The Office of Fair Trading (OFT) and the European Commission are championing reforms to UK and Europe-wide legal systems aimed at encouraging more private actions against companies for breaches of competition (antitrust) law.
The OFT published its reform recommendations before Christmas ( http://www.oft.gov.uk/news/press/2007/162-07). These stem from the OFT’s consultation on its April 2007 Discussion Paper “Private actions in competition law: effective redress for consumers and business”, which itself followed a Commission December 2005 Green Paper “Damages actions for breach of EC antitrust rules”. Both processes aim at encouraging more consumers and businesses to bring private competition law actions. As well as ensuring redress for those harmed and encouraging a greater “compliance culture” within companies, the hope is that more private actions will ease the burden on competition regulators to pursue and punish anti-competitive conduct.
Of particular interest to retailers is the suggestion in the OFT recommendations that “representative bodies” should be permitted to bring “representative actions” on behalf of consumers and businesses “at large”. This partly echoes the class action model available in the US where claims can be pursued on behalf of a class of persons generally, save for those who “opt-out”. By contrast, the current mechanisms for competition claims in the UK allow only for “opt-in” representative actions on behalf of named persons/entities (and even then only after an infringement finding has been made by a competition authority or the court).
Indeed, part of the motivation for the proposed changes has been the perceived failure of the current mechanisms to allow consumers and small businesses, in particular, to seek redress for anti-competitive behaviour. Retailers may be aware of the action brought by Which? (formerly The Consumers Association) against JJB Sports arising out of the OFT’s investigation into price-fixing of replica football shirts. Despite estimating that several hundred thousand consumers had been overcharged for their shirts, Which? eventually signed up around 500 individuals to be named claimants in its action against JJB Sports. This resulted in a call by Which? to be able to bring such actions on an “opt-out” basis.
We await a Government consultation paper on the OFT’s recommendations. Meanwhile, the European Commission is finalising its own White Paper which should appear early in 2008.