The automobile industry has been firmly in the gaze of the EU competition authorities over the last few years. In March 2014, the European Commission (the Commission) imposed fines totalling €953,306,000 on European and Japanese companies involved in an automotive bearings cartel. The companies involved were co-ordinating the passing-on of steel price increases to customers, colluding on quotes and annual price reduction requests, and exchanging commercially sensitive information. Other numerous car part cartel investigations are ongoing, as is Pilkington Group Ltd's (Pilkington) appeal against a €370,000,000 fine for their participation in a car glass cartel.
As a result of Pilkington's involvement in the car glass cartel, in July 2010 Volvo brought an action against Pilkington and its subsidiaries in the High Court of London for damages relating to the illegally inflated prices for car glass. However, until relatively recently, such actions have been fairly rare (at least on this side of the Atlantic).
Now, the introduction of The Consumer Rights Act 2015 (the Act) has made it significantly easier for individuals and businesses to receive compensation where there has been an infringement of competition law.
Traditionally, private competition law claims were restricted to "follow on" actions, where a competition law infringement decision had to have been made by an authority (such as the Competition and Market Authority in the UK or the Commission within the EU). For the first time, as of 1 October 2015, the Competition Appeals Tribunal (CAT) may decide on stand-alone damage claims. In these claims, persons who have suffered a loss or damage may bring civil proceedings in respect of an alleged infringement of competition law i.e. it is not necessary for a previous infringement decision to be made in order to bring a claim for losses suffered. This allows potential claimants to file claims as soon as they become aware of the infringement, rather than having to wait for an infringement decision to be made.
The Act also introduces a new collective proceedings regime. Under the existing regime, the CAT may approve similar claims to be combined into a single collective proceeding, where claimants can "opt in" to be part of the action. From 1 October the CAT will also have the power to hear claims where all eligible claimants will be included unless they choose to "opt out". If the CAT approves an opt-out class action, all eligible claimants domiciled in the UK will be automatically included (non-UK claimants may also opt in to the claim). This is the first time that such US style opt-out claims may be heard in the UK.
All this is part of the desire by the competition authorities as policy makers to encourage damages actions to disincentivise companies from engaging in unlawful acts in the first place. Nonetheless, some safeguards have been put in place to avoid a rush of ambulance chasers. The CAT will only approve opt-in or opt-out collective proceedings after considering whether the claims are appropriate to be brought as a class action. The only eligible claims are those which raise the same or similar or related issues of fact and/or law, and the body representing the claimants is "just and reasonable". Additionally, the "loser pays" principle will apply so that the body representing the claimants exposes itself to the cost of proceedings.
Exemplary or punitive damages may not be awarded in collective proceedings. When assessing damages for collective actions, the CAT will consider the damages suffered by the claimants as a whole, not individually. If there are any unclaimed damages after an opt-out proceeding, the CAT will require the defendant to donate them to the Access to Justice Foundation (although this may be changed by the Secretary of State), or towards the body representing the claimants to cover the costs of the proceedings.
If claimants wish to settle a collective proceeding before a decision is made, they must receive approval by the CAT. The CAT must not approve a collective settlement unless it is satisfied that the terms of the settlement are "just and reasonable".
As a result of these changes, there is expected to be a significant rise in the number and type of competition-based damages claims within the UK. It is important that businesses are aware that they may have access to redress for others' breach of competition law, and that they may take the necessary action to look out for and process such claims.