Kington SARL v Thames Water Utilities Holdings Ltd (Rev1)

Factual and Procedural Background

The judgment concerns an application by Kington, a member of an ad hoc group of junior creditors opposing a restructuring plan ("the Plan") proposed by Thames Water Utilities Holdings Limited ("the Plan Company") under Part 26A of the Companies Act 2006. The Plan Company and its group face serious financial difficulties. The court had previously permitted the Plan Company to convene meetings of creditors, including Kington’s class, and fixed a sanction hearing in early February 2025. The opposing junior creditors had also proposed an alternative plan with a separate hearing scheduled.

The court had given directions to ensure the sanction hearing proceeded efficiently, including provisions for expert evidence on valuation and alternatives to the Plan. A potential competition law issue was raised by the junior creditors at the convening hearing, initially limited to a Chapter I Competition Act 1998 argument, with no immediate application for expert economist evidence. The possibility of such evidence was mentioned in their skeleton argument but remained uncertain until shortly before the hearing.

The Plan involves new super senior funding in two tranches, conditional on the satisfaction of a "June Release Condition" ("JRC") by 30 June 2025. The JRC requires certain creditor groups to agree to a recapitalisation solution. Kington contended that the JRC gives senior creditors veto control over the recapitalisation’s form, timing, and participants, which they alleged infringes competition law under both Chapter I and Chapter II prohibitions of the Competition Act 1998.

Kington sought permission to adduce expert evidence from a competition economist, Mr Murgatroyd, to support their competition law objections, arguing that such evidence was necessary and would assist the court in assessing the economic effects of the JRC. The Plan Company opposed the application on grounds of procedural fairness, timing, and the insufficiency and speculative nature of the proposed expert evidence.

Legal Issues Presented

1. Whether permission should be granted to adduce expert competition economics evidence regarding the alleged anti-competitive nature of the June Release Condition in the restructuring Plan.
2. Whether the proposed expert evidence is reasonably required to resolve the competition law objections to the Plan under the Competition Act 1998, specifically concerning alleged infringements of Chapter I (anti-competitive agreements) and Chapter II (abuse of dominance) prohibitions.
3. Whether the timing and procedural conduct justify refusing permission to admit the expert evidence given the tight timetable for the sanction hearing.

Arguments of the Parties

Appellant's Arguments (Kington)

• The JRC grants senior creditors veto control over the recapitalisation process, exceeding their ordinary creditor rights and distorting competition.
• The competition law objections require economic expertise to assess both the "by object" and "by effect" anti-competitive nature of the JRC and the abuse of collective dominance.
• Expert evidence is necessary because the economic context and market effects cannot be adequately understood or assessed by factual witnesses or legal argument alone.
• The proposed expert report from Mr Murgatroyd, an experienced competition economist, would assist the court by providing market analysis, theories of harm, and an assessment of competitive effects.
• Without expert evidence, the junior creditors would be prejudiced in presenting their competition law case at the sanction hearing.
• The expert evidence is relatively concise and cost-effective compared to other expert evidence already admitted in the case, and the proposed hearing time would be manageable within the existing timetable or by a separate hearing.

Respondent's Arguments (Plan Company and Class A AHG)

