This is an interesting time for competition litigation in the E.U. and especially the U.K., with the Consumer Rights Act 2015 (the “Act”) that came into force on 1 October 2015. The E.U. Directive on Antitrust Damages Actions (Directive 2014/104/EU) (the “Directive”) was signed into law on 26 November 2014 and must be implemented into Member States’ legal systems by 27 December 2016. The Act and the Directive are expected to have a profound impact on private damages actions for competition law infringements at U.K. and E.U. level respectively.

The major reform brought by the Act is the introduction of opt-out collective private damages actions before the Competition Appeals Tribunal (the “CAT”). New rules for the CAT (the “Rules”) have been implemented in tandem with the Act to give effect to the reforms. The Directive makes a number of more minor changes which complement the Act’s facilitation of private damages actions, such as strengthening the effect of decisions by national competition authorities and by introducing a rebuttable presumption that cartels have caused harm to consumers.

This article will discuss the key changes being brought in by the Act and will look ahead to the implementation of the Directive into U.K. law.

Collective Proceedings in the U.K.

Cases heard in the CAT

The Act has elevated the role of the CAT in hearing private damages actions by extending the scope of cases that it can hear. Whilst previously the CAT could hear only “follow on” private damages actions (where a binding decision of the European Commission or the Competition and Markets Authority has established the existence of the competition law infringement), the Act enables the CAT to hear “stand alone” private damages actions in which the claimants must prove the existence of the anti-competitive conduct as well as their resulting losses.

The CAT was previously able to hear opt-in collective actions, brought by specified consumer bodies, however only one such case was brought before the CAT (The Consumers Association v JJB Sports PLC [2009] CAT 3) since the CAT came into existence on 1 April 2003. That case settled but was widely regarded as a disaster for Which?, the consumer association that brought the action. It was considered that reforms were required in order to facilitate redress for consumers that have suffered losses as a result of anti-competitive behaviour.

The legislature was, however, keen to avoid what it considered to be some of the excesses of the U.S. class action system. Therefore a number of measures were introduced in the Act and the Rules which were aimed at ensuring that the U.K. did not develop a similar litigation culture to that in the U.S. For example, the Act prohibits the CAT from awarding any exemplary damages to claimants, in contrast to the treble damages that are available in the U.S.

Collective proceedings order

Under s.47B of the Competition Act 1998 (as amended by the Act), collective proceedings will only be permitted to proceed in the CAT once the CAT has made a collective proceedings order. Before make a collective proceedings order, the CAT must authorise a person to be the class representative for the proceedings.

The class representative need not be a claimant in the proceedings but the CAT will only authorise a person to act as the representative where it considers it just and reasonable for that person to so act.  The Rules set out various criteria that will be employed by the CAT in assessing a person’s suitability for the role, which focus on the representative acting in the best interests of the class members and being able to pay the defendant’s costs if the CAT finds in favour of the defendants. Neither the Rules nor the Act specifically prohibit law firms, funders or special purpose vehicles from being authorised as class representative, however the explanatory notes to the Act contemplate a suitable representative being a consumer body or trade association.

In addition to the requirement for an appropriate class representative, a collective proceedings order will only be made by the CAT where the CAT considers that the cases raise the same, similar or related issues of fact or law and are suitable to be brought as collective proceedings. The Rules provide guidance as to the factors that will be taken into account by the CAT in determining whether the cases are suitable to be brought in collective proceedings, including whether to do so would be cost effective, the nature and size of the class and whether the claims are suitable for an aggregate award of damages.

The class of claimants must also be identifiable, though there is no maximum or minimum class size for a collective action. Neither the Rules, nor the Act provide any further guidance on what constitutes an “identifiable class” though it may be interpreted as a class of claimants for which records do exist, regardless of how arduous a task it would be to assemble such a record. For example, an identifiable class would be all purchasers of a cartelised product; records of all such purchasers exist through the purchasers’ proof of purchase, even though a record of all such persons could not feasibly be presented to the CAT.

The final requirement for the CAT to determine prior to issuing a collective proceedings order is whether the proceedings are to be opt-in or opt-out. Opt-in proceedings involve each individual claimant having to proactively elect to join the class for the group proceedings. Any judgment or settlement reached in opt-in proceedings will only bind those parties that have opted in. Opt-out proceedings, by contrast, involve claims being brought on behalf of a group of claimants that have all suffered loss as a result of anti-competitive conduct, whether they have consented to being included in the proceedings or not. Indeed, opt-out proceedings can be brought on behalf of many claimants with a large proportion of those claimants being completely unaware that the proceedings are being raised. All claimants that fall within the class will be bound by any judgment or settlement reached in the case unless they have proactively opted out of the claim. It should be noted that opt-out collective proceedings will only bind U.K. domiciled claimants. Any non-U.K. domiciled claimant that wishes to join the class of an opt-out collective action in the CAT must proactively opt-in to the claim.

