Which?, the independent consumers’ organisation, is making use of provisions in the Enterprise Act 2002 to bring an action against the retailer JJB Sports Plc on behalf of customers who were overcharged when purchasing replica football shirts during 2000 and 2001.
JJB Sports was fined by the Office of Fair Trading for unlawfully fixing the price of certain football shirts and Which? now aims to recover compensation for the consumers affected.
Traditionally in Europe, the laws relating to anti-competitive practice have been enforced by national competition authorities (such as the Office of Fair Trading in the UK), subject to review by the courts.
Where companies are found to have breached competition laws by carrying on anti-competitive practices such as price fixing, they face severe fines. Awards for damages by national courts resulting from claims initiated by private parties are much less frequent, although this may soon change.
JJB Sports was one of seven companies fined by the OFT following an investigation which revealed that it had participated in an illegal cartel which fixed the prices of Manchester United and England football shirts sold during 2000 and 2001. It paid a £6.7 million fine but was not obliged to compensate consumers who had been overcharged.
Following the accession of the Enterprise Act 2002, Which? has the necessary powers to file a claim for damages at the Competition Appeals Tribunal.
The Act allows a select group of consumer bodies to take representative action, on behalf of customers, against firms that have been convicted of operating anti-competitive practices.
Although claims to recover damages caused by breach of national and EC competition law have been a theoretical possibility for some time, such claims must now be regarded as a commercial reality.
Companies should begin to assess the risks (and opportunities) created by this situation, especially at a time when the number of such breaches is on the increase due to the existence of leniency programmes.
Businesses and consumers should consider whether they have been the victim of anti-competitive behaviour and whether they may have a claim for damages.
Businesses should also consider if their business practices could be anti-competitive and, if so, look into any steps they could take to minimise their exposure to both public enforcement and private litigation.