The Government has today published its plans for reforming the UK regime for competition law private actions, following a detailed consultation exercise carried out last year. The wide-ranging reforms controversially include the creation of an opt-out collective action for competition law claims on behalf of both businesses and consumers, despite concerns that this may lead to some of the excesses of US-style class action antitrust litigation. The other main elements of the reforms are: expanding the role of the Competition Appeal Tribunal (CAT), including by enabling it to hear 'stand-alone' competition claims; implementing a 'fast track' procedure for claimants to seek redress aimed at SMEs; and promoting Alternative Dispute Resolution (ADR), including introducing an opt-out collective settlement regime in the CAT and giving the new Competition and Markets Authority (CMA) the power to certify voluntary redress schemes.

It remains to be seen whether the Government's desired balance of increasing redress for competition law breaches, in particular for consumers and SMEs, without creating disproportionate risks of unmeritorious claims or a 'litigation culture' can be successfully achieved. It is clear, however, that despite attempts to also encourage ADR, the reforms will lead to a significant rise in private competition law litigation in the UK, increasing both burdens on business and potential opportunities for bringing claims. The enhanced risk of private actions reinforces the need for all companies to have effective competition law compliance programmes in place.

Background and rationale for reforms

In April 2012 the Government consulted on reforming the UK competition law private enforcement regime (see our e-briefing here). It outlined concerns that the level of private actions being brought was low and that businesses view private enforcement as the "least effective" aspect of the UK competition law regime, both in terms of 'stand-alone' actions to establish a breach of competition law and obtain appropriate relief, and 'follow-on' actions seeking damages once a competition authority has found an infringement.

In the Government's 29 January 2013 consultation response (here), it reiterates concerns that cost and complexity remain an "insuperable" barrier to the vast majority of consumers and SMEs challenging competition law breaches or obtaining redress through private actions. The stated aims of its wide-ranging reforms are accordingly to empower individual consumers and businesses to hold to account those who have breached competition law and to obtain compensation for loss caused by anti-competitive behaviour. These proposed reforms are summarised below.

Role of the CAT

Extension of the CAT's jurisdiction

As widely expected, the Government proposes to expand the role of the CAT with the aim of making it a major venue for competition actions in the UK. The key changes proposed are to:

  • Allow stand-alone competition law actions, and those involving both a stand-alone and a follow-on element, to be brought directly in the CAT. Such claims can currently only be brought in the High Court (or the Court of Session in Scotland).
  • Provide for the transfer of competition cases between the High Court and the CAT.
  • Enable the CAT to grant injunctions (including the ability require cross-undertakings in damages) as well as award damages in competition cases.
  • Align the limitation period in the CAT with the 6 year limitation period applicable in the High Court (and in Scotland 5 years as in the Court of Session).

Given the CAT's competition law expertise and flexible procedures these proposed reforms are sensible (and are likely to lead to some increase in the number of claims brought in the CAT when compared to the High Court), provided that they do not undermine the CAT's ability to fulfil effectively its other existing appellate functions. Harmonisation of the limitation periods (which follows extensive preliminary litigation on the meaning and application of the limitation rules currently applicable in the CAT) is also welcome, although it is not yet clear what transitional arrangements will be introduced in this (or any other) area.

'Fast track' claims procedure

The Government proposes to introduce a 'fast track' in the CAT for "simpler" cases, designed to deliver "swift, cheap results" and focussing on injunctive relief. This is intended to benefit SMEs in particular, and there will be a presumption that any case brought by an SME will be considered for the fast track, but the procedure will not be limited to SMEs. In terms of the operation of the procedure:

  • A CAT Chairman will decide whether to allocate a case to the fast track, considering a range of factors, to be set out in revised CAT Rules of Procedure. These will include the likely length of trial and the level of damages claimed (although no cap on damages is proposed, unlike within the similar regime in the Patents County Court).
  • All cases on the fast track must be cost-capped in order to encourage claimants to proceed with cases. However, contrary to the position consulted upon, the level of the cost-cap will not be fixed but will be set at the discretion of the CAT.
  • Cases on the fast track will likely involve some limitation on the amount of evidence and witnesses on each side (to be determined on a case by case basis).

