue to, pay higher water bills, but we hope that it will also sends a message to water companies that they cannot unlawfully pollute waterways and mislead their regulators without consequence…As well as providing individual compensation and justice, opt-out proceedings such as these claims act as a deterrent to future misconduct. Consumers can act together to hold businesses to account for any rule breaking.”

The Severn Trent suit is the first collective action case where the competition abuse centres on compliance with environmental laws and reporting responsibilities to regulators.

A Water UK spokesperson said: “This highly speculative claim is entirely without merit. The regulator has confirmed that over 99% of sewage works comply with their legal requirements. If companies fail to deliver on their commitments, then customer bills are already adjusted accordingly.”

In November 2022, Leigh Day announced that legal finance expert Bench Walk would fund the claims, and that it had instructed AlixPartners LLP as economic expert, Windrush Against Sewage Pollution campaigner Professor Peter Hammond as a consultant, and Jon Turner KC, Julian Gregory, and Antonia Fitzpatrick of Monckton Chambers as the counsel team.