March 26, 2015

UK Passes Consumer Rights Bill Introducing Opt-Out Antitrust Class Actions

A View from Constantine Cannon’s London Office

By Richard Pike

The United Kingdom announced today that the Consumer Rights Bill has passed its final legislative hurdle and has been adopted as the Consumer Rights Act 2015 – heralding a major overhaul of consumer protection law in the UK.

Schedule 8 of the Act contains radical new provisions designed to boost private antitrust enforcement in the UK.  Most noteworthy is the adoption of an opt-out class action remedy specifically, and uniquely, for claims alleging infringement of UK and European competition law.  Never before has there been any form of opt-out action in the UK for any purpose.

The class action provisions are intended to strike a balance between enhancing access to justice and avoiding the creation of what has been termed an “American litigation culture.”  As such, there are a number of limits on what will be possible.  First, the opt-out class will be limited to persons domiciled in the UK.  All other persons would have to opt in to obtain the benefit of actions that are brought, or else bring their own claims.  Second, contingency fees will be prohibited, and it is likely that the arrangements for fees and funding will effectively be set by the Competition Appeal Tribunal at the outset.  Third, it will be for the Tribunal to decide in each case whether it is appropriate to allow the case to proceed on an opt-out basis, an opt-in basis or not as a collective action at all.  The Tribunal will also be tasked with deciding whether the lead plaintiff is an appropriate person to represent the class.

How well this class-action regime will work in practice is likely to depend on the minutiae of Tribunal rules, which are currently the subject of consultation, as well as how the Tribunal handles the first few cases.  The new regime is slated to begin in October 2015.

Other innovations in Schedule 8 include the creation of a fast track designed to assist SMEs (small and medium enterprises), particularly, in obtaining quick and cheap redress for competition infringements, as well as a voluntary redress scheme allowing cartelists to benefit from a small reduction in fines if they set up a procedure offering compensation to affected purchasers.  There are also many more technical changes designed to make the Tribunal more effective as a venue for private enforcement as well as changes in respect of limitation periods – though these will be subject to further change once the UK implements the EU Competition Damages Directive, Directive 2014/104/EU.

Edited by Gary J. Malone

Categories: Antitrust Legislation, International Competition Issues

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