In April 2012, the UK's Department for Business, Innovation and Skills (BIS) launched "Private Actions in Competition Law: A Consultation on Options for Reform" (the "Consultation"). The Consultation sets out proposals from the UK government in relation to reform of the procedural landscape in the area of civil justice for the bringing of competition law cases before UK courts. The consultation period closed at the end of July, amid reports that there had been a strong level of response and input.
Historically, in the UK, competition law has been enforced primarily by way of administrative decisions taken by the Office of Fair Trading (OFT) and the various sectoral regulators. Although a number of those decisions have been held up to scrutiny by the Competition Appeal Tribunal (CAT), there have been relatively few "stand alone" cases brought before the courts. Unlike the U.S., therefore, where litigation is the prime driver in competition enforcement, the burden in the UK has fallen, almost exclusively, on the government regulators. Limited budgets, and the need for exacting priority criteria, however, has meant that many cases have not been taken up by the regulators. At the same time, complainants have not considered themselves to be in a sufficiently strong enough position to be able to pursue a private action in the courts. A key aim of this Consultation was to ascertain the reasons individuals/companies have been reluctant to "go it alone" by seeking views on reforms intended to empower consumers and businesses to challenge anti-competitive behavior. In doing so, BIS hopes that the eventual reforms will increase growth, by enabling individual consumers, as well as small and medium sized enterprises (SMEs) to have access to the courts in competition cases. In sum, the Consultation is intended to find ways that private parties can tackle competition issues, thereby promoting what the BIS considers fairness by allowing those who have suffered as a result of anti-competitive conduct to be better equipped to obtain redress.
The scope of the proposed reforms ranges from procedural changes within the existing legal framework, to introducing new rights of action, particularly in relation to collective actions. BIS' focus is on putting forward the proposals that it believes will improve the enforcement system. The main ideas put forward for discussion in the Consultation include:
- Expanding the jurisdiction of the CAT. At present, it is only entitled to hear appeals from decisions of the regulators, and "follow-on" damages actions that "piggy-back" on infringement decisions The Consultation proposes allowing the CAT to hear "stand-alone" cases involving competition law issues — thereby allowing a potential claimant to bring its case in the CAT, which is a specialist competition law tribunal, rather than going through the ordinary High Court system. The CAT's ability to perform that role would be enhanced by it being given the power to grant injunctions.
- Creating a CAT fast-track for SMEs. The proposals envisage creating a new fast-track procedure that would reduce the time it takes to bring a case to a hearing, while limiting the cost of doing so through the introduction of cost caps and other mechanisms.
- Introducing an opt-out collective actions regime for competition law. The proposals have invited views on the most effective format for a collective action regime, including, in particular, whether it is more likely to be successful if it is based on an opt-out model as in the U.S., as opposed to one that requires participants to opt-in. The Consultation is based on the premise that any collective action reforms should apply equally to business as well as to consumers, and that these cases could be brought on a stand-alone basis.
- Promoting the role of Alternate Dispute Resolution (ADR). Even if the route to court is made easier, BIS does not want to alter the fact that courts should be considered the option of last resort after other options for remediation have been exhausted.
- Protecting the complementary roles of public and private enforcement. The proposals take into account the need to protect the incentives for companies to whistle-blow on cartels and, therefore, assist public enforcement.
In general, the response to the Consultation seems to be supportive of the proposals. The majority appear to agree that reform is required, although there are some differences in opinion as to what those reforms should actually look like.
For instance, many agree that there would be a benefit in creating a CAT fast track for simpler cases. The problem, however, is that just because a case involves an SME, it may not automatically be a simple case. While the parties may be smaller, the issues may remain equally complex. By contrast, there can be cases involving major companies where the issues are relatively straightforward. As such, some have suggested that access to a fast track should be driven by an objective view of the issues in the case, rather than a subjective view based on the size of one of the parties.
Similarly, the majority seem to support collective actions as a means to facilitate access to redress. There has been some debate, however, as to the optimum structure for such a regime. BIS has, however, stated in the Consultation that treble damages and contingency fees may have no place in a UK collective action regime, and that maintaining the "loser-pays" rule should ensure fairness for defendants and act as a check on unmeritorious claims.
What is clear at this stage is that the just concluded Consultation may very well result in changes to the UK competition enforcement system. The changes will be against the backdrop of the ongoing reform of the OFT and the Competition Commission into the combined Competition and Markets Authority, as well as ongoing consultations at an EU level, including the likelihood of harmonization of leniency programs across national regimes. While both the details of the eventual changes and the timing remain uncertain, it would appear that significant change is on the horizon.