The Consumer Rights Act 2015 is expected to come into force in October 2015 and will give parties to competition investigations who have breached the law the power to submit a voluntary redress scheme to the Competition and Markets Authority (CMA) for approval. The CMA is now seeking views on the draft guidance published on the operation of this new power.

What will the new power allow?

Anyone harmed by Competition Law infringements has the right to full compensation for the harm suffered. This potentially covers compensation for actual loss, loss of profit, plus the payment of interest.

It is intended that in appropriate cases the CMA’s new power will make it easier for parties to provide, and consumers and businesses to gain access to, redress where harm has been caused by a competition infringement. As such, the power is designed to encourage parties to resolve disputes voluntarily as an alternative to court proceedings.

Any business considering setting up a redress scheme it wishes the CMA to approve should approach the CMA at the earliest opportunity for an initial discussion, in order to avoid wasting resources. The CMA has discretion whether or not to consider schemes for approval.

Importantly, the CMA does not expect to publicise that an application for approval of a scheme has been submitted during the course of an ongoing investigation. Neither does it expect to publicise any preliminary intention to approve or reject such an application. Similarly, parties are expected not to disclose that they have applied, or taken steps to apply, to the CMA for approval of a scheme without first consulting the CMA.

Moreover, when considering approving a scheme, the CMA will note whether it would be appropriate to make a penalty reduction in light of the infringing party’s voluntary provision of redress. While there is no right to a penalty reduction, the CMA expects that in the majority of cases where it approves a scheme it will reduce the penalty it would otherwise have imposed to recognise the provision  of redress through the setting up of the scheme.

How can I respond?

The new power could certainly present an attractive alternative for businesses who find themselves in the midst of potential regulatory infringements and therefore is  worth careful consideration.

The consultation will run for four weeks, from 2 March to 29 March 2015. A final version of the guidance, taking into account consultation responses received, will be published in due course. If you are interested in responding to the consultation, then please follow this link.