The Consumer Rights Act 2015 (“2015 Act“) clears the way for a surge in private enforcement actions against undertakings infringing UK and EU Competition Law. Effectively, the UK has introduced US-style class actions for this type of claims, enabling consumers to seek compensation from undertakings for losses caused by price-fixing.
The new legislation introduces “opt-out” actions, in which all those affected by the infringement are automatically included within the suing class. This is diametrical opposite of the “opt-in” system previously adopted in the UK.
Before the enactment of the new legislation, there has been considerable difficulty in getting the relevant members of the class to opt in and bring a claim. The risk of litigation and high costs dissuaded most fair-minded consumer from opting in. Such is the impracticality that there was only one such attempt, against JJB Sports for the price-fixing of replica football T-shirts. That claim was settled on terms of repayment upon presentation of a receipt.
Schedule 8 to the 2015 Act amends sections 47A-E, amongst other provisions, of the Competition Act 1998, substituting the requirements and procedure for private enforcement actions. In particular, section 47B is amended to provide for class actions, or “collective proceedings” as defined in the statute. Subsection (2) requires that:
Collective proceedings must be commenced by a person who proposes to be the representative in those proceedings.
By virtue of subsection (4), it is necessary to seek the Court’s prior permission in each and every claim:
Collective proceedings may be continued only if the Tribunal makes a collective proceedings order.
The most crucial change is contained in subsection (11), which defines “opt-out collective proceedings”:
“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.
It has yet to be seen how effective this new legislation is, and whether it provides the necessary incentive for private enforcement action. However, given the experience in the US, it seems likely that the Consumer Rights Act 2015 has ushered in a new era of anti-trust litigation, seeing more and more consumers take the proactive role of pursuing undertakings which engage in anti-competitive practices contrary to EU Competition Law.
One thing is for certain – it should now be easier for consumers and small and medium-sized enterprises (“SMEs”) to seek redress in the Competition Appeal Tribunal (“CAT“), without the need to undertake significant financial risks. It is also possible to adopt a fast-track procedure to resolve the dispute within 6 months. Indeed, it has been suggested by some lawyers that:
“It will act as a significant deterrent in practice for companies that are maybe engaged in anti-competitive activity particularly in those consumer-facing markets and also will help to bring an effective redress mechanism for consumers and small businesses for the first time…”
The first test case may be a claim against Volkswagen in light of the recent emissions scandal, although it should be borne in mind that class actions only apply to competition law cases. If any of these claims materialise as a class action in the CAT, it would be an ideal opportunity for the court to give fresh guidance on the relevant considerations for qualifying a representative of a class, and the other statutory conditions that must be fulfilled before the “opt-out” mechanism applies.