• The application for expert evidence is procedurally late and would cause unacceptable disruption to the tightly scheduled sanction hearing.
• The draft expert evidence is tentative, speculative, and lacks the necessary market definition and concrete analysis to be reasonably required or of real assistance to the court.
• The competition law arguments are misconceived, including the analogy with bid rigging and the assertion that the JRC restricts competition by object or effect.
• The Plan Company is entitled to structure the recapitalisation as it sees fit, without an obligation to hold a competitive process, and the JRC does not exclude other financing proposals or providers.
• The evidence on market power and collective dominance is inconclusive and speculative, lacking proper market assessment and factual basis.
• Admitting the evidence would jeopardize the hearing timetable, and the Plan Company has not been able to prepare a meaningful response within the available time.
• Previous competition law cases cited do not dictate automatic admission of expert evidence; the overriding objective and proportionality must guide the decision.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
British Airways plc v Spencer [2015] EWHC 2477 (Ch)	Test for admission of expert evidence under CPR 35.1: evidence must be necessary to resolve the proceedings or, if not necessary, must still assist the court balancing relevance and proportionality.	Guided the court’s assessment of whether the expert evidence was reasonably required and proportionate in the context of the tight timetable.
Unique Pub Properties v Roddy [2018] EWHC 4019 (Ch)	Competition cases almost invariably require expert economic evidence, especially for market definition and assessment.	Recognized the usual practice but the court distinguished the present novel and expedited context requiring first principles analysis.
Phones 4U Ltd v EE Ltd [2021] EWHC 2879 (Ch)	Economic expert evidence is regularly admitted in competition cases for analysis of expected effects and market conditions.	Noted the usual practice but emphasized that even in Phones 4U the critical issues did not turn on expert evidence, highlighting the difference from the present case.
HCA International Limited v Competition and Markets Authority [2014] CAT 10	Example of refusal to admit expert evidence in competition-related proceedings on grounds of fairness and case management.	Supported the Plan Company’s submission that expert evidence admission is not automatic and must be justified by necessity and fairness.
Socrates Training Limited v The Law Society of England and Wales [2016] CAT 19	Another example of refusal to admit expert evidence under fast-track CAT procedures.	Reinforced the principle that expert evidence must be proportionate and fair to all parties.
BGL (Holdings) Limited and others v Competition and Markets Authority [2021] CAT 23	Emphasized the overriding objective and fairness in admitting additional expert evidence not envisaged by directions orders.	Informed the court’s approach to balancing fairness and procedural orderliness in expert evidence admission.

Court's Reasoning and Analysis

The court began by acknowledging the usual practice in competition law cases of admitting expert economic evidence but stressed that the present case’s novel context and expedited timetable required careful application of CPR 35.1 principles. The court considered whether the proposed expert evidence was reasonably required to resolve the competition law objections and whether admitting it would be fair and proportionate.

Procedurally, the court found the application late and inadequately explained, causing significant prejudice to the Plan Company, which had little time to prepare a response amidst complex valuation evidence and a tight hearing schedule. The court rejected the suggestion that any prejudice could be remedied by the Plan Company simply choosing not to call its own expert.

Substantively, the court found the draft expert report to be largely background and theoretical, with insufficient concrete market analysis or definitive conclusions. Key issues such as market definition and dominance were addressed in highly qualified and speculative terms, with the expert acknowledging the need for further evidence unavailable for the sanction hearing. The court noted that much of the report blurred legal argument with economic perspective, reducing its utility as expert evidence.

The court accepted the Plan Company’s submissions that the competition law arguments were flawed, particularly regarding the analogy with bid rigging and the absence of a defined relevant market. The court found no necessity for expert economic opinion on legal questions such as whether certain conduct constitutes an anti-competitive object. The tentative and inconclusive nature of the draft report meant it was not reasonably required to resolve the proceedings.

Further, admitting the evidence risked delaying the hearing and undermining the overriding objective of a just and proportionate resolution. Alternative arrangements such as adjournment or separate hearings were considered impractical or undesirable given the urgency of the Group’s financial position and the court’s prior decisions on timing.

In sum, the court balanced the competing interests of fairness, procedural efficiency, and substantive necessity, concluding that the expert evidence should not be admitted.

Holding and Implications

The court dismissed the application for permission to adduce expert competition economics evidence.

The direct effect is that the Class B AHG, including Kington, will not be permitted to rely on the draft expert report in support of their competition law objections at the sanction hearing. The decision preserves the current hearing timetable and avoids disruption or delay. The ruling does not preclude the competition law arguments themselves being pursued on legal and factual grounds without the expert economic evidence. No new precedent was established; the court applied established principles of expert evidence admission and case management in a novel and urgent restructuring context.