UK Eyeing American Class Actions As Model For Strengthening Antitrust Enforcement

The United Kingdom is considering moving closer to the American class action system and several other reforms that would strengthen antitrust enforcement.

Under a plan announced by the U.K.’s Department for Business Innovation and Skills (the “BIS”), the U.K. would adopt an opt-out collective action system – similar to the American class action system – in an effort to make it easier for consumers and small businesses to obtain damages in price-fixing cases.

The BIS announcement stated that the government has decided to: (1) establish the Competition Appeal Tribunal (CAT) as the major venue for competition actions in the U.K.; (2) introduce a limited opt-out collective actions regime, with safeguards, for competition law; and (3) promote alternative dispute resolution as an alternative to court action.  Much of the proposal would require new legislation.

The British Courts would face significant changes under the plan.  Currently, private cases are heard by an inundated High Court making private litigation lengthy and expensive.  Between 2005 and 2008 judgment was reached in only 41 competition cases.

Under the proposed new system, the CAT would hear all private disputes.  The CAT would also continue to hear appeals of public investigations decided by the Office of Fair Trade.

“Since its creation, the CAT has built up its expertise in competition cases and has become familiar with competition litigation.  There is now a substantial body of CAT case law on many aspects of substance and procedure in this field.  The concept of a specialist competition tribunal or court is recognized internationally as a key strength of the UK regime,” the BIS stated.

Such use of the CAT would also enable a fast-track process to be created to encourage small and medium sized companies to bring cases.

The BIS recommended instating “opt-out” collective action in order to ensure that businesses or consumers affected by an anticompetitive action would receive redress unless they specifically opted out of such relief.

Pro-business interest groups have criticized the plan.  “The Government has let the litigation genie out of the bottle by adopting US-style collective actions.  By grouping potential claimants together indiscriminately these ‘opt-out’ actions fail the growth test and will fuel a litigation culture in the UK,” said Katja Hall, Chief Policy Director for the Confederation of British Industry.

Despite signifying a major change from current U.K. policy on class actions, the new system would maintain significant differences from the American system.  For example, the new British system would not adopt jury trials, treble damages, or contingency fees.  Collective action cases would only be permitted in competition litigation.