It remains to be seen whether these proposals will give rise to unfounded claims being brought in circumstances where the defendant's ability to seek costs will be limited. This will in large part depend on the further design details of the procedure to be included in the CAT Rules of Procedure and how these are applied in practice. The fact that the CAT will retain flexibility about what cases to allocate to the fast track and as to the applicable limitations and cost-caps in individual cases is to be welcomed, in particular when compared with the original proposals.

It will be important for the CAT to ensure that the fact that smaller claims may raise important points of principle and/or have a wider impact on the defendant's business is taken into account when deciding whether to allocate a case to the fast track and on what terms.

Opt-out collective actions regime

The question of collective redress was the most hotly debated aspect of the Government's consultation proposals. The Government views the ability for consumers in particular to bring actions collectively as necessary to overcome the complexities and costs of bringing competition law damages cases to court, especially where individual losses are small and dispersed.

Following very limited use of the existing section 47B Competition Act 1998 opt-in representative consumer action (under which only one case has been brought, in the Replica Football Kits case), the Government believes that only an opt-out regime will achieve its aims.

It therefore plans to introduce a competition specific opt-out collective action in the CAT for both stand-alone and follow-on claims.  This is a significant departure from existing multi-party litigation procedures in the UK.

Opt-out collective action

Under an opt-out regime, a claim can be brought on behalf of a defined group and damages awarded to that group without all the individual claimants needing to be identified, and all parties who fall within the defined group will be bound by the result of the case (including a settlement) unless they actively opt out. The Government proposes that the opt-out aspect of the new action will only apply to UK domiciled claimants, non-UK claimants needing to opt in to a claim if they wish participate.

In terms of who will be able bring the new opt-out collective action, the Government has rejected proposals by some consultees to limit the ability to bring such claims to designated bodies. The right will instead extend to any claimants (individuals or businesses, not limited to SMEs) who have suffered a loss, as well as genuinely representative bodies such as trade associations. Law firms, third party funders and special purpose claims vehicles will not be permitted to bring collective actions (although they may of course be running such claims in practice).  

Unclaimed funds

The Government proposes that any funds remaining unclaimed in the opt-out damages 'pot', which US experience shows may often be in excess of 50%, will not revert to the defendant (or be distributed on a cy-près basis as in the US), but will be paid to the Access to Justice Foundation.  The damages payable by defendants will therefore be based on the losses of the whole class, not only those who have come forward to claim. This will be subject to an order-making power for this to be changed at a future date if necessary.

Defendants will, however, be free to settle on any other basis, subject to approval from the CAT.


The Government recognises the possibility of frivolous or unmeritorious litigation arising from the introduction of an opt-out regime, but considers that its proposed safeguards will prevent this, in particular:

  • A strict certification process by the CAT, under which the CAT will decide whether a case should proceed on an opt-in or opt-out basis.
  • The requirement for CAT approval of settlements, including as to the reasonableness of legal fees.
  • Maintenance of the 'loser pays' costs principle (to be enshrined as the starting point for assessment within the CAT Rules of Procedure).
  • The prohibition of contingency (as opposed to conditional) legal fees or 'damages based agreements' (DBAs) in collective actions, requiring amendments to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (which implemented the Jackson reforms to remove restrictions on DBAs).

The Government also emphasises that, unlike in the US system, no treble damages will be available. It further proposes to prohibit exemplary damages in collective actions, which will presumably require legislation to deal with the recent decision of the CAT in the Cardiff Bus case (an individual action) that exemplary damages can be awarded in competition cases where no fines have been imposed (see our e-bulletin here).

Design details

In addition to the issues addressed above, the Government has put forward a number of further design details for the proposed collective action. These include that, on certification, the CAT must consider:

  • Whether a collective action is the best way of pursuing the claim, and whether it should proceed on an opt-in or an-opt out basis.
  • A preliminary merits test.
  • Whether there is sufficient commonality of issues.
  • Whether the individual or body bringing the case is a suitable representative.