The Rules specify two criteria that the CAT will consider when determining whether a collective action should proceed as an opt-in or an opt-out claim. Those criteria are the strength of the claims, ensuring that the opt-out system is not used to group weak claims together to exert settlement pressure on defendants, and whether it is practical for the claim to instead be brought as an opt-in action. The latter criteria will depend on a number of factors, including the likely amount of damages that each claimant is likely to recover. If the class is relatively small and each claimant is likely to recover significant damages then the CAT may consider opt-in proceedings to be more appropriate.

There are therefore many issues that the CAT will need to determine before certifying a group action to proceed by issuing a collective proceedings order. The CAT’s interpretation of the Act and the Rules will no doubt become clearer once initial claims have been raised in the CAT and the first collective proceedings orders have been issued.

Aggregate damages

If a collective action proceeds to trial and the claimants are successful, the CAT is able to award damages on an aggregate basis, whereby it does not consider the individual amounts of damages that are to be paid to each claimant in the class; the CAT simply makes an order for payment of a headline sum.

The Rules provide that the CAT will, however, give directions as to how the share of the damages that individual class members are entitled to is to be assessed. Such directions may include a mathematical formula that can be applied to quantify each claimant’s individual loss and arrangements for resolving any disputes that claimants may have in relation to the valuation of their share of the damages. The CAT may also stipulate that any apportionment determined by the class representative, or other party, must be approved by the CAT.

In opt-out collective proceedings, the CAT may set a deadline by which claimants must have claimed their share of the damages from the aggregate damages award. The CAT may also stipulate that the class representative inform it of any residual amounts that have been unclaimed from the aggregate damages pot. The CAT may then order that these residual funds are allocated to the class representative to settle any legal fees or disbursements incurred in bringing the claim. The CAT may order, alternatively or additionally, that any residual sums are paid to a designated charity.

Settlement procedures

Settlements in the CAT are effected through collective settlement orders and before any such order is made, the CAT must approve the terms of the settlement. The CAT will only do so where it considers the terms of the settlement to be just and reasonable. The Rules provide guidance as to what factors will be taken into account by the CAT in determining whether a settlement is just and reasonable. These factors range from the obvious (the amount and terms of the settlement) to having to estimate the prospects of the claim should it proceed to trial (specifically the time and costs involved in taking the claim to trial and whether the claimants are likely to obtain significantly more at trial than under the settlement). The CAT is entitled to take into account the views of any claimants that are opting in or opting out of the settlement, submissions from the applicants’ lawyers and the opinion of an independent expert in deciding whether the settlement terms are just and reasonable.

In addition to making a collective settlement order where a collective proceedings order has already been made under the new section 49A of the Competition Act 1998, the CAT can also make a collective settlement order under the new section 49B where no collective proceedings order has yet been made. If the parties have managed to reach a commercial settlement at a very early stage, they can therefore take advantage of the CAT’s collective settlement procedures before an action has even been raised. The parties must make a joint application to the CAT which contains various specified details relating to the dispute, the parties and the settlement terms. The CAT will then consider the application and may convene a hearing in respect of the settlement terms. The CAT will only approve the collective settlement order after determining that the dispute, if litigated in the CAT, would be suitable for collective proceedings and that the proposed class representative would be suitable for the role.

Therefore, although a collective settlement order can be obtained without the need for a formal collective proceedings order, the claimants must still meet the same criteria for achieving the settlement as they would in bringing a claim. However, the dynamic in practice would be different, as claimants applying for a collective proceedings order to commence an action would face opposition from the defendants whereas the claimants and defendants would effectively be working together to convince the CAT to approve the settlement when attempting to obtain a collective settlement order.

The use of the CAT’s settlement procedures, as opposed to a regular commercial settlement outwith the auspices of the courts, can be beneficial for claimants and defendants alike. The claimants can achieve a structured settlement which has the stamp of approval of the CAT, whilst defendants can achieve an opt-out settlement that would quantify their final liability for the infringement in the U.K. and prevent other claimants from raising subsequent actions (unless those claimants have specifically opted out of the settlement).

Future Developments

Further legislation is required in the U.K. by 27 December 2016 to bring the Directive into U.K. law. The Directive aims to facilitate private damages actions by claimants across the EU and seeks to harmonise many of the rules across E.U. Member States as, currently, such actions are much easier to bring in some Member States than others. There are a number of important changes the new U.K. legislation will be required to give effect to.

The effect of national competition authority decisions

The Directive strengthens the evidential value of final infringement decisions taken by national competition authorities across the E.U.. Decisions taken by national competition authorities will be binding in the courts of that Member State. Therefore a decision taken by, for example, the Autorité de la concurrence (the French competition authority) will serve as unchallengeable proof of the existence of the infringing behaviour. Whilst this may require changes to the French legal system, in the U.K. context decisions of the Competition and Markets Authority are already binding in the U.K. courts. It is also worth noting that decisions of the European Commission have been binding in the courts of Member States since 24 January 2003 under Council Regulation (EC) No. 1/2003.

