The UK Department of Business Innovation and Skills has announced its plans for the reform of private actions in competition law. The reforms aim to expedite justice by making it substantially easier for consumers and businesses - small and medium-sized enterprises (SMEs) in particular - to seek redress for competition law infringements, thereby stimulating growth and promoting fairness.
The UK is already home to much of the current high-profile litigation in this area. These measures arguably underline the UK's aim to be seen as the preferred choice of forum for competition law damages claims in Europe.
The Government response to the consultation (launched in April last year) sets out reforms in four key areas:
- Establishing the Competition Appeal Tribunal (CAT) as a major venue for competition actions in the UK. In particular by: allowing the CAT to hear 'stand alone' actions (which do not follow on from a competition law infringement decision by a regulator) as well as 'follow on actions'; allowing the CAT to grant injunctions; harmonising limitation periods with the High Court; creating a fast-track for simpler cases; and, giving the CAT exclusive jurisdiction over collective actions. In practice, the majority of competition litigation in the UK is being brought in the High Court. It will be interesting to see whether these reforms do indeed reassert the CAT's position as the specialist and technical forum for competition actions.
- Perhaps most controversially, the reforms create a limited opt-out collective actions regime with claims brought on behalf of a group. The opt-out mechanism will only apply to UK-domiciled claimants (with non-UK claimants being able to 'opt-in'). This is intended to allow consumers and businesses effective redress against competition law infringers which, it is argued, is not cost-effective, in particular for small claimants under current rules. It is intended that safeguards will be put in place to prevent some of the problems of US-style class actions and frivolous actions. Safeguards are to include no contingency fees for lawyers, no treble damages and maintaining the loser pays rule. Only time will tell, however, if such measures are sufficient to prevent the rise of 'litigation culture'.
- Promotion of Alternative Dispute Resolution (ADR). The promotion of ADR is by no means new in the UK (readers are reminded of the Woolf reforms implemented in 1999) and is emphasised in pre-action protocols and case management. However, these reforms seek to bolster this by adding an opt-out collective settlement regime and a role for the new Competition and Markets Authority to certify redress schemes.
- Ensure private actions complement the public enforcement regime - that is to say, the protection of the leniency programme. The Government is not intending to take action in this area pending anticipated European Commission proposals.
Interestingly, the Government has decided not to introduce a rebuttable presumption of loss in cartel cases. This will come as some small comfort to those on the receiving end of competition law litigation actions.
These reforms represent a bold step. They are very likely to result in further increases to the already growing field of competition law litigation in the UK. A further period of engagement will follow during the legislative process and changes are not expected to be in place for several years.