Both the EU and UK have recently, and in quick succession, announced important developments in the reform of private competition actions, including proposed new legislation and recommendations on the principles that should be adopted across all Member States.


On 11 June 2013, the European Commission published a Recommendation and accompanying Communication on collective redress mechanisms in Member States. Alongside this, it also published a proposal for a Directive on rules governing actions for damages under national law for infringements of EU competition law.

The Communication ("Towards a European Horizontal Framework for Collective Redress") reports on the main views expressed in response to the Commission's 2011 public consultation on collective redress1, and explains the Commission's position on a range of central issues on the topic. The Recommendation then sets out common, non-binding principles that reflect the Commission's position, and recommends that all Member States should have collective redress systems at national level for both injunctive and compensatory relief that respect these basic principles. Member States will have two years to implement those principles.

The main principles of the Recommendation include the following:

  • collective redress procedures should be fair, equitable, timely and not prohibitively expensive;
  • as a general rule, collective redress claims should be "opt-in" (where the claimant group includes only those persons who have given their express consent to be part of the claim), rather than "opt-out" (where all eligible persons would automatically form part of the claimant group unless they actively opt out). Any exception to this should be duly justified by reasons of sound administration of justice;
  • national collective redress systems should contain certain fundamental procedural safeguards, to avoid the development of an abusive litigation culture such as that seen in "class actions" in the US legal system. These safeguards include:
    • contingency fees should not be permitted, but if a Member State exceptionally allows such fees they should be subject to appropriate national regulation;
    • compensation awarded should not be punitive;
    • the entities representing claimants in collective actions should be non-profit making, and there should be a direct relationship between the objectives of the entity and the rights that are alleged to have been violated;
    • it should be verified at the earliest possible stage of litigation that manifestly unfounded cases are not continued;
  • parties should be encouraged to collectively settle disputes, consensually or through appropriate means of alternative dispute resolution.

The proposed Directive relates to national damages claims for breaches of Articles 101 or 102, and seeks to ensure a common approach across Member States. The main point of interest is that it draws an end to the uncertainty around disclosure of leniency documents, following the Pfleiderer judgment, by preventing access to leniency corporate statements and settlement submissions. It also provides that there should be a presumption of harm in follow-on cases, where it relates to a cartel. Otherwise, harm should be quantified in accordance with national rules and procedures.

The Recommendation is available here and the accompanying Communication can be found here.


On 12 June 2013, the UK Government published the Draft Consumer Rights Bill with detailed explanatory Notes. Alongside these documents, the UK Government also published a response to a number of consultations on consumer rights.

The Draft Bill covers various aspects of consumer law, but includes the introduction of a limited opt-out collective actions regime and an opt-out collective settlement regime for competition law. The UK Government has therefore embraced the opt-out form of collective redress rejected by the European Commission in its Communication and Recommendation. The other aspect of the legislation that is at odds with the EU proposed Directive is that the UK has not introduced a rebuttable presumption of loss in cartel cases.

Under the proposed reforms, opt-out collective proceedings will be introduced to allow consumers and businesses to easily achieve redress for losses suffered as a result of breaches of competition law. However, a person not domiciled in the UK must still opt-in to become part of the proceedings.

Any representative group or trade association will be able to commence collective proceedings before the CAT, on an opt-in or opt-out basis, provided either that they are part of the class of persons bringing the action (i.e. a "class member") or that the CAT considers it just and reasonable for them to act as a representative.

Similar to the European Commission, the UK Government recognises the need to implement safeguards to prevent US style class actions. The safeguards in the Draft Bill include the following:

  • certification by the CAT that the case is suitable to be brought in collective proceedings;
  • a prohibition on damages-based agreements (i.e. contingency fees);
  • a prohibition on the award of exemplary (i.e. punitive) damages by the CAT in collective proceedings.

The Draft Bill also establishes a new opt-out collective settlement regime in the CAT, to encourage parties to settle disputes. Any settlement reached between the representative and the defendant in collective proceedings would then be binding on eligible consumers, unless they opted out of the settlement.

The full Response can be found here.