Further details on the factors to be taken into account on certification have yet to be provided, and may be developed by the CAT as part of revisions to its Rules of Procedure. For example, it is likely that issues such as governance of the class, how to deal with multiple claims brought by multiple claimants, whether to certify a class containing members with differing interests (such as direct and indirect purchasers), financial adequacy, and how limitation periods will be applied in this context will need to be considered.


The proposals in this area, if implemented, will likely lead to an increase in cases brought in the UK and represent a tipping of the private enforcement landscape in favour of claimants, although it is not clear whether greater compensation will actually be obtained by consumers in practice. Whether the new regime will lead to vexatious claims being brought (including the bringing of claims at an early stage of an investigation by a competition authority prior to any decision being issued, as in the US) or the exercise of undue pressure on defendants to settle even where they have a reasonable defence will depend in large part on the further design details of the new regime, and how it is applied by the CAT in practice.

What is clear is that the CAT will have a difficult and challenging role to play in ensuring that an appropriate balance is maintained.


Although its proposals are designed to promote private actions in the courts, the Government also proposes to promote ADR (although not make this mandatory), to ensure that the courts are the option of last resort.

Opt-out collective settlements

The Government's main proposal in this area is to introduce a new opt-out collective settlement regime for competition cases in the CAT, similar to the Dutch mass settlements regime (although applying to non-UK claimants on an opt-in basis only), to allow undertakings to settle cases on a collective basis without the need for a claim to be brought.

Cases would need to be certified by the CAT as suitable for such a settlement, and settlements themselves as fair, just and reasonable. The CAT will be able to issue directions as to the timing and mechanics of the settlement, including as to publicity.

OFT/CMA power to certify redress scheme

The Government proposes to grant the OFT (and in due course its successor the CMA) the discretionary power to certify a voluntary redress scheme put forward by an undertaking which has been found by the OFT or the European Commission to have infringed competition law. The OFT will not have the power to order an infringing party to implement a redress scheme. It will have the power to take enforcement action should the terms of a certified scheme not be complied with.

Unlike the CAT, the OFT's role will be limited to certifying that a scheme had been created in accordance with a reasonable process, not that the compensation itself is reasonable.

The Government proposes that the OFT continue to consider whether to grant a (5-10%) reduction in fines where a business has made such redress. This will obviously only be relevant in OFT as opposed to EU cases, and it is not clear how this will operate in circumstances where an offer of redress may only be made after an infringement decision has been issued.

The Government is silent on the question of the relationship between the certification of a voluntary redress scheme and the opt-out collective action regime, for example whether this is a factor to be taken into account by the CAT when considering certification.

Settlement offers

Finally in this area, the Government proposes that the provisions of the CAT's Rules of Procedure on settlement offers be aligned with the position in the High Court (i.e. Part 36 of the Civil Procedure Rules).

Relationship with the public enforcement regime

The Government had consulted on measures to ensure that a strengthened private enforcement regime does not undermine the public enforcement system and its deterrent effect on anti-competitive behaviour, and in particular that it does not undermine incentives on whistle-blowers to make leniency applications to the OFT and the European Commission in relation to cartel behaviour.

These included measures to regulate access by claimants to 'leniency documents' submitted by leniency applicants to a competition authority, and in respect of relieving whistle-blowers from joint and several liability.

However, given that at the EU level the Commission is expected to put forward proposals in this area within the first quarter of 2013, the Government has not proposed taking any action at this stage. It has stated it will consider doing so if there is significant delay to the Commission's proposals (setting out the type of action which it would be minded to propose).

The Government does propose various measures to ensure that the OFT/CMA is aware of and can intervene in competition law private actions (in the CAT).

Proposals not taken forward by the Government

The Government had originally consulted on introducing a rebuttable presumption of loss in cartel cases (for example of 20%), but has now dropped this proposal following widespread opposition to the idea.

It also does not propose to legislate in respect of the passing-on 'defence' (which has not to date been explicitly recognised in English law but is assumed to apply), or the ability of indirect purchasers to bring claims.

Next steps

The majority of the proposals will require changes to primary legislation, and the timing for their introduction will therefore be subject to Parliamentary schedules and approval. Amendments will also need to be made to the CAT's Rules of Procedure, the timing for which is not yet clear.