The Directive also provides that the decisions of national competition authorities provides evidence of an infringement in the courts of other Member States, though their findings will not be binding. For example, U.K. courts will have to have regard to a decision taken by, for example, the Autorité de la concurrence in providing evidence of an infringement. It is unclear at this stage how exactly this requirement will be translated into U.K. law and what evidential weight the U.K. courts will give to decisions of foreign national competition authorities. It is, however, likely to at least shift the initial burden of proof from the claimants having to prove that an infringement took place over to the defendants having to lead evidence that the foreign national competition authority came to an incorrect decision.

Indirect purchasers and the passing on defence

The availability of the passing on defence for competition law infringers has been a subject of much academic debate and differing approaches across E.U. Member States. The defence applies to an action brought by purchasers of goods that have been subject to an anti-competitive overcharge that have then sold those goods on to suppliers further down the supply chain or on to end consumers. The defence is an argument that those bringing the action did not suffer all, or any, of the loss as they “passed on” the overcharge to their own customers.

The Directive contains provisions which will ensure that the passing on defence is available to defendants throughout the E.U.. The passing on defence is currently available in the U.K. however, so no major reform of the existing practice will be required.

Linked to the availability of the passing on defence is the standing of indirect purchasers; those that purchased the goods further down the supply chain that the overcharge was “passed on” to. Indirect purchasers will have to bring proceedings against the infringers directly for the overcharge that was passed on to them. This can, in practice, be very difficult for indirect purchasers to prove. To address this, the Directive introduces a rebuttable presumption that the indirect purchasers have suffered some level of overcharge, which is to be estimated by the court. The Directive contains provisions that aim to ensure that there is no overcompensation, in that the compensation due to the indirect and direct purchasers combined does not exceed the level of the overcharge.

The shifting of the burden of proof from the indirect purchasers to the defendants in respect of proving an overcharge will strengthen the position of indirect purchasers not just at trial, but also in settlement negotiations as any finding in favour of claimants, regardless of the amount of damages awarded, opens up the defendants to potentially having to pay the claimants’ costs.

Presumption and estimation of harm caused by a cartel

In a similar fashion to the position of indirect purchasers discussed above, the Directive introduces a rebuttable presumption that cartels cause harm. Therefore, once the existence of the cartel has been established, either by a Commission or national competition authority decision, the burden of proof is then on the defendants to prove that the claimants didn’t suffer any loss.

The Directive also provides that courts in Member States will have the power to estimate the level of damages caused by the anti-competitive behaviour. The courts can also seek assistance from their national competition authorities in order to quantify these damages and the European Commission should provide guidance on the quantification of damages at E.U. level.

This will, as discussed above in respect of indirect purchasers, strengthen claimants’ standing in respect of both trial proceedings and settlement negotiations. However, neither the presumption of harm nor the courts’ ability to estimate the level of harm caused by the infringement are likely to provide any substitute for claimants obtaining their own expert economic advice as to the level of harm suffered. From a practical perspective, the courts will still hear economic evidence from both the claimants and the defendants. Defendants are likely to lead their own economic evidence to rebut the presumption of an overcharge or, at the very least, argue that any overcharge was lower than that argued by the claimants. Therefore, in order to ensure that the court’s own estimation of damages is not influenced by one-sided expert economic evidence, claimants are still likely to have to incur the costs of obtaining their own expert economic evidence.


Certain competition law infringements (particularly cartels) are, by their nature, secretive. As a result, claimants are usually at a considerable informational disadvantage to defendants when it comes to proving the existence or operation of the cartel. For example, the defendants will likely hold notes and potentially minutes of cartel meetings which provide evidence of the infringement. The Directive provides that claimants, and defendants, can apply to the court to seek disclosure of specified documents from the other party or from third parties.

Categories of documents can also be obtained, provided that the categories themselves are described sufficiently precisely and narrowly. An example would be an application for all invoices in respect of sales of a specified product, to specified parties over a specified period of time. The court is tasked with ensuring that confidential information is adequately protected in any order for disclosure it makes. Furthermore, certain categories of information, such as defendants’ leniency statements submitted to the European Commission or national competition authority, are protected from disclosure in order to protect the effective operation of the leniency procedures.

These provisions will have a minimal impact on Member States such as the U.K. and Germany, which already have established disclosure regimes, but for the majority of Member States that have no existing disclosure regimes this will be a major reform.


The Act, the Rules and the Directive all share a common goal of facilitating private damages actions for competition law infringements and so could all be characterised as “claimant friendly”. The Directive seeks to harmonise the rules across the E.U. in respect of such claims but many of its provisions will have a lesser impact on Member States such as Germany, the U.K. and the Netherlands that already boast well-developed competition law private damages action regimes.

It remains to be seen whether the Act and the Rules result in a dramatic increase in the number of such cases being pursued in the U.K. courts but it is safe to say that these reforms will likely result in the U.K. remaining the chosen forum for many competition litigants.