A boost to private enforcement in competition law: the UK Consumer Rights Act 2015 collective proceedings

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The Consumer Rights Act 2015 received Royal Assent on 26th March 2015 and should come into force in October 2015. One of its main aims is to encourage SMEs and consumers to bring private actions in competition law. This was made clear in the Research Paper produced to inform the debate on the Consumer Rights Bill (HC Bill 161), introduced by the British Government to the House of Commons in January 2014: “The problem identified by [the Department for Business Innovation and Skills, a UK Ministry] is that challenging anti-competitive behaviour is beyond the resources of individual consumers and many businesses, particularly SMEs: ‘Cartels are covert and other anti-competitive practices are often difficult to identify. Establishing the situation that would have existed in the absence of the anti-competitive behaviour is complex, and will often require costly expert economic input’ [Department for Business Innovation and Skills, ‘Private actions in competition law: a consultation on options for reform’, URN 12/742, April 2012]. Both BIS and the OFT [Office of Fair Trading, today replaced with the CMA, see http://www.altalex.eu/content/uk-competition-and-markets-authority-nearly-one] are of the view that the present approach to private actions is one of the least effective aspects of the UK competition regime” (research paper 14/5 of 27 January 2014, p. 10).

In order to address this issue, the Consumer Rights Act 2015 notably introduces a class action regime (see section 81 and schedule 8 on private actions in competition law, which amends the Competition Act 1998 and notably substitute a new section 47B to the existing one, available at: click here). In this respect, one often opposes ‘opt-in’ and ‘opt-out’ models for class actions. The British Government chose to have both. More exactly the choice will be made by the Competition Appeal Tribunal.

Collective proceedings must be commenced by a person who proposes to be the representative in those proceedings. It is not a requirement that all of the claims should be against all of the defendants to the proceedings. Collective proceedings may be continued only if the Tribunal makes a collective proceedings order. The Tribunal will notably consider whether the claims raise the same, similar or related issues of fact or law. The order includes an authorisation of the person who brought the proceedings to act as the representative in those proceedings, a description of a class of persons whose claims are eligible for inclusion in the proceedings, and importantly a specification of the proceedings as opt-in collective proceedings or opt-out collective proceedings. Opt-in collective proceedings are defined as collective proceedings which are brought on behalf of each class member who opts in by notifying the representative, in a manner and by a time specified, that the claim should be included in the collective proceedings. In contrast, opt-out collective proceedings are collective proceedings which are brought on behalf of each class member except (a) any class member who opts out by notifying the representative, in a manner and by a time specified, that the claim should not be included in the collective proceedings, and (b) any class member who (i) is not domiciled in the United Kingdom at a time specified, and (ii) does not, in a manner and by a time specified, opt in by notifying the representative that the claim should be included in the collective proceedings. In other words, the UK opt-out proceedings do not include non-UK domiciled class members: they need to opt-in. The advantage of opt-out proceedings is that there is no need to identify each individual class member.

In order probably to reassure companies, the Tribunal does not award exemplary damages in collective proceedings. Moreover, where the Tribunal makes an award of damages in opt-out collective proceedings, any damages not claimed by the represented persons within a specified period must be paid to the charity prescribed by the Government (save where the Tribunal orders that all or part of these unclaimed damages is instead to be paid to the representative in respect of the costs or expenses he incurred in connection with the proceedings).

A new opt-out collective settlement regime for infringements of competition law is also created, whether a collective proceedings order has or not been made (new sections 49 A and B). It will enable businesses to settle cases quickly and easily, on a voluntary basis. Again, non-UK domiciled persons are protected: they need to opt-in to be included.

(Altalex, 18 May 2015. Article and photo by Emmanuel Guinchard)

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