The Consumer Rights Act 2015 which came into force on 1st October 2015, introduced provisions which constituted a major new landmark in private competition law enforcement in the UK. Aside from a myriad of changes to consumer law, of particular importance is the introduction of US style class/collective actions for competition law claims. Section 81 and Schedule 8 of the Act are set to broaden the procedural options available to claimants bringing collective actions in the Competition Appeal Tribunal (CAT) for breaches of UK and EU competition law.
It was previously possible for claimants to elect to join “opt-in” collective proceedings, in which claims are brought by a representative on behalf of a group of individuals. However, the Act promises to introduce the alternative of “opt-out” collective proceedings. Such actions will involve a representative bringing proceedings in relation to the aggregate claims of multiple unnamed individuals, who must specifically elect not to be involved in the group action if that is their wish.
Whilst there has been significant concern that this marks a move towards synchronisation with the US regime of class actions, there are marked dissimilarities between the two systems:
- Firstly, an opt-out action in the UK cannot be commenced without the permission of the CAT in the form of an Order.
- Secondly, the CAT will have jurisdiction to award damages on a purely compensatory basis, with no option to award exemplary or punitive damages.
- Thirdly, as before, the practice of the losing party assuming liability for the winning party’s incurred costs will be maintained.
The availability of opt-out collective actions holds great promise for claimants who may previously have been deterred from seeking damages and compensation for infringements of competition law because of the complexity and cost associated with proceedings in the CAT. The Act is likely to provoke a substantial increase in the number of claims commenced with damages awards the size of which have not hitherto been seen in competition law enforcement cases in the UK .
However there are many uncertain aspects about how the system will work in practice. For instance, the named representative alone in an opt out collective proceedings action will be liable for any costs awarded by the Court against it. This cannot be shared out among the members of the class. This is a substantial disincentive to bring an action! There is, however, a provision whereby any damages not claimed by members of the class may, at the discretion of the CAT, be paid to the representative to meet their legal costs. Litigation funders are eagerly eyeing this provision as a method of recovering their potential underwriting of any opt-out collective action. There are also issues relating to the anchoring of actions against foreign defendants, the controversial provisions relating to the mandatory payment of any residual damages of the class to the Access to Justice Foundation and the position of foreign plaintiffs.
So many aspects of the new reforms could in theory stimulate substantial claims but until the uncertain aspects of the new regime are fully clarified, litigants are likely to tread very warily into this new litigation landscape.