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The Covid Conundrum – CMA Closes its Investigation into Covid Consumer Refund Rights

The Competition and Markets Authority (CMA) has today announced it is closing its investigation into the refusal of British Airways and Ryanair to provide refunds to consumers who were unable to travel on previously booked flights as a result of Covid lockdown restrictions due to uncertainty in the underlying law.

As we have previously discussed in the context of force majeure, the Covid pandemic has for lawyers created a “Covid conundrum”― stress testing many legal principles and rights as a result of the underlying law being predicated (but not explicitly) on the occurrence of one-off events impacting a small number of parties rather than a long-term pandemic with global impact.

This has been particularly true in the travel industry where significant protections are available to consumers. Many operators have sought to argue that those protections were only ever intended to apply to the occasional cancelled flight (or at worst the failure of a single operator) but not to what was in effect the legally mandated closure of the entire industry for a prolonged period with the associated, and often devastating, financial consequences for operators.

Whilst most operators have begrudgingly accepted that the legal position in the case of cancelled flights which never operated is clear – namely that consumers are entitled to a refund rather than simply a voucher or rearranged future flight – the legal position is not clear regarding flights which did go ahead albeit with few passengers as a result of most consumers being unable to travel on those due to Covid lockdown measures.

This was the issue that the CMA began investigating in June 2021, but today has conceded that, having reviewed all of the applicable law, the lack of clarity coupled with the length of time that would be required to take this case through the courts, and the uncertain outcome, can no longer justify the further expense of public money. The CMA will instead focus its efforts on lobbying for clarifications to the underlying law to provide greater certainty for future cases.

The decision is frustrating for many legal observers, as had this case preceded to court it would have provided useful insight into the approach of the courts to this Covid conundrum with potential relevance to other claims. Whilst the decision of the CMA to seek to clarify the law, presumably by legislative change or industry consensus, is to be welcomed, that is likely to be a lengthy process. Thus, for the foreseeable future, the Covid conundrum will remain.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 280
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About this Author

Paul Jinks Commercial Transaction Attorney Squire Patton Boggs Leeds, UK
Director

Paul Jinks has 20 years’ experience of supporting major commercial transactions in both the public and private sector with a particular focus on large-scale IT and outsourcing projects (both first generation and, the re-tendering/re-negotiation of existing arrangements). Paul has supported major transactions across a wide range of industries and sectors, including the outsourcing of critical business functions by FCA-regulated businesses subject to SYSC 8 compliance requirements; and projects involving significant programmes of service transformation and business change.

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